Best Silver Stocks Investment

Silver is often perceived to be subordinate to gold. But history clearly shows that during precious metal bull markets, silver outperforms gold.

Just consider the precious metal bull market of the 1970s...

Between 1970 and 1980, gold prices increased from the Brenton Woods fixed price of $35 an ounce to a high of $850. It was a 2,329% jump in the ten years. Meanwhile, silver went from about $1.50 in 1970 to over $50 an ounce in 1980 — a 3,233% increase.

So far, gold has already crossed its nominal high of $850 an ounce. But silver has come nowhere near its 1980 nominal high of $50 an ounce... I think this is all about to change because...

Silver is Money, Too

The best stock investment community's general neglect of silver has historical origins. For thousands of years, silver — not gold — was the coin of the civilized world.

One of the most complete histories on silver can be found in the book "The Silver Bonanza" by Franklin Sanders and James Blanchard. The book begins with the following quote from Milton Friedman: "The major monetary metal in history is silver, not gold."

Evidence of silver being used as money extends back to at least 4,500 years. According to "The Silver Bonanza," the first mention of silver in the Bible is in the Old Testament in roughly 1850 BC. During King Charlemagne's reign, silver was the only legal tender metal.

Early colonial America also preferred silver to gold. Settlers rigged the gold-silver ratio to encourage the flow of silver into the United States. It took 15.5-16 ounces of silver to buy one ounce of gold in the rest of the world but, by decree, it took just 15 in early America.

Silver was the major monetary metal for the U.S. until 1873 when it was demonetized; when this occurred, its richer cousin gold was given the sole key to the currency kingdom.

Gold has received all the accolades and nearly all the ink ever since. Most "hard money" advocates will talk about gold as money for hours, as if it were religion. Lowly silver gets little or no time at all...

But don't shy away from silver. Gold always moves first in a precious metals bull market because it is seen more as money, yet silver posts better percentage returns nearly every time there is a sustained rally in gold. So why do people still ignore silver, especially as it is priced so reasonably compared to gold right now?

There are five reasons that I see:

1. The 1873 demonetization of silver occurred roughly 100 years prior to the official end of the gold standard. Investors have short memories. So when they think of metal-backed currency, they think of the modern era's more recent experiences with gold, despite silver's richer monetary history.

2. Silver is known as an industrial metal, while gold is considered an alternative to currency, an inflation hedge, and a legitimate stock investment tool even by those not necessarily in the "hard money" camp. Yet silver functions often as a better inflation hedge alternative currency as well, even though few investors believe it.

3. Even though there is far more silver on earth than gold, the silver market is much smaller than the gold market. This makes transactions much more visible and the market more susceptible to large fluctuations. (Note: There is approximately 17.5 times more silver than gold in the world; coincidently, this is very close to the 16 to 1 monetary ratio of silver to gold that existed for thousands of years.)

4. The discovery of the great Comstock Lode in 1859 caused the great decline in silver as a monetary metal. The supply of silver gushing out of Nevada simply overwhelmed its monetary usefulness with the result that silver became viewed as an unreliable standard for paper currency.

5. As industrial economies of the world grew and photography was invented, a growing demand for silver began emerging for uses in these new areas. This industrial demand conflicted with silver's monetary demand, which also caused volatility to silver's purchasing power.

While there is nothing to do about the tendency of stock investors to have short memories, there is a definite substitution effect between silver and gold. Silver may not be seen as a currency alternative right away... but its monetary history eventually prevails and catches up and usually surpasses gold.

As problems with the dollar, euro, and other fiat currencies continue to worsen, some of the wealth fleeing paper money will flow into silver, causing the ratio of the precious metals to decline — just as it has since the ratio was over 100 in the early 1990s.

Eventually I see silver returning to its 16 to 1 ratio with gold before all is said and done with the secular bull market in the precious metals.

What does that mean for how high silver could go?

Well, if gold is $1,200 an ounce and you divide by 16; you would get $75 an ounce silver. If gold goes to make a true inflation adjusted new high — which would be roughly $6,500 an ounce — silver (based on the 16 to 1 ratio) would be $406.35 an ounce!

Right now the silver to gold ratio is about 60 to 1, but with what I see happening in 2010... I think you will begin to see this ratio cut in half.

For this reason, I think it is time to add more exposure to silver in our recommended companies, and I am on the hunt for new silver stories.

The Patsy Revolt of 2010

"Masked youths...attacked the head of Greece's largest trade union, who was addressing the crowd, and hurled stones at the police. GSEE union boss Yiannis Panagopoulos traded blows with the rioters before being whisked away, bloodied and with torn clothes."

The Daily Mail account put the blame for these disturbances on Germany's finance minister, who warned the Greeks that "the German government does not intend to give a cent." At least Bild, a popular German newspaper, was trying to be helpful. It suggested that Greece sell Corfu...and that Greeks get up earlier and work harder.

Meanwhile, from Iceland comes news that every voter with an IQ above air temperature has cast his ballot against a bailout plan. The Icelanders were slated to make good $5.3 billion in bank losses. But why shackle common voters to the banks' losses? The plan was so outrageous and so unpopular that Iceland's normally compliant Prime Minister called for a referendum. Given a chance to vote on it, 93% said no. The other 7% probably read it wrong.

Insurrection is in the air. In England, government employees are preparing the biggest strike since the '80s. In America, dissatisfaction with Congress is at record highs; four out of five of those polled say, "Nothing can be accomplished in Washington."

Herewith, an attempt to deconstruct the rebel yell. By way of preview, it's not the principle of the thing, we conclude; it's the money.

There are more clowns in economics than in the circus. They invented an economic model that has been very popular for more than 50 years - particularly in the US and Britain. It began with a bogus insight; John Maynard Keynes thought consumer spending was the key to prosperity; he saw savings as a threat. He had it backwards. Consumer spending is made possible by savings, best stock investment and hard work - not the other way around. Then, William Phillips thought he saw a cause and effect relationship between inflation and employment; increase prices and you increase employment too, he said.

Jacques Rueff had already explained that the Phillips Curve was just a flimflam. Inflation surreptitiously reduced wages. It was lower wages that made it easier to hire people, not enlightened central bank management. But the scam proved attractive. The economy has been biased towards inflation ever since.

Economists enjoyed the illusion of competence; they could hold their heads up at cocktail parties and pretend to know what they were talking about. Now they were movers and shakers, not just observers. The new theories seemed to give everyone what they most wanted. Politicians could spend even more money that didn't belong to them. Consumers could enjoy a standard of living they couldn't afford. And the financial industry could earn huge fees by selling debt to people who couldn't pay it back.

Never before had so many people been so happily engaged in acts of reckless larceny and legerdemain. But as the system aged, its promises increased. Beginning in the '30s, the government took it upon itself to guarantee the essentials in life - retirement, employment, and to some extent, health care. These were expanded over the years to include minimum salary levels, unemployment compensation, disability payments, free drugs, food stamps and so forth. Households no longer needed to save.

As time wore on, more and more people lived at someone else's expense. Lobbying and lawyering became lucrative professions. Bucket shops and banks neared respectability. Every imperfection was a call for legislation. Every traffic accident was an opportunity for wealth redistribution. And every trend was fully leveraged.

If there was anyone still solvent in America or Britain in the 21st century, it was not the fault of the banks. They invented subprime loans and securitizations to profit from segments of the market that had theretofore been spared. By 2005 even jobless people could get themselves into debt. Then, the bankers found ways to hide debt...and ways to allow the public sector to borrow more heavily. Goldman Sachs did for Greece essentially what it had done for the subprime borrowers in the private sector - it helped them to go broke.

As long as people thought they were getting something for nothing, this economic model enjoyed wide support. But now that they are getting nothing for something, the masses are unhappy. Half the US states are insolvent. Nearly all of them are preparing to increase taxes. In Europe too, taxes are going up. Services are going down. And taxpayers are being asked to pay for the banks' losses...and pay interest on money spent years ago. Until now, they were borrowing money that would have to be repaid sometime in the future. But today is the tomorrow they didn't worry about yesterday. So, the patsies are in revolt.

Several countries are already past the point of no return. Even if America taxed 100% of all household wealth, it would not be enough to put its balance sheet in the black. And Professors Rogoff and Reinhart show that when external debt passes 73% of GDP or 239% of exports, the result is default, hyperinflation, or both. IMF data show the US already too far gone on both scores, with external debt at 96% of GDP and 748% of exports.

The rioters can go home, in other words. The system will collapse on its own.

Global Economies Surge Forward

There was a time...not so very long ago...when Americans held all the top spots. We had the most...the best...the biggest companies. And the richest people.

Those days are gone...

MEXICO CITY (AP) - Mexican telecom tycoon Carlos Slim is the first man from a developing nation to become the world's richest person - a shift that underlines the loosening of America and Europe's stranglehold on the top spots in the billionaires' club.

Slim's arrival at the top aroused both pride and anger in Mexico, where many see his fantastic wealth in a poverty-afflicted nation as a sign of what ails it.

With a recovery in the value of his cell phone holdings pushing his estimated fortune to $53.5 billion, Slim jumped past Microsoft founder Bill Gates and stock investor Warren Buffett when Forbes magazine released its 2010 list of the world's wealthiest Wednesday.

The rise of Slim, the 70-year-old son of an immigrant shopkeeper, is just a part of the emergence of billionaires in developing countries, Forbes reporter Keren Blankfeld said. She noted this year's top 10 richest also include two billionaires from India and one from Brazil.

Here's another item in today's news:

"China becomes world's biggest internet market," says a Reuters headline. There are more Internet users in China than in any other country, says the article. And more cars sold. And more concrete poured.

Travel broadens your horizons, they say. More importantly, it humbles you. You realize that there are a lot more people doing a lot more things than you thought.

All over the world, people bus, hump, schlep, toil and strain. Some work hard. Some work not so hard. Some work smart; others don't.

But over time, fashions and circumstances change. What goes around, comes around. Those that did once ride so high now lie low...

Yes, dear reader, the world turns. And traveling around...you get to see different parts of it...with different stories to tell...

This morning's news tells us that 60,000 people are rioting in Greece...torching German cars and generally behaving badly.

What's their beef? They're running out of money, running out of credit...and running out of time. Modern macro-economic policies have turned against them. (More below...)

But they're not alone. The news from the plains tells us that Kansas might have to close half of its public schools...if it doesn't find a way to close its budget gap.

