http://archive.aweber.com/stockreport1geGreen Energy ReportThu, 19 May 2011 04:35:48 -0400http://archive.aweber.com/stockreport1ge/bfJA/h/QE_2_And_You.htm Thursday, May 19, 2011 QE 2 And You by Jim Trippon, Chief Investment Analyst While perhaps in print QE 2 looks like the algebraic notation of a chess game which would show the strategic move of a chess player moving his queen to a certain space on the board, it's actually something else. It does denote a move all right, a move called Quantitative Easing 2, which is a move in a much bigger game, the money game, as investors well know. When the Federal Reserve undertook quantitative easing back in November, 2010, it began a program for the second round of the Fed's commitment to buy $600 billion in US Treasury bonds to keep interest rates low and spur economic growth. The program had a designated endpoint of June of this year, which investors again know is on the horizon. What Happens When QE 2 Ends? So what happens when QE 2 ends? This is what investors want to know. First, what about the reaction to QE 2 itself? Free market critics have said QE 2 has skewed the markets, kept interest rates artificially low by flooding the economy with more easy money gushing into the system , which has buoyed both equity and bond prices. They maintain that when the faucet is turned off and the money flow dries up, interest rates will skyrocket and the stock and bond markets will both face a precipitous drop. The economy, which was also supposed to be helped by QE 2, is still sluggish, with a stubbornly high unemployment rate. Cash In On the World's Most Powerful, Long-Term Trends Since April of 2010, a small group of wealth builders have been privy to a very special type of investment recommendation... The wunderkind heading up this portfolio is looking for the Big Ones: the long-term trends that will snowball over time into massive returns. He's aiming for trends like oil in the 1970s... 30-year government bonds in the 1980s... and the Internet in the 1990s. So far, 70% of his picks are winners. And his open portfolio is already showing an average gain of nearly 15%. Get in now, and you stand to see the biggest possible gains. Learn the details click HERE! Advocates--or at least those who even grudgingly acknowledge the need for QE 2--maintain that because of the inadequacy and the early inaction of the Fed as the subprime mortgage crisis unfolded, with near-failures of mega banks Citigroup (NYSE: C) and the actual collapse of Lehman Brothers, that QE 2 was necessary. Yes, there was a QE 1, which was much more limited in scope, and in the odd logic of the era of too-big-to-fail along with everything else from Bernie Madoff to Bear Stearns to the near collapse of the US auto industry (just to mention a few lowlights of the financial crisis), we not only needed to bail out the banks, apparently more bailing, into the whole economy, was necessary. The bottom line of this approach or realization was that even with QE 1, the Fed thought more was needed. QE 2, TARP, QE 1, Too Big To Fail And More Despite the often highly-politicized reactions to QE 2, despite the railing against it by free marketers and the necessities invoked by its advocates, however reluctant, QE 2 happened. So, we'll never know whether the economy, markets, or Citigroup would have failed, because in the lineage of TARP, and QE 1, though its stock did brush under the magically low $1 per share figure, Citi, for example, was saved. An Ugly Chart As its chart below shows, despite the sleight-of-hand reverse split for its share price recently, which renders its once $1 share price as a $10 share price (no, we don't make this stuff up), Citigroup produced as ugly looking a chart as its management did results, or lack of them. Citigroup was indeed the stock market poster child for the financial crisis. So read QE 2 as born of the TARP and QE 1 family, simply another spawn. Possible Scenarios This assumes that QE 2 will actually cease after June, though that is not certain. Perhaps the program will be extended or perhaps there will be another program created following it. QE 3? It's possible the Fed might do this, though unlikely. At some point, so the argument goes, the economy has to get weaned off of these juicy programs and stand on its own. The conventional wisdom is that a multiplicity of things will happen: stock prices will fall, as will bond prices, while bond yields of course will rise inversely. The end of the commodity run also would be a strong possibility. Let's quickly look at these potential outcomes. Both stocks and bonds depend to some degree on the money supply. This makes sense, as capital in the system, that money which is beyond the need for other needs is what gets invested in the equity and debt markets. Also, the commodity run has featured speculative excesses already, with oil, silver, along with other metals, even to some extent, gold. Agricultural raw materials such as corn and wheat have seen their prices boosted by commodity speculation on top of their normal cyclical robust run. Most observers agree that the end of QE 2, when the Fed stops buying $75 billion in Treasurys each month, will end the upward momentum of these markets. The artificially low interest rates and increased money supply will be over. Annual Growth of Money Supply Chart from John Williams' Shadow Government Statistics What Should Investors Do? Investors should always be vigilant and watch their holdings, of course. Should QE 2 end as predicted, while it's possible the markets will see a major correction quickly, more likely a slower pullback will take place. After all, it's not as if professional investors and money managers will be (or at least they shouldn't be) surprised at the cessation of easy money. While some see a doomsday scenario, it's unlikely. The markets may retreat--the air may be taken out-- the economy will be forced to get along without the extra support, and in time, gradually, investors may find opportunities again. Smart investors will stay ready. Committed to your Global Profits, Jim Trippon Chief Investment Analyst Recent Posts by Jim Trippon: Inflation: Your Portfolio's Silent Killer The Magic of Effective Yield Commodities Will Move the Markets Again in the Week Ahead A Million New Millionaires. What Are They Buying? Bubble Trouble? Here's a Golden Alternative This email was sent to by info@globalprofitsalert.com. To ensure delivery of emails to your inbox, please add info@globalprofitsalert.com to your address book or safe sender list. Copyright © Trippon Financial Research, Inc. 2011 View our Privacy Policy. To make sure you don't miss our urgent updates, add Trippon Research to your address book. Just follow these simple steps. For more information and archived issues, visit http://www.globalprofitsalert.com Global Profits Alert (GPA) is published by Trippon Financial Research, Inc. a financial media organization with offices in the United States, Hong Kong and Mainland China. GPA is written by Jim Trippon in conjunction with George Wolff, Sunny Wang, Jim Trippon, Kelley Damiani and J. Daryl Thompson. Would you like to republish this article? Global Profits Alert issues can be republished, as long as the republished issues contain the name of the author(s) and the following short paragraph: This information was brought to you by GlobalProfitsAlert.com, a publication of Trippon Financial Research, Inc. GlobalProfitsAlert.com publishes information on Investing in the China stock market and emerging markets, dividend stock and income investing, exchange traded funds (ETFs), green energy stocks, technology stocks, global market trends and other investment information. To view archives or subscribe, visit http://www.globalprofitsalert.comThu, 19 May 2011 04:35:48 -0400http://archive.aweber.com/stockreport1ge/1nlRA/h/How_To_Be_Bearish_Or.htm Wednesday, May 18, 2011 How To Be Bearish Or Defensive Without Being Short by Todd Shriber Several times in this space I have extolled the virtues of and pointed out cautionary examples regarding inverse ETFs. Overall, I'm a fan of these products when used properly, but the reality is inverse ETFs