TODAY’S INVESTMENT TIPS FOR TOMORROW …REMEMBER THE CLARION CRY OF JOHN TEMPLETON: “THE TIME OF MAXIMUM PESSIMISM IS THE BEST TIME TO BUY!”

aaINVESTING ... PANIC AFTER 1929 MARKET CRASH ...front cover

 

 

 

 

 

 

 

DOWN BABY DOWN!
— Panic On Wall Street — The Real Thing!

Yikes! In one week’s panic selling (we’re talking about you, DOW, S&P, and NASDAQ), Americans watched most of their equity profit gains, from years of investing, wiped out!

The Dow tumbled nearly 280 points (-1.54%). The tech-heavy Nasdaq finished the day down over 75 points (-1.52%).

And according to one brokerage analyst, the S&P 500 – adjusted for inflation — is now about the same as it was in 2000 (15 years of, uhm, nothing – except irrational exuberance”!)

ANY IDENTIFIABLE PROBLEMS SETTING OFF THIS RECENT MARKET IMPLOSION?

In fact, there have two likely causes of the recent market meltdown:

1) CHINA: On Friday, Chinese government regulators continued recent steps to allow more “short-selling, where investors can essentially “bet” that the price of selected will fall — the equivalent of a self-fulfilling (stock market) prophecy, ultimately driving Chinese share prices down, and simultaneously driving down the value of American retirement & pension-fund investments in Asia.

Additionally, there is the fear that, as China’s international exports shrink in response to the current global recession, China’s economy will concurrently slow down — also driving down stock-market valuations.

2) GREECE: It’s an ongoing question — will Greece pay its debts, or will the country be (a) forced into the equivalent of national bankruptcy by its European Union (EU) creditors; (b) withdraw from the EU; and (c) then reflate its treasury’s empty coffers (not to mention corporate profits) by returning to its old currency, the Greek drachma.

Also please note that the respected Bespoke Investment Group advised clients, on Friday morning, that they now believe there is: a 75% chance that Greece will soon default on its debt.

3) A GLOBAL STOCK-MARKET MELTDOWN: U.S. investors simply seem to be following the rest of the world’s stock-market indices into a deep dive. On Friday, Europe’s main STOXX index fell 1.6%, Germany’s DAX ended down 2.6%, and many of Asia’s stock-market exhanges also closed on a down note.

Finally, in response to the many global insecurities – plunging stock markets, Middle East instability, and the ongoing world-wide implosion of bond markets – gold futures were up 5.30 points (rising to 1203.30). So, as I’ve noted previously on this blog, establishing a minimum 10% portfolio of gold-related mining stocks and mutual funds would (in my opinion) be a good idea – since these, and new negative financial & international disasters, could continue to occur.

So what to do tomorrow (Monday April 20th 2015)? Well, believe it or not, my advice would be to be courageous and follow the clarion cry of John Templeton: “The time of maximum pessimism is the best time to buy (stocks)!”

Look for shares in cash-rich, debt-free companies which have been able to maintain growing businesses despite all the recent global economic headwinds.

HOW ABOUT SOME SPECIFIC EQUITY RECOMMENDATIONS ALREADY?

Some specific equity recommendations from yours truly?

Well, why not … paraphrasing the words of Bill Clinton when introduced to a gaggle of White House interns (past & future)?

So here we go:

Buy HOUSTON LAKE MINING INC
($HLM. CA –TSX Venture Exchange) – paying no dividend

Price on April 16 2015 – 14 cents ($0.14)

Rationale: (a) The company owns one the best rare-mineral deposits in North America; (b) Rare-metals demand is rising because of the Chinese chokehold on the market – buying as much as they can on market setbacks, and restricting the export of their own production of rare metals; and (3) Savvy “Houston Lake Mining” management is hedging their bet on rare metals via its continuing accumulation of land holdings rich in gold and platinum deposits.

As a source of further background information on HLM, here’s management’s own description of their company:

“Houston Lake Mining Inc., a mining exploration company, is engaged in the acquisition, exploration, and development of mining properties Canada. The company explores for rare metal deposits, such as lithium, tantalum, rubidium, and cesium, as well as gold and platinum group metal deposits. It focuses on its 100% owned Pakeagama Rare Metals Project that is located in Red Lake, northwestern Ontario, Canada.”

