Take Off the Blinders
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- Published on Wednesday, 27 June 2012 09:00
- Written by Andrew Snyder, Editorial Director, Inside Investing Daily
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We just banked gains of close to 50% using a tactic most investors would easily dismiss. When the markets are hectic, it pays to get unconventional.
Ahhh... profits.
The world's markets are a disgrace. The situation in Europe is laughable. China is ripping at the seams. And Uncle Sam can't afford to keep pounding on the chest of a zombie economy.
And yet -- despite the headwinds and the tough odds -- the folks who followed our advice just banked gains of over 45%.
As you should already know, I spend the majority of my time working on ISG's flagship newsletter Unconventional Wealth. Thanks to the gains we banked yesterday, our portfolio once again stands out as one of the best in the industry.
The success hinges on what I call my six core tenets.
In a second, I'll show you how we just cashed in using only one of our underlying beliefs. But first... see if your beliefs mesh with ours:
Six Core Tenets of Unconventional Wealth
1. A 401(k) is not a retirement plan. It's a path to mediocrity.
2. The Wall Street game is rigged. It has been ever since Gerald Ford put his signature on ERISA.
3. Stocks and bonds are only a sliver of your overall wealth-building strategy.
4. The art of properly valuing a stock is dead.
5. The world is flat; your portfolio must reflect the idea.
6. Invest in what you know. If you don't know... find out.
To bank our big gains this week, we used a play that hits at the idea the world is flat. It's a nod to Thomas Friedman's popular book that vividly proves we work and play in a borderless economy.
It's not an abstract theory. Everything from my Japanese truck to my Malaysian underwear (I just turned around and checked) was on the other side of the planet.
The problem, though... the herd doesn't get it. Most folks think Wall Street is the center of the financial world (see Tenet No. 2).
Americans are the most xenophobic lot around. To the "conventional" crowd, America is where it's at. There's no need to invest anywhere else.
It is one part patriotism... two parts ignorance.
Unconventional Wealth subscribers shun the idea.
Yes, America is the best of the best (or, these days, the best of the worst). Even so, there are plenty of opportunities tucked in markets across the globe.
Like Grupo Modelo (GMODELOC.MX)... the Mexican beer giant in the sights of Belgium's Anheuser-Busch InBev (ABI.BR).
We first introduced subscribers to the company in November. The play was billed as the ultimate form of diversification. Not only was it a way to take advantage of flux in the currency markets, but it also offered exposure to a virtually recession-proof asset... beer.
Right now, the Belgians own just a tick over 50% of the company behind the famous Corona brand. But InBev wants more... and it's willing to pay for it.
As I write, the market has added a premium of about 20% from where shares closed just before the news of a possible deal. If recent takeovers in the industry are an indicator, we could see that figure climb as high as 30%.
But we're not taking a chance. We sold.
You see, most of the shares InBev needs to get its hands on are held by Modelo's top executives and family insiders. Persuading them to sell -- at any price -- will be tough.
If the deal fails, shares will plunge.
By selling now... we lock in gains of close to 50% and turn our ultra-conservative play into a surefire winner.
The key here, though, is that we never would have made the trade unless we ripped the blinders from our face. If we refused to stray from American markets, we never would have unearthed this gem.
I love America. Don't get me wrong. This time next week, I'll have a flag waving in my front yard, a sparkler in one hand... and an American beer in the right.
But just because I live here... doesn't mean I have to invest here.
From the Inside,
Aaron
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