aren't every investor's cup of tea. Along those lines, I've been flooded with questions lately from investors that want to establish bearish or defensive positions without using inverse ETFs or without directly shorting individual stocks. So I decided to devote this week's column to ETFs that can be used to replicate a short position on other ETFs. Best of all, the funds I'm going to mention are plain vanilla long ETFs so the risk in holding these funds for extended periods is significantly less than it is with inverse and leveraged ETFs, plus the fees on non-inverse ETFs are traditionally far lower than they are on inverse and leveraged funds. With that, one of the most frequently asked questions I've been getting lately is about how to short oil without actually shorting oil. Basically, folks have been asking me how to take advantage of oil's (brief I believe) downturn without using an extremely volatile product such as the PowerShares DB Crude Oil Double Short ETN (NYSE: DTO). Personally, I'm no fan of airline stocks as long-term holdings, but they make for decent short-term trades and the Guggenheim Airline ETF (NYSE: FAA) has been soaring as oil has plummeted. As the chart shows, you'll sacrifice some gains with FAA compared to DTO, but FAA also does a pretty good job of delivering an inverse correlation to the U.S. Oil Fund (NYSE: USO) all while keeping you out of a good deal of the volatility involved with an inverse oil ETF. I've got another example for you and it comes from one a sector that is a fine place to be bearish on right now: Financial services. While not as volatile as oil, bank stocks are still considered a high-beta market segment and despite some dividend increases earlier this year, payouts are still nowhere near their pre-financial crisis levels. Not to mention there is still substantial headline risk facing this group. Here's why you don't have to worry about the fine print anymore... There can be some really nasty surprises in store for you when you buy and sell ETFs. Remember, although ETFs combine the best of both worlds of stocks and mutual funds - they can act totally different from each in real life. Those differences are usually spelled out in the fine print of the ETF's prospectus. Fun reading? Not hardly. To get more details on the ETF service recently voted The Most Accurate in America, tap on the link below... Don't Let Me Make These Costly Mistakes When Buying And Selling ETFs! There is also substantial risk in fooling around with an ETF like the ProShares UltraShort Financials (NYSE: SKF) for anything longer than a couple of weeks. Have a look at the PowerShares Financial Preferred ETF (NYSE: PGF), which does NOT move in lockstep with regular long bank ETFs. Plus, PGF has a yield of almost 7%! Obviously, SKF is the better pure short play on financials, but if you ask me, I'll take PGF, its steady performance and yield along with the ability to get a good night's sleep (something SKF could easily deprive you of) over SKF any day. The bottom line is that with ETFs investors can be short or bearish without actually significant risk and that's a good thing in this market environment. Best Wishes, Todd Shriber Recent Posts by Todd Shriber: Finding The Next Silver Debunk The Myths, Then Profit From Leveraged ETFs Dividends and ETFs: Understand The Concept, Then Embrace IT Know What Your Getting With Specialty ETFs This Emerging Market Is Set To Rocket Higher This email was sent to by info@globalprofitsalert.com. To ensure delivery of emails to your inbox, please add info@globalprofitsalert.com to your address book or safe sender list. Copyright © Trippon Financial Research, Inc. 2011 View our Privacy Policy. To make sure you don't miss our urgent updates, add Trippon Research to your address book. Just follow these simple steps. For more information and archived issues, visit http://www.globalprofitsalert.com Global Profits Alert (GPA) is published by Trippon Financial Research, Inc. a financial media organization with offices in the United States, Hong Kong and Mainland China. GPA is written by Jim Trippon in conjunction with George Wolff, Sunny Wang, Jim Trippon, Kelley Damiani and J. Daryl Thompson. Would you like to republish this article? Global Profits Alert issues can be republished, as long as the republished issues contain the name of the author(s) and the following short paragraph: This information was brought to you by GlobalProfitsAlert.com, a publication of Trippon Financial Research, Inc. GlobalProfitsAlert.com publishes information on Investing in the China stock market and emerging markets, dividend stock and income investing, exchange traded funds (ETFs), green energy stocks, technology stocks, global market trends and other investment information. To view archives or subscribe, visit http://www.globalprofitsalert.comWed, 18 May 2011 04:15:13 -0400http://archive.aweber.com/stockreport1ge/1ekSM/h/The_Biggest_Bubble_In_the.htm Tuesday, May 17, 2011 The Biggest Bubble In the World. Who Wins If It Doesn't Burst? By George Wolff China's housing "bubble" is the current bogeyman of the global economy. Ever since the disastrous US real estate implosion, the world has been watching anxiously for the next great bust. China's booming real estate sector has been singled out as the newest global danger zone. Sure, the Chinese real estate sector has enjoyed explosive growth in recent years. But do explosions always burst bubbles? China's real estate values are indeed exceptionally high, but are they likely to implode? And if the sector does implode, should western investors care? Absolutely we should care. We live in a global economy. American unemployment numbers mean much less to the global system than China's overwhelming rise. China Business Services calls China's property market "the single most important global economic indicator". A collapse of this massive market would be felt around the world. But will it happen? One of Britain's most respected sources of analysis, The Economist, says fears about Chinese real estate are overblown. The Economist says there may be a mild, short-term correction but a collapse of the sector is highly unlikely. That's very good news for investors who take a global view of their portfolio's performance and potential. Yes, commodities have suffered sharp setbacks in the past month. But an extended Chinese housing boom would create bigger markets and better prices for commodity investments. Building Rome in a Day (almost) The current rate of housing construction in China is breathtaking. The Economist Intelligence Unit captured the size of the housing boom in a few sentences: "At China's current rates of construction, it would take roughly two weeks" to build an entire city the size of Rome! The authors warn, "In an economy that is building as much housing each year as there is in all of Spain the repercussions of a major collapse would be severe enough to send the world into a mini-recession". Other pessimists have warned of a potential real estate collapse like "Dubai on steroids". Many of these critics, some who have never set foot in China, point to the huge scale of construction and warn that the demand just isn't there. Incredibly, China has built a housing stock the size of all the homes in Europe in just 15 years. But Chinese demand is healthy and set for a very long run. The Economist Intelligence Unit says there are two factors driving ongoing demand for new housing in China. The first factor is increasing wealth. Between 2011 and 2020, China's urban disposable incomes per head will increase 2.6-fold to 51,310 yuan. That is about $7,500 at current exchange rates. Triple this per-capita number to reflect the size of an average family and you get an average of $22,500 per family, a substantial rise from today's figure of $4, 382 per person (according to the IMF). And good housing is the number one priority on every Chinese family's must-have list. The second factor driving a long rise in housing demand will be rapid urbanization. The Economist estimates: Between 2011 and 2020, we expect China's urban population to increase by 26.1 percent, or over 160m people. Residential floor