And further, here’s how they describe what exactly are rare earth metals:

“Over the past quarter century, an emerging class of metals has grown exponentially in demand as a byproduct of the Technological Revolution. That group, known as the Rare Earths Elements (and variously referred to as Specialty or Technology Metals), has become the backbone of innovation in the fields of clean energy, consumer electronics, computer applications, health care technologies and much more. Today, a great deal of what we refer to as the modern technology would be all but impossible without the Rare Earths Elements and their associated oxides and concentrates.

“Rare Earths include the unique elemental suite known as the Rare Earths Elements (REE’s) and a select group of specialty metals produced primarily for technology applications. At Ucore, our focus is on Heavy REE’s (a class of REE’s known for their high value relative to other REE’s) and collateral metals often found in concert with REE deposits. Collectively, this group represents a resource sub-sector experiencing unprecedented growth in global demand, combined with critical issues of diminishing near term supply and a correspondingly high future potential for return on investment.”

 

(2) Buy UCORP RARE METALS INC. ($UCU.CA –TSX Venture Exchange),  also paying no dividend

Average price of this company’s shares this week: 27 cents ($0.27)

Please not that this is an “Over The Counter (OTC)” stock for American investors, requiring a qualified broker to purchase shares in this Canadian-based miner.

Here’s how this company’s prospectus describes its mining “mission”:

“Ucore Rare Metals Inc. is a well-funded development-phase mining company focused on establishing rare metal resources with near term production potential. With multiple projects across North America, Ucore’s primary focus is the 100% owned Bokan – Dotson Ridge REE property in Alaska.

“The Bokan – Dotson ridge REE project is located 60 km southwest of Ketchikan (Alaska) and 140 km northwest of Prince Rupert (British Columbia); and it has direct ocean access to the western seaboard and the Pacific Rim, a significant advantage in developing near term production facilities and limiting the capital costs associated with mine construction.

“The Bokan property is particularly enriched with heavy rare earth elements, including the critical elements Dysprosium, Terbium and Yttrium.

“Approximately 40% (by weight) of the rare earth elements contained on the Dotson Ridge property are heavy rare earths elements, as disclosed in the Company’s NI43-101 compliant resource estimate, released in March of 2011.”

MY OWN PERSPECTIVE ON THIS COMPANY’S MERITS:

  • Highest Grade Heavy Rare Earth Deposit in U.S. (NI-43-101 Compliant)

 

  • Short projected timeline to production: estimated at 3 years

 

  • Excellent Logistics: The only REE deposit worldwide on immediate deep water access; and that also means future accessible labor and electrical power

 

  • Located in Alaska; among the world’s leading mining friendly jurisdictions

 

  • Excellent geopolitical support (local; state; and federal)

 

(3) Buy ACADIAN TIMBER ($ADN:T), paying annual dividend of at least 5%

Here’s how AND’s management describe their company:

“Acadian Timber Corporation harvests and markets forest products. The Company markets saw logs to lumber mills, pulp wood to paper mills, and biomass to electricity generating plants. Acadian Timber operates in New Brunswick and Maine.”

 MY RATIONALE FOR BUYING THIS COMPANY:

(a) All its costs are in CANADIAN dollars; BUT it’s main revenues come from the United States in AMERICAN DOLLARS

(b) Good track of record regularly raising dividends

(c) Excellent current annual dividend of 5% looks sustainable (ie., Acadian will rake in sufficient revenues to pay its dividend, despite most setbacks in the world-wide market for lumber).

(d) When and if the housing market in the United States starts rising again, this company’s share price should also rise substantially!

(e) Just one cautionary note: this is a THINLY TRADED stock; so it may be necessary to ACCUMULATE shares, buying in small quantities (over time) on market dips.

 

(4) Buy KINDER MORGAN ($KMI), paying a dividend of 5.5%

This week, Kinder Morgan projected 2015-16 cash revenues of $1.24 billion ($0.58 a share), after adjusting for expenses.

The number matched the company’s previous guidance, after factoring in possible future energy price fluctuations.

Additionally, the company confirmed its target 2015 dividend of $2 per share, in addition to a 10% annual dividend (compound) growth rate right through to 2020.

FINAL THOUGHTS:

And that’s it for today’s investment musings. Please enjoy your Sunday, perhaps watching today’s first NBA (pro-basketball) round of playoff games, or the NHL (pro-hockey) playoff finals.

And tomorrow morning, remember that clarion call of investment guru, John Templeton:

“The time of maximum pessimism is the best time to buy!”

Nuff said, for today, I would think.

 

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