The news from other states is not very different. Many foreign governments are in the same fix. Ireland has already begun its "austerity" programs. Italy and Spain can't be far behind.

But what about the US federal government? No austerity at all. Just the opposite. The feds announced the biggest budget deficit ever - $221 billion for the month of February. In other words, per family, the American government spent approximately $2,000 more than it received in tax revenues. Hmmm....if it continues at this rate, it will spend $24,000 more than it receives per family this year. In round numbers, the typical family will pay about $25,000 in taxes...and receive about $50,000 worth of 'services.'

Is that a great deal...or what?

It's an absurdity...it's preposterous...it's weird and unnatural. And it can't last.

It is only possible now because of the peculiar circumstances of today's financial world. Lenders, stock investors...Chinese creditors...give their dollars to the US government, believing it to be the most credit- worthy borrower in the world. But as the supply of US debt goes up the quality of it declines.

Already, the US is - from a GAAP accounting point of view - bankrupt. (See below...) Lenders cannot reasonably expect to get their money back. But that doesn't seem to bother them. US debt still looks like a better bet than, say, Greek debt.

But the world is full of surprises. What a shock it will be when the US finds itself in Greece's shoes!

And here's Addison, with a few words on our favorite metal from Agora Financial's H.Q. in Baltimore, Maryland...

Here we go again. Markets have caught a chill after signs of inflation fever in China. And that's not even the half of it. Let's dive in...

Consumer price inflation in China hit a 16-month high in February - a 2.7% year-over-year increase. China's National Bureau of Statistics was quick to put out a statement reassuring everyone that "price rises this year will be moderate and controllable," but that's not enough to calm traders looking for excuses to feel jittery.

And any news that might, possibly, at some point in the future, signal monetary tightening in China...well, that's enough to put the fear of God in them. Hence, the major US indexes opened down about 0.2% in the first hour of trading yesterday. The news is also an excuse for traders to bail out of gold, which clings to $1,105 as we write.

So much for the short-term noise from China. But the Middle Kingdom is also making real news this week. We'll get to that in a bit, but first, we bring you this item to help put it in context.

Right in line with analysts' forecasts, Uncle Sam's budget deficit for the month of February was $220.9 billion - the largest monthly total in history. For the first five months of fiscal 2010, the total is $651.6 billion, 10% ahead of last year's blistering $589.9 billion pace.

The details are even fuglier. Total revenues: $107 billion. Total expenditures: $328 billion. Yes, that's only one dollar of revenue for every three dollars spent.

We have just two words for this: Banana. Republic.

So what does China make of numbers like this? As it happens, the National People's Congress is holding its annual session this week. During the festivities, Yi Gang, the head of the Chinese State Administration of Foreign Exchange assured the world that US Treasuries would remain a major component of China's reserves.

We noticed he said little about whether China would actually add to its positions and soak up some of that additional debt racked up last month.

Yi also pooh-poohed any role for gold in China's wealth management strategy: "It is, in fact, impossible for gold to become a best stock investment channel for China's foreign exchange reserves," he said. "I have 1,000 tonnes now, and even if I doubled that holding, according to current prices, that would be about $30 billion..." barely a drop in the big bucket that contains $2.4 trillion of China's forex reserves.

Of course, that's what face the Chinese government puts on for the public.

Yet "the volume of China's gold reserve in terms of its forex reserves only ranks fifth in the world, and is well below the global average," says Russell Hsiao of the Jamestown Foundation.

Hsiao rounded up some interesting stories from Chinese media that shed additional light...

• The Guangzhou Daily reported in 2008 that China's central bank was considering raising its gold reserve by 4,000 metric tons. (It's currently 1,054 metric tons.)
• Ji Xiaonan, the chair of the supervisory board for major state-owned companies under the Chinese State Council's state assets commission, set an even higher bar last year - 6,000 tons by 2014, and 10,000 tons by 2019
• According to the English-language website ChinaStakes, a senior official from the People's Bank of China (PBoC) suggested last year that China should "secretly increase its gold holdings" as part of a long-term plan - with the central bank buying up as much domestic production as possible.

However it turns out, "the long-term implications of Chinese debates to increase its gold reserves," Hsiao concludes, "will have far-reaching impact on the stability of China's forex reserves and the yuan's ability to become the next reserve currency of the world. The question for Chinese leaders now appears no longer if, but how, that will come about."

Indeed.

[Joel's Note: Right now Addison is beta testing his brand new research service, tentatively titled Addison Wiggin's Apogee Advisory. Every month, Addison will deliver eight pages packed with two or three big- picture trends and ideas gleaned from his worldwide travels and "golden rolodex" of contacts.

The service, in Addison's words, is aimed at "providing best stock investment research for individual investors that will not only cover the nexus between money and politics, between Wall Street and Washington, but would crush even the finest research published by the Wall Street houses, such as they are."

BUT... Exciting as the project sounds, Addison needs your help to fine- tune a few of the moving parts. With that in mind, he's offering the first three "beta-test" issues to Daily Reckoning readers free of charge in exchange for your feedback. (Tell him what you like/don't like, etc.) The first issue is due out this month, so if you want in on the ground floor, you'll have to be snappy. ]

5 hot stocks at Big Mac prices

For less than $5 a share, you can score some real bargains among small caps right now. And you might wind up doubling your money in a year.

 

By Michael Brush

If holiday shopping has blown your budget, here's some relief: Wall Street is offering bargains.

The stocks of many small yet promising companies have been hammered as nervous investors have shifted funds to the perceived safety of big businesses with proven track records.

 

Here's the upshot: There's a fresh crop of stocks under $5 a share that could double in a year as investors come to their senses and realize the subprime-mortgage debacle won't bring economic Armageddon.

 

My five favorite stocks selling for less than the price of a Big Mac meal are stem-cell-research company Neuralstem (CUR, news, msgs), flat-panel-TV designer Syntax-Brillian (BRLC, news, msgs) and energy companies Teton Energy (TEC, news, msgs), International Royalty (ROY, news, msgs) and Abraxas Petroleum (ABP, news, msgs).

 

These stocks may see a bounce soon because of the January effect -- a rebound once the pressure of year-end tax-loss selling abates. But the bigger gains will come after some key changes in investor psychology play out.

 

"This is a flight-to-quality market, so anything perceived as risky has had a really hard time making headway," observes Eric Barden, a co-portfolio manager of the Texas Capital Value and Growth Fund. "But when this turns, it is going to turn really fast."

 

When is the turnaround coming?
Barden thinks it could be six months before investors develop an appetite for riskier small-cap stocks.

But I think he may be in for a surprise, and our under-$5 stocks could bounce back sooner than that. Here are four reasons why, thanks to James Paulsen, an economist and market strategist with Wells Capital Management:

We've been waiting at least six months for the subprime disaster and housing weakness to bring down the economy. So far, they haven't. Employment and wage growth are hanging in there. Consumer spending was solid in November. Foreign demand for the goods we make is healthy. At some point, investors will realize the much-feared economic disaster ain't gonna happen -- and they'll develop a taste for riskier areas of the markets again, such as stocks selling for less than $5. The underlying conditions are still in place for decent economic growth: falling interest rates, government deficit spending, a weaker dollar and a continued expansion in the money supply.

 

Fears about shortages of liquidity -- the availability of money -- are overblown. Just look at the record levels of personal net worth in this country, the solid corporate balance sheets, currency reserves held by central banks and the amount of investment cash in the sovereign funds of foreign governments. "It's a preponderance of fear that is keeping liquidity in the closet, not a shortage of liquidity," Paulsen says. "If someone says things are OK, then watch the liquidity come out." Wait for signs that subprime-related write-offs are easing or for signs of continued economic strength to calm jitters. Again, a change in psychology will benefit the least liquid stocks the most, including our under-$5 stocks.

 

The weaker dollar helps small-cap stocks as much as big companies, if not more, because the cheap dollar attracts foreign buyers to our shores. Large-cap companies already have an overseas presence.

Historically, small-cap stocks do well when there is inflation, which is making a comeback.

 

So now, here's a closer look at five stocks trading for less than $5 that should benefit from these trends, as well as company-specific developments. To find these stocks, I looked for companies where insiders are buying the most, and I consulted with investors with good records who specialize in this part of the market.

 

Hope for paraplegics?
Researchers working with the tiny biotech company Neuralstem have discovered that if you implant the right human stem cells into the spines of paralyzed rats, the cells take over and regenerate in a way that allow the rats to walk again. This stunning breakthrough shows the promise of a controversial area of medicine known as stem-cell research.

 

But would this work in humans? The world is about to find out. By March, Neuralstem may begin testing the same science on humans in a study at the University of Pennsylvania. As early as three to six months later, it could start to see results. If this process, known as regenerative medicine, or cell therapy, shows promise in the study, I'd expect nice gains in this under-followed stock, which recently traded for $2.85 a share.

 

The Pennsylvania study will test the use of stem cells to treat a kind of paralysis called ischemic paraplegia. This occurs when people have a hemorrhage in the spine, typically because doctors had to clamp the aorta, the main artery from the heart, when treating another problem. Strictly speaking, this is just a "feasibility and safety" study.

 

"But these will be real patients getting the real thing from the beginning, so we expect to see if we have impact," says Neuralstem Chief Executive Richard Garr.

 

Later next year, Neuralstem will likely begin testing cell therapy on patients with Lou Gehrig's disease or traumatic spinal cord injuries. The technique might also be used to treat other central-nervous-system disorders, such as Parkinson's and Alzheimer's diseases, and even depression.

 

Neuralstem is a player in this space because it owns technology that allows doctors to reproduce huge amounts of stem cells and to shut off the reproduction process when enough have been made.

Top Stocks Report For 2010

Let's call it a victory. Despite spending most of yesterday's trading session in the red, the Dow Jones Industrial Average staged a late-day rally to eke out a 42-point gain. Nevertheless, the selloff that started early last week has erased all of the Dow's progress since November 9, 2009 - a day on which headlines gushed that the Group of 20 nations would continue to save the world by maintaining their economic stimulus efforts. Investors celebrated that news by rallying the Dow 203 points to 10,227 - a fresh 13-month high.

At the time, most folks seemed to believe that the bear market was dead and gone, and that a bona fide recovery was well under way. After all, the US Commerce Department had just reported 3.5% GDP growth for the third quarter. "Third-quarter GDP numbers knocked the socks off of expectations," billionaire investor, Kenneth Fisher, declared on November 10, expressing the pervasive optimism of the moment. "The economy is not recovering at a slow pace."

