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Don Miller

Shale Oil Stocks are Poised to Earn Investors Big Profits

With oil production soaring in the United States, shale oil stocks will be pumping out profits for years to come.

It's all thanks to huge deposits of shale oil.

At least four new major shale oil plays including the Bakken in Montana and North Dakota, the Eagle Ford in Texas, and the Marcellus in Pennsylvania and New York, may have more than 20 billion barrels each of recoverable oil.

Each of these new shale oil plays has the potential to double the total reserves we have today.

In fact, the "shale oil revolution" will soon make the United States the world's leading producer of crude oil, a report from Goldman Sachs Group Inc. (NYSE: GS) recently predicted.

The United States will produce more than 10.7 million barrels of oil per day by 2017, the report said. That's more than any other country, including Saudi Arabia.

And even though oil prices are in a short-term swoon, the glut of shale oil is about to make savvy investors a huge fortune.

That's why you need to take a hard look at a particular group of shale oil stocks that stand to benefit most from this boom.

But first, you need to know how this came about.

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Four Recession-Proof Stocks for 2012 and Beyond

Despite the efforts of Federal Reserve Chairman Ben Bernanke and his cohorts, it looks like gridlock in Congress will push us into a recession in 2013, if not sooner.

In case you haven't been paying attention, "Taxmageddon," and election-year politics have driven the economy to the edge of a "fiscal cliff." This means the start of next year, unless drastic measures are taken in Washington, is looking precarious for investors.

Just look at what recent U.S. economic reports have told us.

"The Chicago Fed's activity index came in at -0.45 Monday morning, while recent weekly unemployment data have been weak and the Michigan consumer confidence is down," said Money Morning Global Investing Strategist Martin Hutchinson. "Given that first-quarter GDP growth was already under 2%, it looks as though the U.S. economy has stalled. Accordingly, we need to ask: how will our investments do in a recession?"

That's why it's time to update our portfolios with recession-proof stocks.

Not All Stocks Can Handle What's Ahead

Tough economic and market conditions saddle most companies with operational and financial problems that aren't easily overcome.

Businesses are usually forced to cut spending and lay off employees. And there are some expenses a company can't eliminate, such as payroll, rent and taxes.

A recession hits the wallets of customers, too, who typically reign in their spending as they scramble to stay afloat.

That becomes a double whammy for corporations.

Orders for new products slow to a trickle. Some customers slow payments or may not pay their bills at all, crippling cash flows.

Still, there are certain businesses that flourish in the adversity of a recession — making them safe harbors for your investment dollars during bad market conditions.

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Gold Mining Stocks: Now is the Time to Buy

There are lots of reasons you should own some gold. Despite taking a recent breather, gold prices are still up by 139% in the last five years.

Even so, shares of gold mining stocks have suffered lately, hurt mainly by higher energy and exploration costs.

In fact, the stocks of the large gold miners have become nearly as undervalued as they were during the 2008 financial crisis.

The last time shares of these big gold producers were this cheap, they rallied by 283%.

At these levels, that means it's time to take a closer look at shares of big gold miners – while they are still a bargain.

Here's what you need to know…

The Gold Bull Market is Not Over

A number of factors point to higher prices for gold:

  • Real interest rates remain in negative territory. Sitting in cash right now is a losing proposition.
  • The austerity movement in Europe is being replaced with more fiscal easing. The European Central Bank may have to print trillions of euros of debt to keep the Eurozone intact.
  • The odds of more fiscal stimulus in China and the U.S. have increased, as two of the world's largest economies struggle to gain traction.
  • Despite healthy demand and rising prices, global production of the metal rose just 0.7% annually from 1999 through 2011.

Combined with aggressive gold-buying binges by China and other foreign governments moving away from the U.S. dollar, the stage is set for the price of gold to rally.

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Investing In ETFs: How Exchange-Traded Funds Can Save You Money

High commissions and management fees, along with taxes, can really cut into your returns.

That's where exchange-traded funds, or ETFs, come in. In today's investment world, ETFs are cheaper and more tax-friendly than mutual funds.

The average expense ratio for U.S.-listed ETFs is 0.4%, compared with 1.42% for diversified U.S. stock funds.They also give you exposure to an entire industry or market with the click of a mouse.

It's one of the reasons why exchange-traded funds are quickly becoming the investment of choice for investors seeking broad market exposure.

