How We’re Finding Value In the Markets Today

The following is an excerpt from our most recent Cigar Butts & Moats newsletter.

One of the primary themes of our articles over the last few months has been the potential of a major market top forming. We now have what I can only call “numerous bells” ringing.

First and foremost, I want to alert you to a disturbing trend in stock mania. That trend pertains to money inflows to stock mutual funds.

One of the best means of gauging investor sentiment for individual investors pertains to how they move their money in and out of mutual funds.

For example, from 2007 until the end of 2012, investors pulled over $405 billion out of stock based mutual funds. Over $90 billion of this was pulled in 2012 alone: the largest withdrawal since 2008.

In contrast, over the same time period, investors put over $1.14 trillion into bond funds. They brought in $317 billion in 2012: again, this was the most since 2008.

This marks quite a reversal of asset class fund flows: before 2008, stock funds usually took in $2 for every $1 investors allocated to bond funds.

However, this trend reversed back to normal in 2013. The Fed finally succeeded in inducing investors to move into stocks again. And they have done so in a big way. Thus far in 2013, investors have put $277 billion into stock mutual funds.

This is the single largest allocation of investor capital to stock based mutual funds since 2000: at the height of the Tech bubble. That year, investors put $324 billion into stocks. We might actually match that inflow this year as we still have two months left in 2013.

Indeed, investors are reaching a type of mania for stocks. They put $45.5 billion into stock based mutual funds in the first five weeks of October. If they maintain even half of that pace ($22.75 billion) for November and December, we’ll virtually tie the all-time record for stock fund inflows in a single year.

That record, again, occurred in 2000. At that time the NASDAQ had just staged a massive bubble rally.

What followed was one of the worst market collapses of all time:

However, this is not to say that there are not tremendous opportunities for stock pickers in this environment.

Indeed, recently, subscribers of our value stock picking newsletter Cigar Butts & Moats  locked in a 28% gain on our latest stock pick in less than one month.

We did this by buying a deeply undervalued business. Based on its market valuation, this company could easily take itself private, using the cash generated from operations to pay the loan required to buyback all of its shares on the open market.

In fact, this business was so cheap that it could do this even if its earnings fell in HALF.

That’s one heck of a margin of safety. We bought on October 3 2013. And we closed out on October 23 2013 for a 28% gain.

Over the same time period, the S&P 500 rose just 4%.

This is how to make a killing in the market today: by focusing on value stock picking. It’s the very reason we launched Cigar Butts & Moats.

The price of an annual subscription to Cigar Butts & Moats is just $79.99.

For that price you get:

  • 12 monthly issues of Cigar Butts & Moats
  • Our proprietary deep value Investment Special Report How to Make a Fortune With Value Investing (a $199 value) which outlines specifically how Warren Buffett made his fortune investing in stocks.
  • All of our other Special Investment Reports outlining special investment opportunities.
  • Real time investment updates as needed (like the one that told investors to lock in a 28% gain).

All of this for just $79.99.

To take out an annual subscription to Cigar Butts & Moats…

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Best Regards

Phoenix Capital Research

 

 

 

Disclaimer: The information contained on this website is for marketing purposes only. Nothing contained in this website is intended to be, nor shall it be construed as, investment advice by Phoenix Capital Research or any of its affiliates, nor is it to be relied upon in making any investment or other decision. Neither the information nor any opinion expressed on this website constitutes and offer to buy or sell any security or instrument or participate in any particular trading strategy. The information in the newsletter is not a complete description of the securities, markets or developments discussed. Information and opinions regarding individual securities do not mean that a security is recommended or suitable for a particular investor. Prior to making any investment decision, you are advised to consult with your broker, investment advisor or other appropriate tax or financial professional to determine the suitability of any investment. 

Opinions and estimates expressed on this website constitute Phoenix Capital Research's judgment as of the date appearing on the opinion or estimate and are subject to change without notice. This information may not reflect events occurring after the date or time of publication. Phoenix Capital Research is not obligated to continue to offer information or opinions regarding any security, instrument or service. 

Information has been obtained from sources considered reliable, but its accuracy and completeness are not guaranteed. Phoenix Capital Research and its officers, directors, employees, agents and/or affiliates may have executed, or may in the future execute, transactions in any of the securities or derivatives of any securities discussed on this email. 

Past performance is not necessarily a guide to future performance and is no guarantee of future results. Securities products are not FDIC insured, are not guaranteed by any bank and involve investment risk, including possible loss of entire value. Phoenix Capital Research, OmniSans Publishing LLC and Graham Summers shall not be responsible or have any liability for investment decisions based upon, or the results obtained from, the information provided. 

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