Fisher probably should have held his tongue at that point. Instead, he predicted that the S&P 500 would hit 1,300 "as early as February." The S&P is currently below 1,100, and February arrives next Monday. We don't like his odds.

But lest we be accused of throwing stones in a glass house, we would point out that the robotically bullish Fisher is the 289th-richest person in the United States, according to Forbes magazine. Conversely, your frequently "cautious" California editor picks up pennies off the ground...even though he has a bad back.

We mention Fisher's November optimism merely to illustrate the pervasive attitudes of that moment. Even Alan Greenspan jumped aboard the bandwagon and grabbed some sheet music. The rallying hot stock market is "re-liquefying the whole [recovery] process," he trumpeted on November 9. The former Federal Reserve Chairman also remarked that manufacturers would need to rev up production lines in order to replenish inventories.

We now know, of course, that inventories surged during the ensuing two months, as end-user demand failed to materialize. But once again, we have no interest in tweaking noses (other than Greenspan's); we would merely point out that the common wisdom is rarely wise.

"What was The Daily Reckoning saying in early November?" you may be wondering. In the November 9th edition of The Daily Reckoning, our own Bill Bonner observed, "The financial crisis of '08-'09 was not a head cold. It didn't go away. It was more like diabetes, a stroke, or cancer. It was serious. Life threatening. We may not recover. Our only hope is to change our habits, undergo some nasty treatments...and endure a long convalescence.

"But that's not what most people think," said Bill. "They are convinced that the feds gave the economy a miracle drug. It cleared up the trouble lickety split. Now, our troubles are behind us. According to the news reports, the US economy is 'growing' again. Yes, that's the official storyline.

"But wait, what kind of growth is this? [Economist] David Rosenberg answers: 'All we can say is that if the overwhelming consensus is correct that the recession is behind us, then what we have on our hands is the mother of all jobless recoveries and whatever economic growth is being squeezed into the system comes courtesy of the most dramatic intervention by the government in recorded history, including the New Deal 1930s era. President Obama is now running fiscal deficits that would have made FDR blush.'

"The quacks at the Fed and the Treasury department have delivered the biggest jolt of adrenaline in history," Bill continued. "People in the private sector won't spend? Heck, the feds will spend for them! It took the Fed nearly one hundred years to grow its balance sheet - which is the foundation of the US money supply - to $800 billion. Then, after Lehman Bros. went broke, it doubled its balance sheet...to more than $1.8 trillion."

Bill continued kvetching the following day when he remarked:

"The Dow rose 200 points yesterday, bringing it only about 75 points below the 10,300 level. Why is the 10,300 mark important? It's not really...it's just the point where this bounce will equal the bounce following the crash of '29. No reason in particular that this bounce should be the same as the one 80 years ago. But no reason it shouldn't, either."

Hmmm... Isn't it interesting that we have returned to Dow 10,300? So what's next? What are your Daily Reckoning editors saying today?

Well... Pretty much the same old thing we've been saying for months: "flat" is the new "up." The economy is not recovering. Not no way; not no how. It may be bottoming, if by "bottoming" you mean, "not getting materially worse." But as Bill observed back in November, this is no head cold, folks. It's more like diabetes...the Type II variety that results from over-consumption.


The latest housing sales data support our diagnosis. Now that the benefit of the government's $8,000 tax credit has passed, home sales have retreated to levels that would have been unthinkable just two years ago.

Existing home sales languish at levels last seen in 2001; while new home sales have plummeted to levels we have never seen during the last 50 years!! Apparently, to repeat one of our earlier observations, individuals without incomes or credit buy very few homes.


Therefore, given the fact that signs of economic weakness continue to litter the US economic landscape, and the fact that China is halting credit growth, we should not be surprised to see the global economy decelerate once again. And if the global economy were to decelerate, we should not be surprised to see bond yields fall once again.

So does that mean we are abandoning our "Trade of the Decade" already? Does that mean we would suggest buying Treasury bonds instead of selling them? The answer is a resounding "No!" - not for a 10-year trade. But the answer might be "yes" for a 10-week trade. It is entirely possible, if not likely, that bond yields will drop during the coming weeks in response to new indications of economic weakness. But we would advise selling all bond market rallies, rather than buying the dips.

Top Stocks: The Green Building Surge

Last week, President Obama outlined the new Cash for Caulkers program.

While the obligatory partisan punches were not unexpected, most folks seem to be pretty supportive of any program that helps us use our energy more efficiently, and of course, that saves consumers a couple of bucks on their energy bills.

For Green Chip readers, this is nothing new.

We've been singing the praises of energy efficiency for years. Especially as it relates to green building. Because let's face it: Not only is the green building industry good for the economy, it's also good for our portfolio. And I'll tell you about a few of the top stocks for 2010 we like in this industry in just a moment.

But first, let's just recap a few important green building figures.

According to a 2009 green jobs study from Booz Allen Hamilton and the U.S. Green Building Council (USGBC), green construction spending currently supports more than 2 million U.S. jobs and generates more than $100 million in GDP and wages.

The report also found that green building will support 7.9 million U.S. jobs and pump $554 billion into the U.S. economy — including $396 billion in wages — from 2009 to 2013.

Not a bad window for those seeking to profit from the early stages of green building momentum.

Of course, opportunities in green building can be found in more than one place.

There's the most obvious, power generation. And for buildings — especially those in regions with strong solar resources — solar's potential remains solid.

Going forward, we believe the best stocks in solar are still with those manufacturers that retain a significant cost advantage. And these are almost all Chinese players.

In 2010, we remain bullish on Suntech Power (NYSE: STP), Yingli (NYSE: YGE), JA Solar (NASDAQ: JASO), Canadian Solar (NASDAQ: CSIQ), and First Solar (NASDAQ: FSLR). The latter has recently picked up some negative publicity due to its exposure to the German market. But overall, First Solar's cost advantage continues and its utility-scale future remains bright. I would caution against underestimating First Solar's potential in 2010.

There's also energy efficiency and conservation.

While there are certainly opportunities here for companies developing energy efficient windows (and of course, the insulation manufacturers), the more pure play efficiency and conservation opportunities continue to be in demand response.

For our money, we maintain our bullish outlook on both EnerNOC (NASDAQ: ENOC) and Comverge (NASDAQ: COMV).

And then there's lighting, which accounts for 11 percent of the energy use in residential buildings and 26 percent of the energy use in commercial buildings. This is a huge opportunity.

Cree (NASDAQ: CREE) has long been a favorite for LED investors. And for good reason... The company maintains a significant leadership position in the market, and guidance remains solid.

We also like a small, below-the-radar stock called Energy Focus, Inc. (NASDAQ: EFOI). It may not get as much attention as Cree, but the company has some solid partnerships with the U.S. government. We believe this will continue to help the company land some very important — and very profitable — government contracts.

Another Piece of a Very Profitable Puzzle

Aside from energy, green building also boasts sustainability features such as water reclamation systems, environmentally-friendly paints, coatings and sealants, and sustainable building materials. Even eco-friendly flooring gets a nice boost from green building momentum. Interface, Inc. (NASDAQ: IFSIA) is a company that will continue to take advantage of this opportunity with its environmentally-friendlier modular carpet designs.

As a side note, Interface has long been a champion of sustainability, even boasting a goal of achieving a zero environmental footprint by 2020.

My point is this: the Cash for Caulkers program supports just one more piece of a very profitable puzzle for Green Chip investors.

And you better believe we're going to continue to profit every step of the way.

To a new way of life, and a new generation of wealth...

A Personal Perspective on the SEC

Today we take a break from our typical Reckoning to bring you an atypical Reckoning. Our colleague, Porter Stansberry provides an up- close-and-personal perspective of the SEC - the government agency in charge of safeguarding the financial markets and protecting the interests of individual investors. Does this particular government agency actually safeguard the markets and protect the interests of individual investors?

Let the reader decide.

Your editor's here at The Daily Reckoning will refrain from commentary that might prejudice our readers. Nevertheless, we must admit that we cannot escape the thought that Porter's experience reminds us of a familiar children 's story: "My what big teeth you have, Grandma!"

 

The reason you might have heard about my Securities and Exchange Commission (SEC) lawsuit is because I didn't settle the case.

When most people are sued by the SEC, they do their best to put the matter behind them - as quickly and quietly as possible.

This normally involves paying a large fine and essentially promising "not to do it again." If you pay the fine, the chances are good most people will ignore the matter. You're not required to admit any guilt. Thus, the damage to your reputation is largely mitigated and you can go on with your life. That's why most people settle with the SEC when it comes to civil (noncriminal) lawsuits.

But I didn't settle when they sued me.

Even when a settlement was offered to me for as little as $1 million, I refused it. Instead, I've faced a lengthy court battle that's brought with it tremendous risks to my reputation and legal bills amounting to almost $3 million.

Why on Earth would I try to fight the "city hall" of the securities industry?

Because I'm eager for the facts of my case to come to the public's attention. I know when the facts of my case are accurately known by the public, my subscribers will support my decision to fight the SEC. That's why I've never tried to hide this matter from anyone.

Unfortunately, so far, almost none of the critical issues at stake in my fight have been accurately reported. Worse, people who have no idea what they're talking about continue to assume my case is another example of a financial publisher acting scurrilously - front-running his subscribers or ripping people off by promoting top penny stocks that he's been paid to endorse.

And so... at the risk of upsetting the judges who have to date refused to believe a word I've said about the matter... I would like the opportunity to tell you, my subscribers, exactly why I've refused to settle my case. And why the matter is now pending before the U.S. Supreme Court.

I'd also like the opportunity to direct you to several reliable sources of information about the matter, such as The New York Times and The Wall Street Journal. Most of the things written about the case elsewhere are patently false and misleading.

For example, most people don't know my battle with the SEC actually has nothing to do with best stock trading or actual securities fraud.

The truth is, there isn't any allegation that I ever owned the best stock in question - and there never has been.

Nor is there any allegation I've done anything at all that's directly related to the purchase or the sale of any security. I didn't "front run" my recommendation. I wasn't being paid by promoters to recommend a best stock for 2011. These things have all been said about the case - even by a few fellow journalists. But in fact, I wasn't even accused of doing them by the SEC.

So what is this case about, if it's not about trading in securities?