space per head in urban areas will increase from 30 sq meters (in 2008) to 41 sq meters by 2020. (That's a little more than 441 square feet - not huge but more than the average Japanese and a 25 percent increase from current housing space.) And much of the expansion will happen in China's fast-growing interior cities. Adding to the viability of China's real estate boom is a policy to reinforce the nation's banks. Unlike America's ill-fated banking regulators, Beijing has constantly raised bank reserve ratios - the proportion of money that banks must hold in reserve relative to their outstanding loans. Last week Beijing raised the reserve ratio by another half point, the fifth such raise this year. Mortgage rules have just been tightened again. Several banks have just have raised the minimum down payment to 40 percent from the official minimum 30 percent required by China's banking regulator. Compare that to America's NINJA loans. (No Income, No Assets, No Job.) Global Investment Opportunities Ongoing real estate investment on a Chinese scale will have a powerful, long-term effect on commodities including metals, timber and energy. Secrets of the 30-Year China Stock Market Super-Cycle: Here's How To Get Your Share... We've been in a global "Super-Cycle" for 10 years now. It's true. There's no denying it. Well... maybe not here in the United States. But certainly in emerging markets like China and India. The growth in the next 25 - 30 years in those two countries is almost too big to fathom. Hundreds of new millionaires will be made... and dozens of billionaires. Think about the enormous wealth created in the American Industrial Revolution... times 11. But you still have to know the best places to invest your hard-earned cash... even in the fastest-growing economies on the planet. We're already one third of the way into the investment boom of the century. Let us be your "Investor Sherpa" guide into this once-in-a-generation phenomenon. For full details, hit the link below: YES! I Don't Want To Miss Out On This Investment Opportunity Of My Lifetime! Show Me Where To Put My Money For Maximum Appreciation! The Economist estimates that steel demand will rise by 25 percent. Many new homeowners will purchase cars to travel from their new homes to their places of work. Oil demand is expected to rise by 50 percent. Other commodities including timber, copper and the other basics of construction will also face rising demand and higher prices. China's exploding real estate demand will amount to an $11.5 trillion shot in the arm for the world economy. Although there may be some bumps along the way, the future of Chinese demand seems to be a very long term, sustainable trend. China's double-digit GDP growth is moderating but that won't lead to a sudden drop in housing demand. The outlook from many sources indicates that China will continue to outpace the U.S. in growth for the remainder of the decade. Investments that feed that mega-trend seem like reasonable bets for long-term investors. Keep investing wisely, George Wolff Recent Posts by George Wolff: China's Trillions on the Move. Will They Invest Here? Nuclear Fallout Casts New Light on China. Investment Leader Shines China Gets Semi-Enthusiastic. Watch Where the Money Goes Washington Fiddles While Dollar Burns. Protect Yourself Now China's Coming Bull Market. Who Will the Winners Be? This email was sent to by info@globalprofitsalert.com. To ensure delivery of emails to your inbox, please add info@globalprofitsalert.com to your address book or safe sender list. Copyright (c) Trippon Financial Research, Inc. 2011 View our Privacy Policy. To make sure you don't miss our urgent updates, add Trippon Research to your address book. Just follow these simple steps. For more information and archived issues, visit http://www.globalprofitsalert.com Global Profits Alert (GPA) is published by Trippon Financial Research, Inc. a financial media organization with offices in the United States, Hong Kong and Mainland China. GPA is written by Jim Trippon in conjunction with George Wolff, Sunny Wang, Jim Trippon, Kelley Damiani and J. Daryl Thompson. Would you like to republish this article? Global Profits Alert issues can be republished, as long as the republished issues contain the name of the author(s) and the following short paragraph: This information was brought to you by GlobalProfitsAlert.com, a publication of Trippon Financial Research, Inc. GlobalProfitsAlert.com publishes information on Investing in the China stock market and emerging markets, dividend stock and income investing, exchange traded funds (ETFs), green energy stocks, technology stocks, global market trends and other investment information. To view archives or subscribe, visit http://www.globalprofitsalert.com Tue, 17 May 2011 06:43:14 -0400http://archive.aweber.com/stockreport1ge/23OWM/h/Inflation_Your_Portfolio_s.htm Monday, May 16, 2011 Inflation: Your Portfolio's Silent Killer by Jim Trippon, Chief Investment Analyst Last week I made four presentations at the Las Vegas Money Show. The big question on most investors' minds is how to play inflation. According to the U.S. Department of Labor, inflation ran at a meager 1.5% for all of 2010. Most of us find that report questionable, given what we experience every time we fill up the car or take a trip to the grocery store. If you exclude housing's impact on the formula (most of us don't buy a new house every year) the real inflation rate was closer to 8%. Of course the federal government has tweaked the CPI (Consumer Price Index) calculation method to use the reality of falling home prices to hide the reality of big jumps in the cost of food, healthcare and gasoline. Given that most banks are paying interest on savings at a rate below 1%, this means over the next 10 years a $100,000 CD could lose 70% of its purchasing power. Many stock and bond portfolios may not fare much better. What is an investor to do? Let's recognize for starters that we cannot depend on the government to get this problem under control and so we will have to take matters into our own hands. Knowing this issue exists could be the most important realization you make this decade. Given that sobering realization as our starting point, we have only two solutions to this mess. What Most Investors Want Right Now A recent in-depth survey of a group of investors hurt in the 2008 stock market meltdown revealed three necessary characteristics of stocks that would get them back in the market. To see what those characteristics are, and to discover how we found the exact stocks that met all criteria (and produced an overall return of 62% the next year), click HERE! First we need to increase the growth rate of our savings. Second, our stocks must grow faster than inflation. My private clients have had an amazing amount of success in this area using dividend paying stocks that are uniquely positioned to benefit from inflation. As every dividend investor knows, it does no good to earn a high dividend if the stock that pays the dividend plummets in price. So the important thing is to get BOTH a high yield and price growth. The problem is that searching for stocks that can both pay a high yield, AND grow faster than inflation is not an easy task. Currently I am averaging 7 to 9% annual dividend yields not counting the additional growth in the underlying stocks of up to 20% annually. Want to do the same for yourself? There are very specific "telltale signs" that reveal the right candidates for this type of investment and these "telltale signs" can be learned with a bit of specialized training. The good news is there are occasional opportunities for you to get this specialized training on how to find these treasures. If you want my system for finding dividend winners, I will be covering the exact selection methods I use to find these types of dividend paying portfolio winners at our June 2011 live event in Houston. To get in on the secrets, contact Kelley in my office at 888-853-1456. Space is very limited. Committed to your Global Profits, Jim Trippon Chief Investment Analyst Recent Posts by Jim Trippon: The Magic of Effective Yield Commodities Will Move the Markets Again in the Week Ahead A Million New Millionaires. What Are They Buying? Bubble Trouble? Here's a Golden Alternative Too Much Money? 