You are on page 1of 25

03

04
08
10
14
15

___________________

20
24

.
Copyright 2014 by Robinson Media Group, LLC.

Welcome to the very first issue of the FTM Quarterly Journal of


2014! Our long-time subscribers will no doubt notice the major
design changes that we have made to the newsletter. Aside from the
design changes in this issue, we have also made some exciting
content changes.
First, I am proud to unveil the new look for our General Market
Conditions Alert system. It is now simply called the Market
Barometer (turn to page 4 to see the new look). Our new Market
Barometer has been designed to make understanding current
market conditions easier than ever. Each day, our Market Barometer
system measures 10 important indicators. When the markets are in
an uptrend and the big money is flowing into stocks, the needle will
be in the green area of the Market Barometer. In contrast, when the
market becomes erratic and the big money begins to flow out of
stocks, the needle will move first to the yellow area, which indicates a market under pressure. If the
selling pressure lingers and if conditions continue to deteriorate, the needle will slip into the red zone,
which indicates a full blown market in correction.
Additionally in this issue, we are unveiling our new Global Currency Monitor (see page 14). This
brand new currency rating service, which is an added benefit for all of our subscribers, is updated every
month with the FTM Insider Dashboard. We believe this will be a helpful resource for those who are
seeking to diversify some of their U.S. dollar holdings into foreign currencies.
I am grateful to you for being a subscriber to our many services. Please know that we always value your
input. If you ever have any comments, questions, or suggestions, please feel free to contact me by email
(jerry@ftmdaily.com) or by phone (800) 609-5530.
I believe that 2014 is going to be a very important year. The clock is ticking on the gross financial
excesses of both Washington and Wall Street. Like never before, it is time to become vigilant with our
finances and investments.
With many blessings!

FTMQuarterly Journal Publisher

On January 13, the FTM Market Barometer signaled a shift in the general market
conditions for U.S. stocks, as the needle fell from a strong uptrend (GREEN) to an
uptrend under pressure (YELLOW).
The beginning of 2014 has been unkind to U.S. stocks, as investors remain uncertain
whether the strong gains witnessed in 2013 can continue into the New Year. Others are
concerned that stocks have risen too quickly and are waiting for a pullback. Hopefully, the
current selling pressure will allow the markets to digest their massive 2013 gains before the
uptrend resumes. Based on the sideways consolidation trend currently in place, this may
indeed be the case. It is normal and healthy for markets to pullback after sharp increases,
such as the one that we witnessed in 2013.

The last three months of 2013 were relatively placid on Wall Street. Interestingly, the day that many
investors feared turned out to be the best trading day of the quarter. The Dow rose 292 points on
December 18, when the Federal Reserve announced the oncoming tapering of its massive monetary
stimulus, also known as QE3. The DJIA gained 9.56% in Q4, and the Nasdaq and S&P 500 did even
better. Key foreign indices mostly advanced, even though economic indicators from Europe and China
were decidedly mixed. Mortgage rates increased and the housing market cooled down a bit. Gold sank
and oil rebounded. Consumers grew more optimistic about the economy, but also grew frustrated with
both Congress and the Affordable Care Act.

Arguably the biggest headlines in Q4 2013 came out of the nations capital. The federal
government shut down for 16 days in October, and though it merely paused the bull market, Standard
& Poors estimated that it put a $24 billion dent in the economy. In better news, the House and Senate
arrived at a 2-year budget agreement in December, quelling fears of another shutdown for January.

The Fed elected to reduce its monthly asset purchases from $85 billion to $75 billion starting in
January, with the chance of further measured reductions this year. It made no move with interest
rates. While the Congressional Budget Office projected 7 million Americans would sign up for their
own health care via the health insurance exchanges by the end of 2013, the reality was in the vicinity
of 2 million due to technical difficulties. Additionally, 4 million insured Americans found out that
their coverage was being cancelled because it did not meet ACA standards.
As for economic indicators, things seemed to be improving on the surface. The jobless rate was 7.3%
in October, then 7.0% in November. Q3 GDP was 4.1%; economic growth has averaged about 2% since
2009. The Institute for Supply Managements factory PMI reached 56.4 in October and 57.3 in
November (its highest reading in almost three years); ISMs service sector index was at 53.9 in
November, signifying a 47th straight month of expansion.
Consumer spending rose 0.5% in November after a 0.4% October gain. Meanwhile, official consumer
inflation figures dipped 0.1% in October and stayed flat in November. Retail sales were up 0.6% in
October and another 0.7% a month later. As for big-ticket items, durable goods orders rose 3.5% in
November, offsetting a 0.7% dip for October. The Producer Price Index retreated 0.2% in October and
0.1% in November.

As 2013 ended, it was apparent that the boost in U.S. manufacturing during Q4 wasnt being replicated
in Asia. Chinas official purchasing manager index came in at 51.0 in December, down from the
previous 51.4, and the private sector HSBC PMI retreated 0.3% to 50.5 for December. The regions best
PMI was that of Taiwan (HSBC PMI of 55.2, up from 53.4 a month earlier). South Koreas HSBC
PMI was a middling 50.8 in December, 0.4 higher than in November. Elsewhere, the Markit PMI for
Australia slipped down to 47.6, and Singapores economy contracted 2.7% for the quarter. Is the link
between western growth and Asias growth still strong?
France was plainly the economic laggard among the major EU nations in Q4, with its Markit factory
PMI dropping below 50 in November and December (it finished 2013 at 47.0, a 7-month low). In
contrast, the manufacturing PMI for the United Kingdom finished the year at 57.3 and came in at
58.1 in November. The quarter saw Spains factory PMI move back into the expansion zone (it was at
50.8 by December) and the euro area composite PMI finish the year at 52.7. Germanys Markit PMI
hit a 30-month peak of 54.3 in December. The quarter saw the European Central Bank lower its
benchmark interest rate 25 basis points to a record-low 0.25%. Annual eurozone inflation was just
0.9% in November compared to 2.2% a year earlier.