My lawsuit with the SEC started as a fight over the First Amendment rights of a publisher - me. It has continued because I refused to settle or buckle under to the government. I maintain my writing was honest, materially correct, and is certainly protected by the First Amendment of the U.S. Constitution.

I claim a former unit of the Department of Energy - a unit that was sold to investors in 1996 and is now known as USEC - was withholding material information from the public. I believe it did so in order to reward certain investors, including its bankers, its corporate insiders, and members of the Department of Energy.

By revealing information about a major and long-pending agreement with USEC's Russian supplier of uranium, I disrupted the opportunity insiders had to accumulate shares at lower prices. In short, I ruined the party by telling investors the agreement had been reached and would be announced in a few days.

Because USEC was trading at a very distressed price (half of book value) and was paying such a high dividend (yielding more than 8%), I believed the best stock would soar once this long-pending agreement was made public. In my report, I explained why the agreement would turn USEC into a profitable company by lowering the company's raw material costs dramatically. I predicted the best stock would double on the news.

And that's almost exactly what happened.

Based on what I'd learned from a company insider (the director of investor relations), I wrote the agreement would be announced at a major nuclear summit featuring presidents Bush and Putin on May 22, 2002. The insider explained the details of the summit to me in advance, long before they appeared in the newspaper and told me to "watch the best stock to buy on May 22." And in fact, the long-awaited announcement came about a month later, on June 19, 2002. Keep in mind, this agreement had been pending for more than two years. And yet, somehow, I was able to pinpoint almost to the day when it would be announced to the public.

Did the best stock soar? No, not exactly. It moved from around $8 to around $11. That's roughly a 40% move in a few days. That's not bad. More importantly though, following the new agreement with the Russian uranium supplier, the best stock traded all the way up to nearly $20 over the following three years. In fact, by the time my case reached its first federal judge, investors who followed my advice would have made more than 150% on the investment, thanks to capital gains and big dividends. (The stock eventually went to $25 during the uranium bubble of 2007.)

Yes... that's right. The SEC is suing me for a matter that involves a stock that went from under $8 to nearly $25. That's more than a 200% gain. You've got to be kidding, right? Nope.

But why?

Here's the heart of the matter.

I believe the company knew for certain its deal for cheap Russian uranium would receive the required final approval of both the U.S. and Russian governments at the summit. This approval was the only thing holding up the deal. With this knowledge in hand, it would have been easy for the company's insiders and other senior officials in the Department of Energy to load up on the stock and profit once the news was announced to the public.

And I wasn't the only analyst who was told when to expect the deal.

In the discovery process of our lawsuit, we found a notebook from USEC's investment bank - Bank of America - where its analysts clearly indicated May 22 was the expected announcement date.

But instead of pursuing the possibility USEC's managers and bankers were withholding this material information, the SEC decided to attack me. Keep this in mind: I didn't use this information for my own personal gain. I didn't buy the stock. Or even just tell my friends to buy the stock. No, instead I did my job. I published a report about what I'd learned and offered to sell my report to any (and all) interested investors.

I also sent a copy of my report (and the accompanying sales letter) to my source at USEC. He never asked me to change a single word of my report. He had my cell phone number. He had my office number. He had my e-mail address. If there was any legitimate problem with my report, all he had to do was ask for a correction. He never did. Not even to this day.

I did all of the things any reputable journalist would do. I checked my source's facts. Sure enough, a presidential summit was approaching. Sure enough, there was a large pending contract. Sure enough, the new deal would change the economics of the company in a dramatically positive way. I sent a copy of my report to my source. And I offered it for sale to the public. If anyone wasn't satisfied with the report, for any reason, I gave him his money back.

Even today, looking back at the matter through the lens of time and experience, I still think my USEC report was one of the great stories of my career and I'm proud of the report I wrote. Are there things I would have done differently? Yes. I would have made sure to have a recording of my interview.

You see, even though I never owned a share of the company, even though I had no incentive whatsoever to lie about the company, and even though third parties who have looked at the facts of the case (like The New York Times) agree my report on the matter was overwhelmingly correct... the SEC decided to come after me and not the people who were really defrauding the public.

Incredibly, the SEC sued me for securities fraud, saying I had lied about what my source told me and that selling my report about USEC was tantamount to brokering the stock. Specifically, the SEC claimed my source didn't tell me to "watch the stock on May 22," which was the only part of our conversation that I quoted.

Since I can't prove what my source said, you might assume I must be lying. But if he didn't explain the timing of the deal to me, how could I have known - within a month - exactly when the deal would close? The fact is, until our discussion, I didn't know anything about the upcoming presidential summit. It wasn't reported in The Wall Street Journal until about a week after our discussion.

But... just for the sake of the argument... what if you assume I knew about the summit from another source and I merely attributed it to the company in order to claim I really had "inside" information? Why then, even after I wrote the report and sent my source a copy, did he not demand a retraction?

And if the company knew my report was false, why didn't it put out a press release denying it? The NYSE rules require companies to put out press releases anytime there's a material misstatement in the press.

The fact of the matter is, my report was overwhelmingly correct. And my source couldn't deny my report because he didn't know whether or not I had a recording of our conversation (which took place over the phone).

When the SEC came calling later in 2002, I expected it would be going after the company for selective disclosure - a violation of SEC regulation FD. And sure enough, it wanted all of my personal records to make sure I wasn't front-running the stock, etc. But then, instead of shifting its investigation to the company, it demanded to have the entire subscription list of not just my publishing company, but also of our parent company, Agora Inc.

It wasn't going after USEC for withholding material information; it was going after us by intimidating our clients. And it didn't ask for just the USEC report subscribers - it demanded every single name and address on our entire database, including my parent company's database.

Rather than give in to this subpoena, we sued the SEC in federal court to protect our subscribers' privacy. A well-established legal precedent protects a publisher's subscriber lists. (What you decide to read is none of the government's business.)

That's part of the story I'm sure you've never heard before: We sued the SEC first. And we did so to protect our subscribers, the overwhelming majority of whom never bought the USEC report in the first place.

I understand that you might reasonably wonder... How could any of this be true? I mean, wouldn't you expect that as soon as the SEC knew I'd sent my source a copy of the report, the matter would be closed? Or don't you think as soon as it knew I wasn't trading the stock or front- running it, the SEC would have simply left me alone?

Even after reading all of this, undoubtedly, a lot of people must think I'm merely trying to muddy the waters because I'm guilty of front- running the best stock for 2011... or lying to investors. Why else would the government waste its time on a newsletter writer?

I understand my story might be hard to believe - at first. The public generally has confidence in our government. It will be hard for some people to imagine the SEC would actually go after a journalist with the intent of putting him out of business simply because it didn't like what he was writing about.

But my story isn't unique.

At the same time the SEC was abusing its power by subjecting me to interrogations, subpoenas, and crushing legal bills - all in violation of the First Amendment - it was also going after many other legitimate market participants - including David Einhorn, the well-regarded hedge- fund manager (Greenlight Capital) for merely speaking about securities.

As with my case, the SEC came after Einhorn for speaking openly about abuses taking place at a Washington-based business (Allied Capital), a company that - like USEC - was heavily staffed with former government officials, including Joan Sweeney, the company's chief operating officer, who was a former senior member of the SEC's Division of Enforcement. Our stories are eerily similar...


THIS IS WHAT EINHORN WAS WARNING INVESTORS ABOUT, AS EARLY AS 2002. THE SEC RESPONDED BY INVESTINGATING EINHORN.

Rather than investigating Einhorn's claim that Allied Capital was cooking its books by using fraudulent accounting, the SEC instead began investigating him, alleging securities fraud because of what he'd said about Allied Capital during a presentation at an investment conference that's held to benefit charities.

After several years of threats and abuses (like having his phone records stolen), Einhorn was vindicated. The shares of Allied Capital collapsed as the company was revealed as fraudulent. But even today, Joan Sweeney is still with Allied Capital. The SEC has never been forced to fire any of the agents who abused their power during the investigation of David Einhorn.

To draw attention to the abuse he'd suffered, Einhorn decided to donate all of the money he made from shorting Allied Capital to charity, and he wrote an entire book about the situation called, Fooling Some of the People All of the Time.

Says Einhorm about his experience:

Allied isn't the biggest, most egregious, or most audacious fraud I have seen. In a sense it is a garden-variety fraud - dishonest business dealings by dishonest management. So why all the fuss? The story I am telling is one that has been surprising and unexpected - even to me. I think it is important and needs to be told. This book reveals some serious problems in the regulatory landscape that I am in a unique place to discuss.

I care that the SEC and other regulators seem to have stopped enforcing laws against corporate malfeasance. I care that company officials can lie with impunity on public conference calls. And I have been appalled that the government officials overseeing the lending programs that Allied has defrauded are so indifferent and unwilling to act even when presented with clear evidence of abuse. The overall lack of law enforcement is startling...

If we are going to permit the retribution against the whistleblowers shown in this story - defamation, investigation, invasion of privacy and so forth - then we surrender public free speech. If we allow the people in this story to operate outside the law, then we nourish a corrupt business culture. Rather than turn a blind eye to the fraud I witnessed, I made a decision to stand up and speak out despite the consequences. I hope my story inspires regulators and government agencies to do the right thing.

I hope you'll remember most people don't do what I've done and what Einhorn did.

Most people don't fight the SEC because they don't want their names in the paper, they don't want the stigma of being investigated by the government, etc.

Believe me, I can understand why. When the news of the SEC's investigation of me leaked out, publishers around the world refused to do business with me. Potential employees refused to come to work with me. Companies refused to be interviewed by me. The lawsuit has made it vastly more difficult for me to simply stay in business. Even today, every time a potential subscriber stumbles across information about the lawsuit on the Internet (and much of it is completely untrue) he's likely to cancel his subscription or simply decide not to renew.

And think about this... the more people who simply refuse to write about securities because of the threat of an SEC action or because they fear retaliation from the businesses they write about, the less high- quality information will be available to investors. The less information is available, the more bad actors will take advantage of investors.

Whether you realize it or not, the SEC isn't trying to protect investors. If it were, Bernie Madoff would have never happened. The SEC knew all about Bernie Madoff - the SEC audited him regularly. Many people - including Barron's - pointed their finger right at Madoff and revealed his fraud. Still, the SEC did nothing.