'Cross-Eyed' Investors Approve! This email was sent to by info@globalprofitsalert.com. To ensure delivery of emails to your inbox, please add info@globalprofitsalert.com to your address book or safe sender list. Copyright (c) Trippon Financial Research, Inc. 2011 View our Privacy Policy. To make sure you don't miss our urgent updates, add Trippon Research to your address book. Just follow these simple steps. For more information and archived issues, visit http://www.globalprofitsalert.com Global Profits Alert (GPA) is published by Trippon Financial Research, Inc. a financial media organization with offices in the United States, Hong Kong and Mainland China. GPA is written by Jim Trippon in conjunction with George Wolff, Sunny Wang, Jim Trippon, Kelley Damiani and J. Daryl Thompson. Would you like to republish this article? Global Profits Alert issues can be republished, as long as the republished issues contain the name of the author(s) and the following short paragraph: This information was brought to you by GlobalProfitsAlert.com, a publication of Trippon Financial Research, Inc. GlobalProfitsAlert.com publishes information on Investing in the China stock market and emerging markets, dividend stock and income investing, exchange traded funds (ETFs), green energy stocks, technology stocks, global market trends and other investment information. To view archives or subscribe, visit http://www.globalprofitsalert.com Mon, 16 May 2011 05:46:11 -0400http://archive.aweber.com/stockreport1ge/scGc/h/The_Magic_of_Effective_Yield.htm Thursday, May 12, 2011 The Magic of Effective Yield by Jim Trippon, Chief Investment Analyst Dividend investors are familiar with yield. It's that lovely percentage of payout that tells you how much you are receiving from your income investment. And of course the higher yield the better, if the investment is safe enough. As a dividend investor, you probably know the current yield of some or many of the dividend stocks you own. That's good. Always, the more knowledgeable you are about your investments, the better able you are to make informed decisions. Yet as much as you may see and hear investing information which talks about yield, whether high-yield investments or simply anything about yield, you seldom see or hear much about effective yield. What is it and how can you profit from it? Stock Price, Payout And Yield To understand effective yield, let's back track a bit and do a quick review of the most basic workings of dividend stocks. Please bear with this. Stock X sells for $50 a share and pays a $2 dividend. The $2 is called the payout, which is the annual dividend distributed to you, the shareholder, usually in four quarterly equal payments. In this case, the quarterly dividend would be 50 cents. The yield, or more precisely, the current yield, is the percentage of income the stock pays with its dividend. With a $2 annual dividend on a $50 share of stock, the yield is 4%. This is arrived at by dividing the share price into the dividend, or 50 into 2.00 which gives an answer 0.04 or 4%. Simple enough. Stock X has a 4% current dividend yield. Dividend Yields Are Elastic But dividend yields are not actually static, though sometimes investors regard them that way. Let's suppose that our stock X has a 52-week price range of $45 to $55 per share. With the same dividend, the yield can change. Let's say our stock X, still paying out $2 a share, has had a terrific couple of quarters with its earnings, and that in a buoyant market, its share price rises to $55. Now the current yield has fallen to 3.63%. Conversely, if the market goes sour or perhaps there's unhappy earnings news for stock X and its share price falls to $45, the current yield rises to 4.44%. Same dividend, different share price; something of a different investment. Why This Is Important Obviously, for the income investor, buying the stock at a $45 share price can potentially be a better deal. We say potentially, because a lower share price can signal trouble for a company, especially if its fundamentals are not as strong as they were at the $55 or $50 share price. Value investors will recognized this as a value trap. On the other hand, the market may have simply taken stock X's share price down along with others, so the $45 price may be a bargain. 65% Gain On A Global "Double-Whammy" Last year one of the Liberty Street Investor experts pinpointed a German company that stands in the center of a global "double-whammy." Right now the world is facing two crushing needs. One is a necessity to life: safe, clean drinking water. Simply put, we are running out of it. The other need is energy. As the global population increases, more and more people want to life the middle-class lifestyle with cars and refrigerators and air-conditioning. This means global energy needs are skyrocketing. Since we first recommended it to readers in June of 2010, this company has gained 65% (that's double the S 500 over the same time period!). If you'd bought 50 shares In June, you could be sitting on a $2,600 gain! And there's no reason to believe it won't keep on climbing. This company could hand out 20% to 35% gains in the next 3 to 6 months! Learn the identity of this under-the-radar pick - and how to get regular recommendations on the world's most powerful, long-term trends - by reading on right here. Dividend Increases And Yield Increase Let's say stock X is doing just fine, and its price variation between $45 and $55 signifies no more than the normal fluctuation in the buying and selling of its shares. If you bought the stock at $50, and it remains or returns to $50 a share, but the company raises the dividend a penny a quarter for a 4cent annual dividend increase, this is a 2% increase, a happy event for shareholders. Now the stock pays $2.04 in annual dividends and yields 4.08%. And so on. (McDonald's recent dividend payment history) If the company makes incremental dividend increases and the share price creeps up--even if the stock isn't a particularly high-flyer, as many dividend payers aren't--these increases can add up, particularly for long term investors. If in even a couple of years the dividend increases bring the payout up to $2.25, and you are able to buy shares again at $45 on a market dip, with the underlying fundamental business still sound, your yield on these shares is 5% instead of 4%. This is a very conservative example of dividend investing. Yet even if you are not a long-term holder, the added payout will make the stock more attractive even if you plan to buy stock X and hang onto it for 3 to 6 months. Perhaps you employ a strategy of buying dividend payers near their 52-week lows and turn them over when their stock price appreciates. The increased dividend payout kicks in some extra cash along with your capital appreciation. There are many ways to win with dividends. Another Kicker Now let's say you bought your shares of stock X at $45, held it for a couple of years, and the price rose to $60, then $65. Even at the original annual dividend payout of $2.00 per share, you can see how you're really making out. While other dividend-shoppers see only a 3.08% yield, you would be receiving a 4.44% yield plus capital appreciation of 44% on your original investment. Suppose the dividend had been raised to $2.25. Again, you bought the stock for $45, so you are receiving 5% yield on your original purchase, compared to the 3.46% that a buyer at the current $65 price does. Your 5% is your effective yield, and your capital appreciation is 44%. Does It Happen In The Real World? Of course. McDonald's (NYSE: MCD) pays a $2.44 per share annual dividend, which gives a current yield of 3.1% on its recent closing price of $78.70 per share. But had you bought the stock at its 52-week low of $65.31, your effective yield would be 3.74%. Going back even a couple of years, to 2007, if you'd bought McDonald's at $50, although the dividend then was $1.50, you are now receiving $2.44 on your $50 purchase price. That now gives you an effective yield of 4.88% on a payout of $2.44. And so on. Planning to increase your effective yield by buying stocks at lower prices is just another often overlooked, seemingly simple technique to boost your dividend investing results. Committed to your Global Profits, Jim Trippon Chief Investment Analyst Recent Posts by Jim Trippon: Commodities Will Move the Markets Again in the Week Ahead A Million New Millionaires. What Are They Buying? Bubble Trouble? Here's a Golden Alternative Too Much Money? 