In fact, the number of ETFs has surged over 10-fold in the last decade.

The total number of ETFs in the market grew to 1,114 by October 2011, with assets over $1 trillion, according to the Investment Company Institute.

And the ETF market will expand to roughly $3.1 trillion by 2016, according to projections from the Financial Research Corp. in Boston.

So if you're looking to diversify your portfolio and save money doing it, ETFs may be the way to go.

Here's a primer on how ETFs can work for you.

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Case-Shiller Index: Is This the Housing Market Bottom?

Analysts, government officials and certainly homebuyers are spending hours trying to figure out if we have reached the housing market bottom.

Yesterday's (Tuesday's) data would seem to suggest the bottom is a bit bumpier than most people think.

According to the S&P/Case-Shiller home price index of 20 cities, home prices declined 3.5% from a year ago, while the 10-city composite slipped 3.6%. That meant fresh new post-bubble lows for home prices.

New-home sales in March also fell from their February level, the Commerce Department said. Together, they pointed to a more lackluster market.

"We're still in a slow period," said Robert Shiller, who co-founded the index that bears his name. "We're still in a funk."

But behind those numbers, there are reasons to be hopeful.

With borrowing costs near all-time lows, an economy that's bouncing back and cheap foreclosure properties attracting buyers, housing could be on the mend.

Knowing whether the housing market has bottomed out is important because nobody wants to pay thousands of dollars more for a property that could decline in value next week, next month or next year.

"The perception that prices could go lower…that's certainly keeping some people on the sidelines," Louis Cammarosano, general manager at HomeGain told Bankrate.com.

That's a problem because until buyers come back in significant numbers, the housing market can't completely regain its health. And without a housing market recovery, there won't be a real economic recovery.

But while we'd all like to know where the bottom is – pinpointing the exact date really doesn't matter.

Here's why…

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Agricultural Stocks: Fatten Up Your Portfolio on Food Price Inflation

For most Americans, the cost of food hasn't always been such a big deal.

For the better part of the last 30 years, food supplies were plentiful and the economy provided enough wealth to keep cupboards stocked.

But my how things have changed since the financial meltdown of 2008. Today, food inflation has more people concerned about the cost of groceries — and how they're going to pay for them.

Yet for investors, the same food price inflation dilemma presents an investment opportunity that is ripe for the picking.

With that in mind, agricultural stocks are where to look for the low-hanging fruit as food prices keep heading higher.

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How to Buy Foreign Market Dividend Stocks

There's nothing better than buying stocks with strong upside and getting paid with cold, hard cash.

It's true here in the United States and in foreign markets all around the world.

As we showed you in last week's article, buying dividend stocks that deliver a steady and growing income stream is a great way to do just that.
But the U.S. isn't the only country with world-beating companies.

In fact, adding a few foreign market dividend stocks will diversify your portfolio and help you sleep better at night, no matter what the U.S. market does.

Here's what you need to know…

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How to Pick Winning Dividend Stocks

Do you need more income? Join the crowd.

It seems everyone is scouring the landscape these days for decent income investments to beef up their monthly take-home – especially now with the price of gas and other everyday items skyrocketing.

But it's not too late to find great dividend stocks. You can still get cold, hard cash on a regular basis by investing in companies that reward loyal investors with substantial dividends.

In fact, if dividend-paying stocks aren't a major part of your portfolio, the odds of being successful in the markets are stacked against you.

Need proof?

An exhaustive study of stock market returns from 1871 through 2003 showed that over a 135-year period owning stocks and reinvesting the dividends produced 97% of all stock market returns. Meanwhile a paltry 3% was produced by capital gains.

Dividend stocks are safer too. The very same qualities that allow companies to pay steady dividends means they're much less vulnerable to broad market drops than your typical stock.

And right now corporate America is willing to pay even more in dividends.

Companies are on pace to pay a record $263 billion in dividends to shareholders over the next year even though the S&P 500 Index is still more than 10% below its peak, according to S&P Capital IQ reports.

"We're seeing good dividend increases across the board," Richard Helm of Cohen & Steers Dividend Value fund told USA Today.

Buying Great Dividend Stocks

It's no secret – a company's dividends play a major role in their performance. Yet many investors completely ignore this important fact.

But you can't just plunk your money down on any old dividend stock.