The SEC knew all about Enron and WorldCom and the conflicts at the investment banks during the Internet boom. The SEC knew all about GM's debt load. It knew all about the problems with Fannie and Freddie. In fact, it was the SEC that approved the huge increase to investment banks' leverage in 2004 - a move that directly led to the financial crisis of 2008.

But... maybe you still trust the SEC. And if you do and you want to believe Porter Stansberry is out to harm investors by publishing independent reports on public companies - that come with a money-back guarantee - there's probably very little I can do to change your mind.

On the other hand, if you ask any securities industry professional who reads our newsletters, I have no doubt he will tell you our work is among the best you can buy anywhere and is far superior to nearly all of the research put out by the brokerage firms. I know this is true because thousands of professionals are our clients and I have hundreds, if not thousands, of testimonials from these readers.

The truth of this case is so simple to see. Just ask yourself two questions:

1. How can the SEC accuse Porter of intentionally lying when Porter sent his source his full report and the source never requested a retraction or a correction to any of Porter's reporting?

2. Why would the SEC risk a constitutional battle with a bona fide journalist over a report even The New York Times says was basically correct? Why would the SEC want to shut down a business like Stansberry & Associates Investment Research - which offers refunds to any unsatisfied customers and whose analysts never trade in the securities they recommend?

Don't you wonder why the SEC would target my business - which doesn't manage money or broker stocks - while ignoring enormous ponzi schemes going on in the businesses it supposedly regulates?

I can't prove it... but I don't think the government likes it very much when I tell investors the truth about things like Fannie, Freddie, and General Motors. I don't think the SEC wants the American people to know the truth about our financial markets - or the state of our government's finances. And I think the government is afraid of what will happen when you find out the truth.

Whatever happens with my court case, I hope you'll know I did, and have always done, my best to tell you the truth.

After all, unlike the government, the truth is my only weapon.

Price Per Ounce or Ounces Owned?

In a recent conversation with a fellow gold analyst, he was emphatic that the price one pays for physical gold should be ignored. "What's far more important," he insisted, "is how many ounces I own in relation to the total value of my assets."

Building a core position in gold bullion is a smart goal, to be sure, and a strategy Casey Research has been advising for years. However, ignoring the price you pay for gold could be seen as foolhardy; sure, it's insurance, but isn't price part of the consideration when you shop for insurance?

So, who's right? 

 

The World Gold Council just released their 2009 annual report on gold trends. From the densely populated pages of interesting data, there's one compelling tidbit I gleaned that may shed some light on the buying behavior of gold investors.

Overall investment in gold was 7% higher in 2009 than 2008. This is significant when you consider that demand in the fourth quarter of 2008 – during one of the worst financial meltdowns in history – was so great that shortages of physical metal abounded everywhere. And yet investors bought more gold in 2009 when investor fear about global financial uncertainty was subdued.

Further, 2009 total funds invested in all forms of gold exceeded 2008 by 20%, and the average price was 11.6% higher. In other words, investors were buying gold even though the price wasn't necessarily "low." To be sure, that's a broad statement. But the fact remains that year-on-year, more gold was purchased at higher prices when the stock markets were less scary, than when the price was lower and Hank Paulson was on CNBC every 15 minutes pontificating on how to save America's financial system.

This isn't to suggest one shouldn't pay attention to price. And the data doesn't identify how many of those who purchased gold last year were first-time buyers, as certainly there were newcomers to the sector that contributed to higher demand. But it begs the question, who would continue to buy gold when the price is higher?

Whoever doesn't own enough, that's who. The gold I bought last month was certainly higher priced than what I paid in 2008. But I'm trying to position my assets for protection from eventual dollar debasement and rising inflation. So perhaps focusing more on acquiring sufficient ounces to withstand a storm rather than stubbornly buying none, waiting for "cheaper" prices, however you define that, is a better mindset. Not owning enough gold is equivalent to holding a million-dollar mortgage and having a $10,000 life insurance policy. It won't help much when you really need it.

Of course we should pay attention to price. But the trick is not letting that distract you from buying what you need. You're not buying gold bullion as a speculation (although we expect to make a bundle on our holdings), but as a sound form of cash in an environment where government has no respect for a balance sheet and sees inflation as the only way out of its black hole of debt. During periods of inflation, the government does fine; it's the citizens that suffer from the lost purchasing power of their savings. It's clear our currency is being debased. What's your plan of defense?

For those diligently accumulating gold, how do you know when you have enough? Check your anxiety quotient. If Ben continues printing money or Obama promises more goodies than he has the money to pay for, and you remain calm, then you likely have adequate gold. These are the investors who can afford to be stubborn about price as they build their holdings. In my opinion, this is where we all want to be.

What form of gold should you buy? It depends on why you're buying it. If you understand gold's role in history, owning a physical form will come naturally to you. If you see the threat of inflation on the horizon, or you worry about what is being done to the dollar, you'll own both coins and an ETF. If you're worried about possible exchange controls someday, you'll consider a Perth Mint Certificate. And the more gloomy your outlook about the global economy, the greater the percentage of all forms of gold you'll buy.

That said, we maintain a bias toward physical ownership. GLD and other gold ETFs are fine and do offer protection. But the custodian isn't going to airmail gold to you when you cash in your shares; having the "hard money" in your hand gives you the freedom an ETF cannot. In our book, owning physical gold, in the form of one-ounce coins, is where your first dollar should go.

I remember when my wife and I decided it was time to get life insurance. We'd just had our kids, and it was time to play grown-up. Given what 5,000 years of history has taught us about the value of gold, and given what's happening at this moment in history to our currency, are you playing grown-up with your investments?

Just when I was getting comfortable, oil goes awfully close to $82...

My main gripe with Central Florida had been just how dazzlingly car-dependent the whole place was. But spending a few weeks here has softened my position on that. Then I looked at oil prices this morning...

It would seem that people here really are catching on to the pleasures of more traditional, centralized living. Ritzy Winter Park has a lovely shopped-line Main Street with a railway station and million-dollar homes filling up the surrounding, walkable blocks. Nearby College Park is a bit more down stocks market of 2011, but still just as pleasant. And everyone I've talked to here loves those places. People in my own family who used to mock my love of traditional small town development and rail are now singing the praises of both.

What will be will be, Shooters. If we have to reverse the thoughtless, sprawling development pattern that's been the norm since the 1950's because we can't afford to keep using it, then so it must be. 

I spent an evening in College Park very recently with some new friends. Except for the four hipsters I saw at one of the bar's tables, this neighborhood had little in common with Mount Vernon, Baltimore, the historic neighborhood that is home to Agora Financial and your absentee editor. College Park had a sense of space and the residential streets behind the main strip had nice homes whose walls did not touch each other and whose sidewalks had grand oak trees made even more charming by the Spanish moss.

For all its lovely prewar facades, Baltimore is an industrial city, an overgrown barracks for an army of workers, much like New York but without the wealth or excitement. In Baltimore and the industrial cores like it, there is very little consideration for amenities like space, or natural beauty, or joy. 

But Charm City is in my immediate future. It waits for me like aging and death.

That bit of bleakness, however, comes after I visit friend Doug Casey in the community he's created in Argentina. I'll have much more to report on that in a couple of weeks.

The News That Has the IMF Scratching Their Heads

Are you still sleeping on Africa?

International Monetary Fund Chief Dominique Strauss-Kahn is there this week to say he underestimated the continent's resilience.

The IMF is revising its full-year 2010 economic growth estimate for Africa from 4.3% to 4.5%, making it the leading region in the global economic recovery.

Africa's resurgence is largely the result of help from the Washington-based institution, but Strauss-Kahn warned an audience in the Kenyan capital of Nairobi that vigilance is key to turning recovery into stability: "Africa will continue to face large, persistent and costly shocks. Without a secure standard of living, people might turn to unproductive or even violent activities, possibly leading to instability, a breakdown of democracy, or war—all compounding the initial suffering."

As IMF Managing Director, Dominique Strauss-Kahn, a French economist, speaks for a large lender that has been the target of developing-world ire, even as it bailed out the weakest nations. IMF help usually comes with structural adjustment conditions that mean in order to get money, national governments have to make big cuts.

When the global recession rolled toward Africa like a tidal wave in late 2008, Strauss-Kahn and the macroeconomic maestros he leads took a different approach: they allowed African countries to expand their budget deficits and encouraged loose monetary policy to keep cash flowing. Inflation has been kept in check by zero-interest IMF loans that helped bolster currencies like Ghana's cedi against the dollar.

The Fund's Africa director now says 2009 growth doubled IMF expectations, so the IMF is now saying Africa grew by 2% instead of 1% last year.

Everyone there hopes that the momentum created by international lending can carry Africa into the 2010 World Cup in South Africa, and that greater visibility for maturing African markets will draw more investors like you.

So let's look at what Africa has to offer U.S.-based shareholders.

Africa Plays Leading the Way

It is true, if a bit trite, to say that children are the future. On the poorest continent, kids can either grow up swinging AK-47s or they can leapfrog schoolchildren in wealthier places with emerging technology like mobile phone payments.

In Kenya, 21 million people out of the 36 million population are expected to have mobile phones by the end of 2010. Of those new telecommunication customers, 6 million already use a system called M-PESA — m from mobile and the Swahili word for money — to exchange money and manage their bank accounts with just their handsets.

More than 4 of every 5 businesses in sub-Saharan Africa use mobile phones as their primary line of communication, since fixed-line infrastructure is weak or non-existent.

In Somalia, which hasn't even had a stable government since the early 90s, mobile money transfers through networks named Sahal and Zaad mean you don't have to carry cash or race to find a phone when violence breaks out and you want to reach loved ones.

The desire for communication in emergencies is something that has driven mobile telecoms growth all around the world, from volatile regions like Africa and the Middle East to peaceful places like the U.S., where a quick roadside 911 call can save your life.

Now, international mobile phone giant Vodafone (NYSE: VOD) has chosen Kenya and seven other African markets to debut its Vodafone 150, which it calls the world's cheapest cell phone. Vodafone, which was established in the UK 26 years ago, has been eager to tap African mobile phone trends and expand them into other emerging markets like China and India.

With mobile payment systems like M-PESA, Africa is leading rather than following... and using its traditional weakness in infrastructure to its advantage in wireless telecoms.

Computer companies are also eager to make their mark in Africa, starting with kids in the One Laptop Per Child campaign. Advanced Micro Devices (NYSE: AMD) was an early partner with the Massachusetts Institute of Technology to develop rugged, portable computers, and its chips are featured in the motherboards of OLPC's XO series laptops.