'Cross-Eyed' Investors Approve! The Tax Benefits Of Investing In Royalty Trusts This email was sent to by info@globalprofitsalert.com. To ensure delivery of emails to your inbox, please add info@globalprofitsalert.com to your address book or safe sender list. Copyright (c) Trippon Financial Research, Inc. 2011 View our Privacy Policy. To make sure you don't miss our urgent updates, add Trippon Research to your address book. Just follow these simple steps. For more information and archived issues, visit http://www.globalprofitsalert.com Global Profits Alert (GPA) is published by Trippon Financial Research, Inc. a financial media organization with offices in the United States, Hong Kong and Mainland China. GPA is written by Jim Trippon in conjunction with George Wolff, Sunny Wang, Jim Trippon, Kelley Damiani and J. Daryl Thompson. Would you like to republish this article? Global Profits Alert issues can be republished, as long as the republished issues contain the name of the author(s) and the following short paragraph: This information was brought to you by GlobalProfitsAlert.com, a publication of Trippon Financial Research, Inc. GlobalProfitsAlert.com publishes information on Investing in the China stock market and emerging markets, dividend stock and income investing, exchange traded funds (ETFs), green energy stocks, technology stocks, global market trends and other investment information. To view archives or subscribe, visit http://www.globalprofitsalert.com Thu, 12 May 2011 08:19:16 -0400http://archive.aweber.com/stockreport1ge/26aSc/h/Finding_The_Next_Silver.htm Wednesday, May 11, 2011 Finding The Next Silver by Todd Shriber Wow, even more breath-taking than silver's ascent was the wicked decline investors were forced to endure last week as the CME Group, the operator of the exchange where silver trades in the U.S., used margin increase after margin increase to chase the volatility out of the silver market. I'm not going to speculate as to why CME or any exchange operator raises margins. Nor am I going to try to surmise whether silver's run is over (my gut tells me silver is headed higher, but I could be wrong). What am I going to do is engage in one the favorite pastimes of traders and that is to identify who or what is next, as in what's the next silver? And when I say that, I mean it in a good way as in silver pre-margin-hike-carnage. Fortunately, in the hunt for the next silver there is no dearth of options in the exchange traded products universe, but I keep coming back to one option: Corn. By now, you probably know that corn is used for much than Fourth of July barbecues. It's used for livestock feed and, like it or not, ethanol. In fact, over a third of corn produced in the U.S. is used to make ethanol. Plenty of folks have been critical of the "food for fuel" policy, but put those personal feelings and put your trader's cap on because corn is a backdoor way to play rising oil prices, too. I'll let the chart do the talking on this front. Of course, there is more to the corn story than just U.S. ethanol output. There is a major emerging markets kicker at play. Earlier this month, Bloomberg News reported that China's corn demand is expected to handily outpace domestic supply over the next decade. Looking at the next chart, that's not surprising at all. It's not just China. Emerging middle classes in places like Brazil, India and others want to eat better food. That means more beef, pork and poultry and it takes lots of corn to feed all those chickens, cows and pigs. As I've said previously, commodities are volatile, making ETFs and ETNs the preferred way for many investors to get exposure to this asset class, and corn is no exception. In fact, corn is one of the msost volatile commodities out there, but don't fret because there is an ETF or ETN for you to get some corn exposure while suiting your individual investment style. Voted the Most Accurate ETF Newsletter in the Country This newsletter has 14 open ETF positions in its recommended portfolio, with 30% in cash. All 14 are up in value, with an average gain of 14.52% over short time periods (the newsletter may change positions each week). In the list of 16 recently closed out positions, only one ended up with a loss. Is this the type of (almost mathematically impossible) accuracy you'd like to see in your own portfolio? Then get the details HERE. For the investor that wants to pass on the commodities market altogether and just play equities that are part of the corn growth story, take a look at the Market Vectors Agribusiness ETF (NYSE: MOO). The corn angle here is fertilizer producers and farm equipment companies such as Deere (NYSE: DE). Those wanting more corn exposure with the potential for gains with some other grains might want to look at the iPath Dow Jones-UBS Grains Subindex-TR ETN (NYSE: JJG). Corn accounts for almost 41% of JJG's weight. Those are just a couple of options for corn exposure. We have an even more compelling option in the ETF Profit Report portfolio right now, which I invite you to check out. Best Wishes, Todd Shriber Recent Posts by Todd Shriber: Debunk The Myths, Then Profit From Leveraged ETFs Dividends and ETFs: Understand The Concept, Then Embrace IT Know What Your Getting With Specialty ETFs This Emerging Market Is Set To Rocket Higher Important Lessons For Beginning ETF Investors This email was sent to by info@globalprofitsalert.com. To ensure delivery of emails to your inbox, please add info@globalprofitsalert.com to your address book or safe sender list. Copyright (c) Trippon Financial Research, Inc. 2011 View our Privacy Policy. To make sure you don't miss our urgent updates, add Trippon Research to your address book. Just follow these simple steps. For more information and archived issues, visit http://www.globalprofitsalert.com Global Profits Alert (GPA) is published by Trippon Financial Research, Inc. a financial media organization with offices in the United States, Hong Kong and Mainland China. GPA is written by Jim Trippon in conjunction with George Wolff, Sunny Wang, Jim Trippon, Kelley Damiani and J. Daryl Thompson. Would you like to republish this article? Global Profits Alert issues can be republished, as long as the republished issues contain the name of the author(s) and the following short paragraph: This information was brought to you by GlobalProfitsAlert.com, a publication of Trippon Financial Research, Inc. GlobalProfitsAlert.com publishes information on Investing in the China stock market and emerging markets, dividend stock and income investing, exchange traded funds (ETFs), green energy stocks, technology stocks, global market trends and other investment information. To view archives or subscribe, visit http://www.globalprofitsalert.com Wed, 11 May 2011 05:28:10 -0400http://archive.aweber.com/stockreport1ge/1uQIs/h/China_s_Trillions_on_the.htm Tuesday, May 10, 2011 China's Trillions on the Move. Will They Invest Here? By George Wolff The Chinese are coming and they are bringing bags and buckets of money. Will America turn them away? Or will the U.S. take full advantage the biggest investment opportunity of the coming decade. It is no secret that China has a mountain of money to invest. Of China's three trillion dollars in foreign reserves, approximately one trillion is held in U.S. debt instruments. Obviously it makes good sense to invest some of this money in desirable foreign assets and profit-making corporations, rather than in the sinking greenback. This potentially huge investment trend is already underway and it is unstoppable. Hundreds of billions in Chinese reserves have already been placed in the government-run Chinese Investment Corporation (CIC). After a shaky