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Investors Turn to TIPS as Warren Buffett Warns on Inflation

Warren Buffett last week did more than warn investors on the dangers of low interest rates and inflation.

The Oracle of Omaha also had harsh words for traditional bonds.

In a Fortunearticle Buffett went so far as to say, "Right now bonds should come with a warning label."

"They are among the most dangerous of assets," Buffett wrote, "Over the past century these instruments have destroyed the purchasing power of investors in many countries."

To prove his point Buffett labeled inflation as the primary threat to bond investors, noting it takes no less than $7 today to buy what $1 did in 1965.

Instead of bonds, Buffett recommends "productive assets," including farmland and real estate.

But he saved his highest praise for stocks, especially the stocks of companies like The Coca-Cola Co. (NYSE: KO) and International Business Machines Corp. (NYSE: IBM), that consistently deliver inflation-beating returns.

But what if you're not comfortable betting most or all of your chips on stocks? And if traditional bonds are out, where else can investors turn for inflation beating returns?

TIPS Insure Wealth Against Inflation

Enter Treasury Inflation Protected Securities, or TIPS.

Unlike regular bonds, TIPS are designed to protect your principal against the ravages of inflation.

In fact, TIPS zig when other securities zag, providing diversification and safety to your portfolio.

TIPS are considered to be an extremely low-risk investment since they are backed by the U.S. government, and their par value rises with inflation while their interest rate remains fixed.

Here's how they work.

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Three Glencore Xstrata Takeover Targets: TCK, AAL, FCX

The proposed mega-merger of Glencore International PLC and Xstrata PLC will create a global powerhouse with the potential to shake up the mining industry overnight.

If completed, the $90 billion deal will form a mining behemoth with control over one-third of the global market for thermal coal, and make it the world's largest producer of integrated zinc production. It will also rank as the world's third-largest copper producer and fourth-largest nickel producer.

Basically, the merger would create a super-giant that could compete with the industry's heavyweights – BHP Billiton Ltd. (NYSE ADR: BBL), Rio Tinto PLC (NYSE ADR: RIO), and Vale (NYSE ADR: VALE) – the mining industry's "Big Three."

The merger is certain to spark volatility in the sector, according to Money Morning Global Resources Specialist Peter Krauth, an expert in metals and mining stocks who runs the Global Resource Forecast investment service.

"What observers need to understand is consolidation like this concentrates decision making," Krauth said. "The fewer participants in an industry, the more impact they have.

When output is either increased or decreased by one or more mega producers, it will also have a larger impact on world supplies, and therefore prices."

With that kind of power, the Glencore-Xstrata deal will form a goliath with the appetite – and the muscle – to swallow its weaker rivals.

Glencore Xstrata: Hungry for Mergers

Based on estimated 2011 results compiled by Credit Suisse Group AG (NYSE ADR: CS), the new company would have revenue of $211.3 billion and net profit of $7.5 billion. That kind of clout would make its stock valuable currency for more acquisitions.

Plus, both companies are led by aggressive chief executives that have a history of snapping up competitors.

Xstrata has been racking up spectacular growth through acquisitions, although lately it has focused on organic or internal growth to boost production by 50% by 2014.

Glencore, a trader of metals, minerals and oil, has said the main idea behind going public after almost four decades as a private company was to grab acquisitions.

Of course, the new company would have more going for it than sheer size and a forceful management team.

Glencore has a giant global intelligence network of 2,000 employees in about 40 countries. Many of them are traders and marketers that collect extensive data on what commodity buyers want and when.

"Glencore's network makes the CIA look like your grandmother's coffee club," columnist Eric Reguly recently wrote in The Globe & Mail. "It has been adept at forecasting commodity prices based on intimate knowledge of production, demand, regulations, political whims, transport costs and movements everywhere."

Glencore's intelligence network will likely direct it to takeover targets that have iron ore resources, an area where Xstrata currently lacks exposure.

The industry's Big Three control nearly 70% of the one billion-ton annual iron ore seaborne trade, along with contract pricing. Lately they've been dampening prices by flooding the market with iron ore, driving high-cost producers out of the business.

But their mushrooming market shares have triggered more regulatory reviews by concerned governments. That should clear the way for the new Glencore Xstrata entity to target smaller competitors without the Big Three interfering.

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