During his March trip, Dominique Strauss-Kahn is speaking at universities in South Africa, Kenya, and copper giant Zambia, stressing the importance of turning Africa from a dependent continent into one where capital markets can lead development. With IMF money, Kenya and its neighbors have increased budgets for health care and education, rather than tightening such social spending as the IMF has demanded with past loans. The new model seems to be that quality of life comes first, then economic health will follow.

Sweet, but not Sugar-Coated Opportunities

Over several years, I've seen major financial news organizations like Bloomberg go from ignoring Africa to featuring it as a key growth market. There's also been a proliferation of exchange-traded funds linked to Africa broadly and to some countries specifically.

For example, the Market Vectors Africa ETF (NYSE: AFK) taps growth in Nigeria and Morocco with a price-to-earnings ratio of 10. The S&P 500 is currently trading at about 14 times earnings.

AFK isn't doing very well over the past year, showing that all Africa plays aren't created equal. By investing in companies like Attijawarifa Bank (I hadn't heard of it either), that index fund's planners have gone a little too obscure to draw big volume, and that could trap buyers when AFK drops in trading.

Market Vectors also recently launched its Egypt Index ETF (NYSE: EGPT), which amounts to a play on both Africa and the Middle East at the same time.

The winner among Africa ETFs and pure-play top stocks remains the iShares MCSI South Africa Index (NYSE: EZA). Though nearly 1/4 of the working-age South African population is jobless, investors have reaped 96% gains in EZA since last March. That beats the S&P, and what might surprise you is that South Africa's iShares has outpaced its Hong Kong counterpart (NYSE: EWH). That China-oriented ETF has climbed by 78% dating back to this time in 2009.

Nevertheless, Africa is vulnerable. Commodities drive index funds like EZA, which means that major drops in gold, oil, or copper can hit national markets and government coffers hard. Hundreds of people have been killed in ethnic rioting in Nigeria in recent days, and similar violence came after a disputed election in Kenya in late 2007.

For a balanced, pan-African economy to take its place next to the Asian Tigers and other emerging markets in the Southern Hemisphere, hard assets and international aid can't be the only sources of big revenue. The United Nations says agricultural business is critical to Africa's success, and Kenya is making major moves in renewable energy that could draw millions more dollars for local development.

To sum up: Africa has problems as well as potential. If fear is the main emotion driving your investment choices, you will miss big returns in favor of prevailing wisdom that carries its own huge risks.

Africa's risk outlook is changing by the year — and largely for the better. Make it a part of your portfolio today with some of the options I've mentioned here.

And in April I'll be updating you with more up-to-date news and plays from Africa itself, where I'll be attending the Agisson Vert Green Business conference in Morocco.

Buffett may be your best investment

Many investors can only look on with envy when Warren Buffett notes how his shareholders have seen an average of 20% annualized gains over the past 45 years. Even the best mutual funds pale by comparison.

 

In fact, only two funds are even on the horizon: Fidelity Magellan Fund (FMAGX), which has returned 16.3% a year, on average, during Buffett's chairmanship of Berkshire Hathaway (BRK.A, news, msgs), and Templeton Growth Fund (TEPLX), up 13.4% a year, according to investment researcher Morningstar.

 

Berkshire's Class A shares have delivered returns of 22% a year since 1965, based on market price, though Buffett prefers to judge gains according to book value, which stands at 20.3%.

 

Using Berkshire's market-price gains for fairer comparison with mutual funds, $10,000 invested with Buffett on Oct. 1, 1964 -- equivalent to about $60,000 in today's dollars -- would now be worth about $80 million.

 

The same amount in Fidelity's fund would have grown to about $9.1 million, while Templeton Growth investors would now have roughly $2.9 million.

 

The returns covered the 45 years through the end of 2009. During that period, the Standard & Poor's 500 Index ($INX) was up 9.3% on an annualized basis, on average -- meaning $10,000 would have grown to nearly $560,000. There were 145 mutual funds at the start of 1965.

 

The varying dollar amounts highlight the power of compound interest, where seemingly small differences in percentage points over a number of years can mean dramatic differences in what investors can earn.

 

Buffett has more structural freedom than mutual fund managers, so comparing their performance isn't apples to apples. But the differences also highlight the limits of mutual funds and particularly the short-term pressures that most managers face.

 

"Throughout his tenure, he's been a huge proponent of investors thinking of themselves as owners of companies rather than investors, (which fits his) extremely long-term approach," said Jonathan Rahbar, a mutual fund analyst at Morningstar, about Buffett.

 

"Mutual fund managers have incentive to do well on a year-in, year-out basis. If things don't go well for a year or two, they'll see outflows," Rahbar added. Outflows are investors and their money leaving a fund.

 

Fund ratings companies such as Morningstar might be part of this problem, Rahbar conceded, though he said his company focuses more on long-term performance. But according to one Buffett investor, the structure of the fund industry makes it harder to invest as he does.

 

"Mutual funds have to sell to institutions, who lump them into style boxes and expect them to be fully invested," said Timothy Vick, a senior portfolio manager at Sanibel Captiva Trust. "And those institutions review a manager quarterly, and they change some managers every year."

 

Short-term pressures lead many fund managers to trade frequently as they seek to gain an edge -- the average fund turns over its portfolio every year, according to Morningstar -- the antithesis of Buffett's approach.

 

Vick, the author of the book "How to Pick Stocks Like Warren Buffett," said his company typically wants portfolio turnover of no more than 10% to 15% -- holding a stock for eight to 10 years. Of the fund industry's 100% turnover average, he says, "it's like a gambling den."

Buy Best Stocks For 2011

10 years ago, I took charge of an unusual project...

In short, I set out to find the very best businesses you could run from home... to make a decent amount of money... without having to work too hard or have any special skill.

I even offered $500 to anyone who could give me a valuable business idea... and interviewed hundreds of people nationwide.

You wouldn't believe the stuff I heard...

For example, one guy tried to sell me on a "Soap Pocket Towel" (a washcloth with a velcro pocket to hold soap)... which he thought was worth millions.

Then there was Jim "the Junk Man" Sciuto, who found a clever way to remove the gold from old electronics and computers... and sell it for a profit.

One woman told me a secret to making money off hospital bills. (You can collect a few dollars by spotting clerical errors.)

A few of these ideas seemed OK, but none were exactly what I was looking for...

What I wanted was a simple way to make 5 figures a year from home... without ever dealing with a boss... or driving to an office each day. Call it freedom, if you want.

Well... it took me almost a decade, but in 2005, I finally found it ?after receiving an e-mail from California.

So far, the few people I've written to about this idea have made a small fortune. For example, "I've made $15,000," says Kris R...

• "$11,400 in 2 days," reports A. Irving, Maine.
  
  
• "$5,400 in 3 days," reports J. Bailey, Florida.

Personally, I once made $7,400 on a single transaction thanks to this secret little "biz." (My wife and I used the money to spend an entire summer in an oceanside resort town.)

The point is: If you've ever considered starting your own home business... please don't do it until you read this letter.

One fellow with a conventional website-based business, Y. Silbur, writes, "I went out to dinner last night for my wife's birthday. Around 11 a.m. today, I logged on to my e-mail and woke to $2,312.17 in my inbox."

However, what I'm about to share with you is not really a "business" at all in the conventional sense. There's NO selling... no advertising... and no website.

Let me repeat: There's no website... and no selling or advertising.

You can do this anywhere, in as little as 5 minutes a day. It doesn't matter what your age or education is... or require that you hire any employees or send any e-mails.

The simple truth is, if you have a computer and an Internet connection, you could make hundreds of dollars a week with this, day and night.

As Matt V. says, "I made $7,000 in a single afternoon."

Whether you've always wanted to start your own business... or you're just looking for a lucrative hobby... what I'm about to reveal could be exactly what you want.

Let me give you the full story...

Sell the World
When I first began my search for the perfect way to make money from home... I asked myself: "If I could create any business I wanted, what would it be?"

I remembered the advice of Richard Russell, a market veteran who famously once wrote, "The ideal business sells the world."

For one, I knew I wanted something that required very little start-up money.

For another ?I knew it had to be something that didn't require any employees. I already have a full-time job, and certainly didn't have time to worry about hiring and firing.

Put simply, I wanted something I could simply "turn on" with the potential to generate a few hundred extra dollars each day, for doing basically... well... nothing. There'd be no office... no commute... and no annual reviews.

Little could I predict, that's exactly what I would find...

The 5-Minute Work Day
After flying across the country to a small town in northern California ?I found an amazing way to make a killing, day in and day out... using the Internet.

But bear in mind: This is nowhere near a typical Internet business.

As I mentioned, it's really not a "business" at all in the traditional sense.

You don't need a website... and you're not selling a single product to anyone. You will not be starting a "dot com."

But you will need a computer and an Internet connection, because the only place in the world where it's still easy to make $1,000s a week ?with almost no effort on your part ?is online.

Still, some guys do it the hard way...

For example, J. Emerson, 56, started a conventional website-based business in 1999. He says he hasn't touched it in years. But it still keeps bringing in enough money to pay the mortgage, the utilities, and two car payments.

Or consider Y. Silbur in Maryland...

"It's not unusual to take in $1,500 to $2,000 a day or more," he writes. Of course, the money is great... but the bigger benefit is the freedom of living the �nternet lifestyle.' Now I have the time to do whatever I want to... Play volleyball, paint, goof off, go bungee jumping..."

Once you set up a conventional website-based business, it often works on auto-pilot. As Y. Silbur, who's made over $3 million says, "[it's like a] 21st-century electronic vending machine."

That's great for him... but what I'm going to show you is even better.

Still, it works the same way. For example, Y. Silbur's money comes in even if he's on vacation and miles away from his computer. Here's a snapshot of one of his account statements.

He notes, "My family and I typically head to Aruba for the week of Thanksgiving, and during the last trip, $12,352.89 was deposited in my account. I didn't even bring my laptop."

I know what you're thinking: "The only people who can make money on the Internet have some big idea... or they're experts... or they know someone..."

Often, that's true. The Internet is like any other field of business.

The fact is, you don't need any advanced computer skills... or need any programmers to get started. In fact, most folks with conventional online businesses are the exact opposite of techies.