start, the CIC has earned a good reputation for the success of its corporate investments in the U.S. and elsewhere. Major Chinese corporations are also ramping up their investments abroad. Trillions of dollars are at stake. But will the U.S. turn its back on that gusher of Chinese money? America has recently reacted with fear to large investments from overseas. Many readers will remember the paranoia that surrounded large Japanese investments in the U.S. during the 1980's. There was widespread paranoia that the Japanese had become better capitalists and manufacturers than Americans. Widely-read books and even Hollywood movies harped on the theme of a Japanese takeover of the United States' economy. China got its first taste of U.S. investment paranoia back in 2005 when CNOOC, a Chinese oil giant, tried to buy up the Unocal oil company. The ensuing political outcry about a Chinese takeover of an American resource firm scuttled that deal in a hurry. But America simply can't afford to thumb its nose at Chinese investment money this time around. America Needs a Chinese Economic Miracle Billions and billions of dollars worth of foreign investment played a crucial role in what we now call the Chinese Economic Miracle. The flow of cash into China is called Foreign Direct Investment (FDI) and its steady increase is carefully monitored. Last year China's FDI total rose by an amazing 17.4 percent. The total amount that the world invested in China reached $105 billion in 2010. But China's outbound direct investment (ODI) was still small. Last year China invested $59 billion abroad. Only $5 billion of that total was invested in the U.S. But here's the key news. China says the United States, the EU and Latin America are about to see a "rapid increase" in Chinese investment. Beijing's mandarins declare that Outbound Direct Investment is set for the fast track and will grow by 20 to 30 percent in the next five years. In fact last year's ODI total showed an increase of 36 percent from 2009! The fast track is already open for business. The U.S. has been named as a choice target for investment. But will we say no to the money? What to do With a Trillion? The potential is staggering. It took about a trillion dollars worth of foreign investment, spread over three decades, to kick start the Chinese economy. From a near standstill, it has become the fastest growing major economy in the world. What stocks is the "Warren Buffett of China" into now? Jim Trippon, Publisher of China Stock Digest, has been called the "Warren Buffett" of China because he just seems to have a knack for unearthing the most undervalued stocks in that country. He provided a hefty 39% return to his subscribers in 2007, 58% in 2007, and is up 48% over the past 3 years in the worst market since the Great Depression. The best part? He sees even better profit potential this year. Click HERE for the exciting details... Now China expects to reverse the flow. Chinese firms are likely to "place some $1 trillion to $2 trillion in direct investments around the world over the coming decade". That's the prediction from the U.S.-based Asia Society, which worries that opposition from Congress could have a chilling effect on Chinese investment in the U.S. The report, by two leading economists, estimates that Chinese firms have already opened businesses in at least 35 states and created some 10,000 jobs. If so, the predicted tidal wave of Chinese ODI could have a colossal effect on the struggling U.S. economy. But much of the expected investment will come in the form of corporate mergers and acquisitions. Companies like China's telecom giant Huawei have experienced enormous resistance to their expansion plans on American soil. Of course there are sensitivities about American security. Nobody wants to see a firm which harbors information sensitive to U.S. security sold to a foreign buyer. Nor is it in America's interest to sell off its prize technologies for a song. That's why Congress created the Committee on Foreign Investment in the US (CFIUS). CFIUS is a group headed by the Treasury department with members coming from the defense and intelligence departments. Its role is to review sensitive foreign investments to protect American security. But Congress and CFIUS should not give China the cold shoulder. As the Asia Society authors said, "If just 5 per cent of China's expected outflows target the United States over the coming decade, the numbers will be enormous". I can't improve upon a word from the report's conclusion. "For 30 years, China has grown stronger by opening its door wider to FDI...The United States should do the same, or risk Chinese firms setting up plants in Ontario instead of Michigan or Juarez instead of El Paso." When China and the U.S. meet for economic talks next week, American politicians should keep America's unemployed and China's potential foremost in their minds. Keep investing wisely, George Wolff Recent Posts by George Wolff: Nuclear Fallout Casts New Light on China. Investment Leader Shines China Gets Semi-Enthusiastic. Watch Where the Money Goes Washington Fiddles While Dollar Burns. Protect Yourself Now China's Coming Bull Market. Who Will the Winners Be? The Worst Investment in the World. Beware of Promoters This email was sent to by info@globalprofitsalert.com. To ensure delivery of emails to your inbox, please add info@globalprofitsalert.com to your address book or safe sender list. Copyright (c) Trippon Financial Research, Inc. 2011 View our Privacy Policy. To make sure you don't miss our urgent updates, add Trippon Research to your address book. Just follow these simple steps. For more information and archived issues, visit http://www.globalprofitsalert.com Global Profits Alert (GPA) is published by Trippon Financial Research, Inc. a financial media organization with offices in the United States, Hong Kong and Mainland China. GPA is written by Jim Trippon in conjunction with George Wolff, Sunny Wang, Jim Trippon, Kelley Damiani and J. Daryl Thompson. Would you like to republish this article? Global Profits Alert issues can be republished, as long as the republished issues contain the name of the author(s) and the following short paragraph: This information was brought to you by GlobalProfitsAlert.com, a publication of Trippon Financial Research, Inc. GlobalProfitsAlert.com publishes information on Investing in the China stock market and emerging markets, dividend stock and income investing, exchange traded funds (ETFs), green energy stocks, technology stocks, global market trends and other investment information. To view archives or subscribe, visit http://www.globalprofitsalert.com Tue, 10 May 2011 06:32:10 -0400http://archive.aweber.com/stockreport1ge/11hW6/h/Commodities_Will_Move_the.htm Monday, May 9, 2011 Commodities Will Move the Markets Again in the Week Ahead by Jim Trippon, Chief Investment Analyst The real story, by far, last week was the price collapse of global commodity markets. Materials prices declined across the board from metals to crude oil to the grain markets. This decline will be a huge educator for all of whom I refer to as the amateur commodity traders out there. As many of you know, I think that for many investors commodities are included in their portfolios with no rational forethought. Remember, buying a commodity is not like buying stock in an operating company. The problem is that for many there is no rational behind these investments. There are no balance sheets, no financial stats, just a bunch of emotional and fundamental hunches. So when the selloffs begin, no one can come up any logical reasons for the price that these are really worth in the markets. The reality is everyone just panics and sells out. We are seeing this in silver and beginning in gold. I have discussed several times over the past couple of months that gold is in its final leg up. This finally sequence is the most risky, especially because there is no reliable way to estimate where the prices will stop advancing and begin a full blown price collapse. This is the case for many commodities in the current environment as prices become very volatile. The prices can snap back as fast as the decline, only to resume the decline out of nowhere. During the next several weeks, the education of risk in commodities will be best illustrated with this volatility. This action could also signal the beginning of a new trading range for the stock market. How to Score Big on the World's Second Largest Economy... China surpassed Japan as the world's second largest economy, right behind the U.S. as the strongest on the planet. Chinese companies are making money hand over fist, and will continue to do so for years into the future. For now, the Chinese stock markets are taking a break from their recent torrid pace. That won't last much longer. It's time to position your portfolio for potential monster gains the likes of which you've never seen before. Click HERE for the exciting details on how to score big in the Chinese stock markets from the "Sage of Shanghai"... So will the next move be a downward one for stocks? The odds right now are we are looking at a week or two of lower stock prices. This does not mean an end to inflation or a strengthening of the dollar. It just means that we can expect price weakness in equities over the next week or so. Of this also spells opportunity. Show what moves should we make now? I will get into that on my next commentary. Committed to your Global Profits, Jim Trippon Chief Investment Analyst PS: I will be making 4 presentations this week at the Las Vegas Money Show. I hope to see you there! Recent Posts by Jim Trippon: A Million New Millionaires. What Are They Buying? Bubble Trouble? Here's a Golden Alternative Too Much Money? 'Cross-Eyed' Investors Approve! The Tax Benefits Of Investing In Royalty Trusts China's Newest Surprise. Illusion or Money-Making Trend? This email was sent to by info@globalprofitsalert.com. To ensure delivery of emails to your inbox, please add info@globalprofitsalert.com to your address book or safe sender list. Copyright (c) Trippon Financial Research, Inc. 2011 View our Privacy Policy. To make sure you don't miss our urgent updates, add Trippon Research to your address book. Just follow these simple steps. For more information and archived issues, visit http://www.globalprofitsalert.com Global Profits Alert (GPA) is published by Trippon Financial Research, Inc. a financial media organization with offices in the United States, Hong Kong and Mainland China. GPA is written by Jim Trippon in conjunction with George Wolff, Sunny Wang, Jim Trippon, Kelley Damiani and J. Daryl Thompson. Would you like to republish this article? Global Profits Alert issues can be republished, as long as the republished issues contain the name of the author(s) and the following short paragraph: This information was brought to you by GlobalProfitsAlert.com, a publication of Trippon Financial Research, Inc. GlobalProfitsAlert.com publishes information on Investing in the China stock market and emerging markets, dividend stock and income investing, exchange traded funds (ETFs), green energy stocks, technology stocks, global market trends and other investment information. To view archives or subscribe, visit http://www.globalprofitsalert.com Mon, 09 May 2011 08:08:24 -0400http://archive.aweber.com/stockreport1ge/zB9o/h/Debunk_The_Myths_Then.htm Wednesday, May 4, 2011 Debunk The Myths, Then Profit From Leveraged ETFs by Todd Shriber When I think about inverse and leveraged ETFs and the controversy that surrounds these products I also find myself thinking about an episode of the "Family Guy" where Peter Griffin gets a segment on the mythical local news station called "You Know What Really Grinds My Gears?" That's how I feel about all the misinformation out there inverse and leveraged ETFs: It really grinds my gears. Let me briefly give you two recent examples that have been grinding my gears. A couple months ago, someone was touting a $51 investment that could do something spectacular as a result of the coming banking industry meltdown. I don't remember the exact words because I found the premise of this advice to be dangerous and not worth following. I did my own investigation and figured the investment in question was the ProShares UltraShort Financials (NYSE: SKF). I admit I may be wrong about the specific security, but SKF was trading around $51 when I read this piece and it would, IN THEORY, be a great trade if banks falter once again. More on this in a minute. The next instance that irked me was a recent blog post on Reuters where the writer all but implies that the SEC should intervene and prevent investors from big losses with the ProShares UltraShort 20+ Year Treasury Fund (NYSE: TBT). One of the writer's knocks on TBT is that it has 173 million shares outstanding, but average daily volume of "just" 10.7 million shares. I've never once heard that a stock or ETF needs to have a majority of its shares outstanding trade each day to make it a safe investment. Exxon Mobil (NYSE: XOM) has average daily volume of less than 19 million shares, but has 4.93 billion shares outstanding. Does that mean the SEC should tell you only the pros should invest in the stock? I doubt it. Here's why you don't have to worry about the "fine print" anymore... There can be some really nasty surprises in store for you when you buy and sell ETFs. Remember, although ETFs combine the best of both worlds of stocks and mutual funds - they can act totally different from each in real life. Those differences are usually spelled out in the "fine print" of the ETF's prospectus. Fun reading? Not hardly. To get more details on the ETF service recently voted "The Most Accurate in America", tap on the link below... Don't Let Me Make These Costly Mistakes When Buying And Selling ETFs! While at opposite ends of the spectrum (one plays on fear, the other on greed), both instances troubled me. The first creates unrealistic expectations. The second tries to scare you away from potential profits. With the first example, let's assume you buy SKF now and it takes five years for another banking crisis to materialize. What happens if the next one is like the most recent one? Well, this much is clear: SKF, Bank of America (NYSE: BAC) and Citigroup (NYSE: C), just to name two of the more controversial banks, are ALL DOWN MORE THAN 50% in the past five years. Translation: Leveraged and inverse ETFs are not investments. They are trades. The chart below illustrates the dangers of uninformed and unrealistic expectations with leveraged ETFs. In the chart, the light yellow line is what you think you're getting, the dark yellow line is what the index does and blue line is what you actually get with a leveraged or inverse ETF. I've said it in previous posts and I'll reiterate my stance on leveraged ETFs: I like them, I TRADE them and will continue to because I've made money on these trades. You can, too. And you will if you don't fall for the scare tactic outlined in the TBT example and if you don't get fooled into thinking these ETFs are portfolio building blocks meant to be held for months and years. Best Wishes, Todd Shriber Recent Posts by Todd Shriber: Dividends and ETFs: Understand The Concept, Then Embrace IT Know What Your Getting With Specialty ETFs This Emerging Market Is Set To Rocket Higher Important Lessons For Beginning ETF Investors Time To Get Proactive About Actively Managed ETFs? This email was sent to by info@globalprofitsalert.com. To ensure delivery of emails to your inbox, please add info@globalprofitsalert.com to your address book or safe sender list. Copyright (c) Trippon Financial Research, Inc. 2011 View our Privacy Policy. To make sure you don't miss our urgent updates, add Trippon Research to your address book. Just follow these simple steps. For more information and archived issues, visit http://www.globalprofitsalert.com Global Profits Alert (GPA) is published by Trippon Financial Research, Inc. a financial media organization with offices in the United States, Hong Kong and Mainland China. GPA is written by Jim Trippon in conjunction with George Wolff, Sunny Wang, Jim Trippon, Kelley Damiani and J. Daryl Thompson. Would you like to republish this article? Global Profits Alert issues can be republished, as long as the republished issues contain the