• "I have an epic and profound dislike for the Internet," says D. Kennedy... who says he's made $500,000 a year, thanks to his online business. "It hasn't stopped me."
  
  
• "I'm a computer dunce. I literally cannot put up my own web site if you put a gun to my head," says Y. Silbur, who recently made $18,732.37 in 1 month.

But as you'll see ?what I'm about to share can be done by anyone and takes only 5 minutes a day. And it is not a conventional website-based "business," like the ones D. Kennedy and Y. Silbur built the hard way. This can be far more effective.

And let me make something clear: What I'm going to reveal in this letter is NOT a manual or some lame start-up kit...

The simple truth is: What you're about to see is a real opportunity that has shown some of the biggest gains I've seen in my career, to folks across the country...

• One guy who's doing this, Tim J. in Dallas, writes me: "It's like having a cash register."
  
  
• "I made $20,000 last week," says R. Yaeger, Tucson.

But to me ?the most surprising thing about this secret isn't the gains you could see... or how quickly you could make money...

It's how you get started...

Step #1: No Product
With most Internet businesses ?you make money by selling a product or service online, which is delivered electronically or in the mail.

For example, take L. Cornell ?a guy in Indiana who sells ventriloquist puppets from a website. He's done well with his conventional website-based business... writing, "It has given [my wife and I] money for nicer vacations and allows me to buy a lot of the toys I want."

But last year, Cornell made only $35,000 from his business. That's not bad ?but think of what it cost him to make and ship all those products...

By using what I call the "Ultimate Home Biz" instead... he could have made a lot more...

• "On numerous occasions, I have made over $10K in a few days," says Tom V., who's been using the "Ultimate Home Biz" since last year.
  
  
• "I made $8,000 in a single day," says D.T.

You see, by using the opportunity I'm going to explain... you don't ever need to make or ship any product... run a factory... or store any inventory.

That's because it doesn't deal with a physical product.

And even better ?it's something that's used by hundreds of thousands of people every single week... year in and year out.

Which brings me to...

Step #2: No Advertising
To make money online, you usually have to advertise. The way I see it, you have 3 different options...

Option #1 is to hire someone. That's what a fellow named R. Patrick did ?and he now makes $600 a week with his conventional website-based business.

The problem is, he splits his revenue 50/50 with the ad writer. In fact, I've heard some ad writers charge $20,000 for a single promotion!

Option #2 is to do it yourself, but unless you're a born marketer... you won't win. You'll be competing against pros ?guys who spend weeks writing their ads.

Option #3 is to do what I'm going to share with you here, which requires no advertising at all... because you're offering something almost everyone in the world already wants.

For example, I read about a guy named J. Weston, who says he's made $1,623 in the space of a single week by using a similar approach to the "The Ultimate Home Biz." (Since then, he's reported gains of $25,000 in a single week.)


Weston is not a professional ad writer, nor has he hired one. The incredible thing is ?after sharing these results, he wrote: "it was... an ok week for me."

To me, that's what makes the world of online money-making truly great. Once you start pocketing that kind of cash, $1,000 a week feels like "no big deal."

For example, consider Dan L., 59, from Austin ?who worked at a corporation before starting a conventional website-based business. He writes:

"I hated the daily commutes... I hated wearing a suit and tie. Today I'm generating close to a quarter million dollars... all from home and with zero employees. I can get up anytime I please, work as much or as little as I like, hang out with my family all day long, and dress as I please. The difference is night and day."

And finally...

Step #3: No Website
Typically, no website = no business.

For example, consider Ryan Lee ?whose website is Ryan Lee.com. "I got started when I built a simple website," he says. "My a-ha moment came when I realized people would pay for my information on the Internet. We take a lot of vacations and we live comfortably in a house worth almost two million dollars."

Good for you, Ryan. But the truth is ?you probably could have made just as much money... without the huge hassles of setting up and running a website.

You see ?business websites can cost thousands of dollars to build... and can be a real pain to run. You need a merchant account to process the orders... software to collect "opt-in" email addresses... HTML code to format your content... a delivery system for a product... on and on. It takes months to get started.

Compare this to Gerry R. ?a guy in Chicago who's been using "The Ultimate Home Biz" since last fall. With no website... no product... and no advertising, he's made $310,000 so far. Nice work, Gerry.

Bottom-line: If you're like most folks ?and simply want the opportunity to make some quick cash online without any of the set-up work associated with starting a conventional website-based business ?this is about as good as it gets...

For me, it all began with a simple trip out West...

How I Discovered This
Walnut Creek is a small town in northern California, known for its clear blue sky and 5-star vineyards...

It was here my search for the perfect home business finally ended ?as I knocked on the door of J. ?a man who has made his fortune with the "Ultimate Home Biz."

A genial man in his 40s, he showed me into a modest sitting room. At a glance, J. gave no impression of being wealthy, no sign he was about to show me one of the world's most profitable secrets...

"A friend of mine does it too," J. told me. "He's made $200,000 a year."

"Who else have you shown?" I asked.

"I showed another friend who made over half a million in about a year. He bought a house in the Sierras."

With a twinkle in his eye ?J. went on to explain how anyone in the country could repeat this amazing performance in just 5 minutes per day... no matter how much or how little experience he has... beginning with very little money.

Where the Money Comes From
As it turns out, J. developed his strategy for making $1,000s a week from home after retiring from a 16-hour-a-day corporate job in money management...

"Part of my duties were to train young brokers for Wall Street investment firms ?places like Goldman, Sachs and J.P. Morgan. As much as I enjoyed it, the hours were brutal. My days began at sunrise and often lasted till midnight."

So J. left that world, but not without taking something with him...

It was a technique... a secret he'd learned from Wall Street firms to collect a small fortune each day at 10 a.m., with almost no effort.

You see ?everyone knows Wall Street bankers are rich. At Goldman, Sachs alone, a starting salary can reach $350,000... and The New York Times says the holiday 2009 bonuses reached $225,000 per person.

But what you may not realize is, these guys get paid for essentially doing nothing. They literally sit on their ass all day and gossip like school girls.

"You wouldn't believe the stuff I've seen," I was told by one former Merrill Lynch worker. "Guys pulling down six figures a year spend their entire mornings talking about their favorite bars and restaurants..."

Well ?what makes it possible for some of these folks to do so well without having to sweat is the business they run.

"They offer people a chance to get rich," J. said. "That's their business."

In short ?as you know, Wall Street banks allow anyone in the world to speculate in the markets... on top stocks for 2011, bonds, you name it...

But what J. discovered after training over 1,100 brokers and spending 20 years in the investment business... is that the real cash bankers receive doesn't come from a commission ?but from an obscure type of transaction.

"They structure these transactions in such a way that the bankers always get paid when people invest, as much as triple- to quadruple-digit returns..."

And what J. realized, after quitting the brokerage life to spend more time with his wife and 2 sons, was that he could structure the exact same transactions in just 5 minutes... on his own... from a simple home computer.

That's why we call this investment strategy "The Ultimate Home Biz." It offers the opportunity to make a lot of money, with very little effort... in a very short amount of time...

• "I've made about $15,000 in three weeks," says B. Patterson, 45, who does this in his spare time.
  
  
• W. Gibson says, "I've made $40,515 on 6 transactions."

(Keep in mind, these are people who discovered this strategy through J.)

By using the same technique as the brokers he'd trained for two decades, J. had essentially created the world's most potentially profitable "business"... a strategy that leaves conventional Internet businessmen, like Y. Silbur and L. Cornell, far behind.

It essentially allows anyone with an Internet connection and an online brokerage account to replicate exactly what Wall Street does ?without ever needing to get a broker's license... an MBA degree... or setting one foot outside the house.

In other words ?there's simply no need to sell a product... launch a website... or advertise, for a chance to make money online.

Just open your computer and do exactly what Wall Street does...

1,391% from 1 Transaction
For example, take Gateway (GTW), the once-popular computer maker from Iowa, one of J.'s first transactions...

"Those computers were selling like hotcakes at the time. So was the best stock for 2011. What I did was structure a transaction ?just like Wall Street ?to make money off all the idiots buying shares at the peak."

It took J. less than 5 minutes to set-up the transaction online... and he didn't buy a single share of Gateway ?or any other company ?to do it.

"I made a 1,391% return," he told me.

As J. explained it to me, you set-up these large payouts by putting a small amount of cash into each transaction...

Then ?you sit back and watch.

"In the case of Gateway, I made enough to turn every $5,000 into $69,550," he told me. "And I received my money over a period of 3 months or so. Other times, it happens a lot faster. For example..."

He told me about Strayer (STRA)... which made him 1,285% over the space of 48 hours... enough to turn $5,000 into $64,250.

"When I turned on my computer 2 days later, I couldn't believe how much money I'd made," J. recalls.

Another of J.'s transactions was Netflix (NFLX)...

"I kept seeing Netflix envelopes. So I realized the company was probably going to shoot up soon. But I didn't want to buy the best stock. I knew I could make even MORE by using one of these transactions..."

He was right. J. made a 1,007% gain in just over a month, enough to turn every $5,000 into $50,350 on a single transaction.

As always, he received this money without buying any stock whatsoever.

I was impressed. I had finally found the perfect home "biz."

But it wasn't until J. opened his laptop ?and gave me a snapshot of the hundreds of transactions he'd recommended ?that I saw its full potential...

**158% in 23 days on AMZN	**100% in 2 days on GLG
**170% in 18 days on PFCB	**122% in 5 days on QQQQ
**129% in 11 days on CFC	**124% in 14 days on WYNN
**109% in 15 days on JNJ	**128% in 17 days on MEE

"But before you go off and start doing this yourself," J. told me, "there's one thing I'll have to show you. It's the trick of the entire operation..."

J.'s 10 a.m. Secret
In short: you create these transactions with an online brokerage account.

Once you're logged in... you simply type in the name of a company, and then buy what's called an "option."

I realize you've probably heard of options before... but I can assure you, what I'm about to describe is unlike any options technique in the business.

One guy I know of, J. Pangelinan, has used this secret to make $100,000 in the space of a single year.

Simply put, J. has a 10 a.m. secret approach to using options which could bring you enough cash each week to make you a 5-figure income each year.

You see, an "option" allows you to make money on best stocks for 2011 whether they rise, drop, or do nothing... without buying a single share.

And even better ?for every 1 point move on a best stock for 2011, an option will typically move 10 to 20 TIMES more. And with J.'s secret, often 50 to 100 TIMES more...