name of the author(s) and the following short paragraph: This information was brought to you by GlobalProfitsAlert.com, a publication of Trippon Financial Research, Inc. GlobalProfitsAlert.com publishes information on Investing in the China stock market and emerging markets, dividend stock and income investing, exchange traded funds (ETFs), green energy stocks, technology stocks, global market trends and other investment information. To view archives or subscribe, visit http://www.globalprofitsalert.com Wed, 04 May 2011 05:20:12 -0400http://archive.aweber.com/stockreport1ge/20VO2/h/A_Million_New_Millionaires_.htm Tuesday, May 3, 2011 A Million New Millionaires. What Are They Buying? by Jim Trippon, Chief Investment Analyst What does it look like when Chinese people enjoy their newfound wealth? Not so long ago, buying a color TV or taking the entire family out for dinner at McDonalds would have been a splurge. For poorer families that still qualifies. But not for China's new rich. China now has almost one million millionaires. The Hurun Wealth Report's new rich list says China has created 960,000 millionaires as of this year. That's an increase of 135,000 from the 825,000 millionaires Hurun reported just two years ago - an astonishing rise in personal wealth. Keep in mind that these are "dollar millionaires", extravagantly wealthy by Chinese standards. And most of them are very new to their wealth and they are extremely eager to show off. The average age of the Chinese millionaire is only 39 years old - 15 years younger than those in the U.S. and Europe. Just as amazing, 30 percent of Chinese millionaires are women. All of this new wealth is creating a major boom in China's luxury goods market. Not long ago we reported that China was on course to overtake Japan as the world's top luxury goods market by 2015, accounting for 20 percent of worldwide sales. Now, with China's accelerating wealth and Japan's slump following the earthquake disaster, the Chinese will likely hit the number one spot even sooner. A Picture of New Money An armada of private jets descended recently on the gorgeous southern coast of Hainan Island. In the tropical resort of Sanya, throngs of China's new rich were enticed with displays of vintage wines, elite villas, one-of-a-kind jewelry, and glittering watches set with colored diamonds. The four-day event was designed to demonstrate world-class standards of wealth to China's luxury-hungry consumers. Representatives of 195 global luxury companies shipped in hundreds of millions of dollars worth of bling to show off to the world's new moneyed elite. Among the high-end brands, Switzerland's Chopard shipped in 200 million yuan worth of watches and jewelry from Europe for the event. A representative was quoted in the Chinese press as saying, "Sales far exceeded our expectations; we received hundreds of customers." "I Charge My Millionaire Clients $50,000 A Year For This..." It's true. I've created many millionaires with this legal "insider" information available nowhere else. And they really do gladly pay me 50 grand a year to get it. It involves certain extremely undervalued investments available in China. As you may know, China is exploding in growth, and there will in fact be many more millionaires made before it's all said and done. You can be one of them. And you won't have to pay anywhere near $50,000 a year. For the ultra-exciting details, click HERE. Investors in luxury brand companies should keep in mind that China's luxury boom will look much different from the development of the sector in Europe or the United States. The Chinese middle-class is rising very quickly and developing a hunger for glitz and glamorous goods. McKinsey Insights says, surprisingly, the new growth area is among Chinese who can barely afford western-style luxury. In a recent report, McKinsey wrote: "Wealthy consumers (with incomes above 300,000 renminbi, or about $46,000) will continue to account for a majority of luxury consumption. But our research shows that the 13 million households in China's upper middle class (incomes between 100,000 and 200,000 renminbi) offer the biggest new growth opportunity." Keep in mind that 100,000 yuan or renminbi amounts to only $15,400 at today's exchange rates. This bracket is not a potential luxury buyer in any other market. McKinsey says: "They already account for about 12 percent of the market, and their numbers are growing rapidly: we expect to see 76 million households in this income range by 2015, accounting for 22 percent of luxury-goods purchases." What about fake goods? China is famous for counterfeiting brand name goods, but Chinese consumers are becoming more discerning. McKinsey says: "The percentage of those who said they would buy fake jewelry dropped to 12 percent, from 31 percent in 2008. Some luxury buyers told us they felt sure that their friends would spot a counterfeit." Spectacular Growth Beijing is scrambling to close China's wealth gap. In an effort to ease social strains, taxes have been adjusted to remove the burden from those with lower incomes. A new initiative would increase the number of tax-exempt Chinese. It would raise the minimum income required to pay income tax to $450 a month from $315. Even more dramatic, other policies include a promise to raise average wages by 15 per cent a year. That should double average wages by the end of 2015. The government also intends to build 35 million units of low-income housing over the next five years. As Beijing stokes the fires of increasing domestic wealth and stimulates consumer spending, the outlook for luxury goods sales in China is simply breathtaking. CLSA Asia-Pacific Markets, majority owned by France's Credit Agricole is looking ten years into the future. CLSA predicts that overall consumption in China will rise by 11 percent annually over the next five years. Sales of luxury goods in China will grow more than twice as quickly, by 25 percent a year. China will account for as much as 44 percent of global luxury sales by 2020 according to CLSA. (Remember that China will become number one in 2015 just by hitting the 20 percent mark.) Forty-four percent is more than a sign of Chinese super-dominance in the sector. It is a signal that a vast new market is emerging right now. For investors with a long term outlook, diversifying your portfolio into major luxury brand names is a move well worth considering. Committed to your Global Profits, Jim Trippon Chief Investment Analyst Recent Posts by Jim Trippon: Bubble Trouble? Here's a Golden Alternative Too Much Money? 'Cross-Eyed' Investors Approve! The Tax Benefits Of Investing In Royalty Trusts China's Newest Surprise. Illusion or Money-Making Trend? More Food For Thought About Dividend Growth This email was sent to by info@globalprofitsalert.com. To ensure delivery of emails to your inbox, please add info@globalprofitsalert.com to your address book or safe sender list. Copyright (c) Trippon Financial Research, Inc. 2011 View our Privacy Policy. To make sure you don't miss our urgent updates, add Trippon Research to your address book. Just follow these simple steps. For more information and archived issues, visit http://www.globalprofitsalert.com Global Profits Alert (GPA) is published by Trippon Financial Research, Inc. a financial media organization with offices in the United States, Hong Kong and Mainland China. GPA is written by Jim Trippon in conjunction with George Wolff, Sunny Wang, Jim Trippon, Kelley Damiani and J. Daryl Thompson. Would you like to republish this article? Global Profits Alert issues can be republished, as long as the republished issues contain the name of the author(s) and the following short paragraph: This information was brought to you by GlobalProfitsAlert.com, a publication of Trippon Financial Research, Inc. GlobalProfitsAlert.com publishes information on Investing in the China stock market and emerging markets, dividend stock and income investing, exchange traded funds (ETFs), green energy stocks, technology stocks, global market trends and other investment information. To view archives or subscribe, visit http://www.globalprofitsalert.com Tue, 03 May 2011 06:54:15 -0400