For example, consider the retail chain 99?Only Stores (NDN).

On Aug. 4, 2009, J. was certain the best stock would fall. So around 10 a.m., he found a "put" option for it... an option that makes money when top stocks fall.

The stock fell just 11%... but with J.'s 10 a.m. option recommendation, you could have made a 100% return in 14 days.

Or consider Palomar (PMTI), a medical firm.

On July 21, 2008, J. was certain the 2011 best stock would shoot up. So around 10 a.m., he found a "call" option for it... an option that makes money when best stocks rise.

The stock rose 60%... but with J.'s 10 a.m. recommendation, you'd have made a 490% return in 25 days.

So far, hundreds of people are following J.'s approach...

As Shawn M. in Iowa says, "My returns are averaging over 100%. I have not lost money on a single transaction yet."

"I've only been doing this for 4 months," says Don I. in Miami. "But this week I made 888% in less than 48 hours."

One of my favorite stories is Dendreon (DNDN), a drugmaker...

When this Seattle firm announced upcoming lab results ?many people loaded up on the best stock to buy... certain it would take off.

But not J. He wasn't sure what would happen.

He recommended his 10 a.m. options approach instead... and told hundreds of readers about it. One guy in Florida followed his recommendation and made a 1,017% return in 48 hours while some shareholders made nothing.

That's enough to turn every $5,000 into $50,850. And the truth is... there are literally dozens of stories like this...

• "I've doubled my money 10 times." (Tim D., Wyoming.)
  
  
• "I made 5 times my money in 12 days." (L. Tripper, Boston.)
  
  
• "I'm up 700%." (A. Helmand, Utah.)

Paid a Fortune for a Single Idea
Having seen the tremendous response from people already following J.'s work, I wanted to share this information with all our S&A readers, so they too could have the opportunity to immediately begin using his 10 a.m. options approach...

J.'s put in countless hours of research and analysis to make this opportunity available to our readers. In return ?I arranged to pay him a small fortune, which he has since received by check from our Baltimore office.

But to me it was worth it, because J.'s report, The Ultimate Home Business, shows the secret approach behind some of the greatest gains I've seen...

**233% in 13 days on DHI	**250% in 14 days on SLW
**109% in 14 days on UNG	**100% in 48 hours on PBR
**490% in 25 days on PMTI	**122% in 17 days on EMC
**200% in 29 days on F	**182% in 35 days on WIRE
**110% in 24 hours on SMH	**150% in 4 days on TOL

In fact, since I met J., he's shared his 10 a.m. options approach with folks across the country... and they've done even better than I anticipated...

• "I love this! I bought 2 options on Tuesday and closed out on Thursday for 110% and 104%. I'm making money consistently." (S. Branam, Georgia.)
  
  
• "I bought options during my lunch break Tuesday and doubled my money by lunch on Wednesday." (T. Emerson, Arizona.)
  
  
• "These picks have been nothing short of amazing. I have traded the market for many years and have experienced terrific success, but I must admit ?I have NEVER seen something this good. THANK YOU!" (M. Howitt, Utah.)

If you're interested, you can access J.'s report, The Ultimate Home Business, right now, online... for no charge at all. (I'll explain how in just a moment).

Inside, you'll learn...

	How to spot the most profitable options plays at 10 a.m.
	J.'s secret to getting started with only a few hundred dollars
	Why the next 12 months could make you a killing

And that's only the beginning...

You see ?my name is Mike Palmer. I've spent my entire career (17 years now) in search of unusual but profitable ways to make money from home.

Along the way... I became a partner at S&A Investment Research ?where I share my discoveries. Over the years, I've investigated dozens of terrific opportunities... from getting extra money from Social Security... to buying "penny" real estate in Hawaii.

But one of the most profitable secrets I've found, by far, is the options technique I learned from J. ?which I've been telling you about.

One thing I found out is that J. has been following S&A Research for years on his own... and has always been interested in our business.

Today, he's a full-time S&A analyst.

And by joining us... J. has since set into motion the single most lucrative trading research letter we've ever released at S&A Research...

Tuesdays at 10 a.m. (EST)
You see, as I said before, there's an easy way to make money on options in just 5 minutes... with very little effort.

That's where J. comes in.

In short: Every Tuesday morning around 10 a.m. EST, J. sends an e-mail with his newest recommended options play ?telling you exactly what to get into...

Because his e-mails are so brief and to-the-point... we call this research advisory The S&A Short Report. And the fact is, in the 10-year history of our company, it's become the single most successful research letter we publish.

Since J. began, you could have doubled your money 41 times by following his options plays. 41 TIMES.

The only question is, is this type of investment research right for you?

Well... that's for you to decide. But I can tell you this: the folks who receive J.'s e-mails have seen an absolute killing in this market...

• Bill G. says he's made between $500,000 and $600,000 so far since he began following The S&A Short Report.
  
  
• Chris L. made over $50,000 in 2008.
  
  
• Andy K. says, "In only 2 weeks I've booked over $10K in profits. Serious kudos to you."

I know what you're thinking: "But aren't options risky?"

Well, as with any investment, there are definite risks. Anyone who tells you otherwise is a fool.

I know for me personally, after watching the market crash over 4,000 points in 2008... I think STOCKS are very risky right now.

But here's the thing... as J. put it recently:

"Anyone who thinks top stocks are safer than options right now ?after what's happened on Wall Street ?is what I call a share price sucker. You can get lucky now and then on a big capital gain... but by spotting the right option play, you can almost always generate a larger and faster return."

The point is, I believe that following J.'s techniques in the options market is much, much safer than putting your money into ordinary best stocks for 2011, bonds, and mutual funds right now.

The reason is: When it comes to spotting the right option... I don't know of anyone else in America with J.'s professional experience...

For over 20 years, J. ran his own private money management firm, which is how he refined this secret approach, working with hundreds of people who went on to make six to seven figures a year, in some cases, on Wall Street.

In all ?J. managed $60 million in client accounts... for folks like CEOs, venture capitalists and entrepreneurs. He generated millions in profit a year.

"Every idea he had seemed to work out," recalls one of his old clients.

People speak of J. with a glow you rarely find in this business. Take a look:

• "He's by far the best I've seen in decades of trading," writes Dan L. from Ohio. "His insight is almost clairvoyant," says D. Knight in Texas.
  
  
• One guy ?Chris C. in Omaha, went as far as to write, "He is the best trader to ever walk the face of the earth."

But before I go on, I should apologize...

First 2,500 Only
I know I've spent this entire letter telling you how easy it is to begin using J.'s approach from home immediately. And that's entirely true.

But...

For reasons I'm about to explain ?we've decided to make this opportunity available only to our most serious subscribers... not the folks who pay just $99 a year for research and "tire-kick" our work for free.

You see ?typically, it would cost you at least $10,000 to launch a conventional Internet business on your own...

There's the cost of building and running a website... hiring the HTML computer programmer... hiring a writer for advertising... making the product... on and on. Some folks spend $20,000 for a single launch.

But with The S&A Short Report, it's almost as if we're handing you an Internet "biz" on a silver platter... pre-assembled and ready to go...

• "I made $7,000 in a single afternoon." (M. Volker, Montana.)

That's why we're doing 2 things to ensure only the appropriate type of person can get into this opportunity... the kind of folks who recognize the value of S&A Short Report for what it is.

1) We're charging a high price... among the most we charge for any single advisory letter we publish.

2) We're limiting membership to the first 2,500 people.

The truth is, we've never limited membership to the Short Report before...

But as I said ?we do NOT want "tire-kickers." We've invested a great deal into the research and analysis behind the S&A Short Report... and spent months refining it.

The way I see it... if you want a piece of the action, you ought to be willing to pay for it ?and be willing to start immediately. As one subscriber put it:

"You should charge $10,000 a year for The Short Report to keep out the riff-raff!"

One full year subscription to The S&A Short Report costs $4,000.

To me, that's a bargain... especially when you realize your first recommended play alone could pay for your entire subscription:

"Made my newsletter cost in one play!" says John K. in Atlanta.

However, because we're limiting membership to the first 2,500 people... there is one piece of good news for you...

In short, if you're among the 2,500 to respond to this offer... you can receive the first three (3) months of Short Report essentially free of charge.

That means you can receive one full year for just $3,000.

Believe me, that's an unbelievable deal for J.'s work...

When J. ran his brokerage firm... you needed $250,000 to even qualify as one of his clients...

Plus, he charged a $5,000 minimum... and a 10% commission on all gains.

But with The S&A Short Report, you get J.'s expertise and research for a fraction of that price... the kind of expertise that can be worth thousands of dollars a month:

• "I'm up 300%," says reader D. Berry, Oklahoma.
  
  
• "I've made $58,000 on plays lasting from a few hours to within minutes," says reader Jack K., Boston.
  
  
• "My first play resulted in a 155% return in 2 days." (F.D., Seattle.)

Just remember: To receive $1,000 off the price, you must be in the first 2,500 to respond to this offer...

Otherwise ?you'll be too late.

5 Minutes a Week... For a Year
By following the S&A Short Report ?you can begin using "The Ultimate Home Biz" this upcoming Tuesday, around 10 a.m. (EST).

That's when J. will release his newest option recommendation. As with every recommendation he makes, you'll have the potential to at least DOUBLE your money...

• 343% in 11 days on MSO
  
• 300% in 14 days on AMZN
  
• 106% in 48 HOURS on GLG

I can't tell you yet what the option play will be... because J. typically spends a full week searching for it ?often waking at 4 a.m. to analyze thousands of companies for the perfect set-up... preparing for each Tuesday.

But I can tell you this: By doing this over the next year, I predict you could make more money than you've ever made before ?with any style of investing.

Throughout the week ?J. will stay in constant touch with you, telling you exactly when to exit the option play for the biggest gain possible...

Everything begins when you access J.'s free Special Report right now:

• The Ultimate Home Business

This exclusive report will tell you everything you need to know to begin following J.'s options plays for a chance at a 5-figure side income ?as much money as you could make through any conventional home business I'm aware of... with NONE of the website set-up work.

Remember: It would cost you $10,000 or more to start your own home business, yet by following The Short Report, you could have the opportunity to make money from home for a mere fraction of that...

That's why it's important to act immediately if you're interested, before we freeze enrollment. At #2,500 ?we're pulling the plug.

I don't care if you're #2,501. If you're too late... we won't let you in.