The big story here was the freefall for gold and silver. Gold prices dropped 9.4% in Q4 and 28.3%
on the year to settle at $1,202.30 on December 31. Gold hadnt had a down year since 2000. Silver
did even worse: it lost 10.8% for Q4 and 35.9% for 2013. Platinum futures dipped 2.7% in Q4,
6

finishing 2013 at -10.9%; only palladium posted an annual advance, going +2.1% despite a 1.2% loss
in Q4. Copper retreated 7.0% for 2013. The U.S. Dollar Index was little changed on the quarter,
losing only 0.2%.
The second biggest story in the commodities sector was the ascent of natural gas futures for
the year, they rose +26.2%. NYMEX crude ended the quarter with a 7.5% annual gain. While Q4
gains sent cocoa futures to +21.2% for the year, other key crops suffered; 2013 losers included corn
at -39.6%, coffee at -23.0%, soybeans at -7.5%, wheat at -22.2% and sugar at -15.9%.

The Dow, S&P 500 and Nasdaq all posted four consecutive monthly advances to close out 2013,
finishing the year as follows:
DJIA: 16,576.66
S&P: 1,848.36
NASDAQ: 4,176.59
2013 was the best year for the S&P 500 since 1997 (and the worst for the CBOE VIX since 2009). Could
2014 offer returns anywhere close to these? Very few analysts believe it could. In the final 2013
Reuters poll of stock market analysts, the consensus forecast was for a 4.1% gain for the S&P 500 in
2014.
We fully expect a steep pullback in U.S. stocks in 2014. After all, we havent had sharp correction in
about two years, and historically they occur about once a year.
The average bull market lasts 3.8 years, and this one will turn five in March, yet Wall Street seems
confident that the bulls can keep running even as the central bank attempts to wind down its asset
purchases. If stocks gain 10% or better in 2014, it will be another one of this bull markets numerous
pleasant surprises.
HAVE A QUESTION ABOU T YOUR OWN STOCK PORTFOLIO? FOR A FREE 30-MINUTE REVIEW O F YOUR
CURRENT INVESTMENT STRATEGY, CALL JAY PERONI, CFP , AT 866-594-9919.

P.A.C.E. Portfolio Performance As of January 22, 2014


Name
Precious Metals: 20%
ETFs Silver Tr
Ishares Comex Gold
Market Vectors Gold Miner
Franco-Nevada Corporation
Agriculture/Food: 15%
Toro Corp.
Kubota
Hormel Foods
The Andersons
Tractor Supply Co.
Commodities: 10%
Aqua America
Energy: 30%
EQT Midstream Partners
Oasis Petroleum
Magellan Mid Stream
Bonanza Creek Energy
Core Laboratories
World Dominators: 25%
WD-40 Company
Abbvie Inc.
VF Corp.
Nu Skin
Hanesbrands

Symbol

Buy Price

Purchase
Date

Shares
Held

Gain/Loss

SIVR
IAU
GDX
FNV

Buy ETF
Buy ETF
Buy ETF
Buy up to $50

1/3/2012
1/3/2012
1/14/2014
10/21/2013

1.62%

170
330
285
150

-29.14%
-21.27%
3.08%
0.02%

TTC
KUBTY
HRL

Buy up to $75
Buy up to $90
Buy up to $55

12/2/2013
9/24/2013
12/3/2013

0.88%
0.95%
1.48%

100
80
150

5.81%
10.71%
0.42%

ANDE
TSCO

Buy up to $100
Buy up to $150

12/23/2013
9/24/2013

0.75%
1.42%

75
110

-3.37%
12.33%

WTR

Buy up to $35

3/6/2013

2.95%

325

3.04%

EQM
OAS
MMP
BCEI
CLB

Buy up to $70
Buy up to $52
Buy up to $63
Buy up to $60
Buy up to $205

11/12/2012
9/12/2013
9/12/2013
10/14/2013
10/28/2013

2.27%
3.30%
0.57%

175
150
125
150
30

107.19%
0.47%
15.35%
-9.83%
1.14%

WDFC

Buy up to $85

12/3/2013

1.73%

85

-2.73%

ABBV
VFC
NUS
HBI

Buy up to $55
Buy up to $225
Buy up to $150
Buy up to $75

4/5/2013
7/22/2013
12/3/2013
10/28/2013

3.26%
1.78%
1.46%
1.19%

150
120
50
125

18.84%
21.93%
-33.88%
5.52%

Yield

Performance vs. Benchmark


P.A.C.E.
S&P 500
+/- S&P 500

2014
-2.57%
-0.19%
-2.38%

Since Inception
40.1%
44.4%
-4.3%

Yearly P.A.C.E. Performance


2014 YTD
-2.57%

2013
21.8%
8

The PACE-20 portfolio had a great final quarter in 2013 (up almost 8%). For the
year, our energy and agriculture stocks had impressive gains. World dominating
companies performed in line with the markets, while our commodity and metals
exposure lagged the markets. The goal of the portfolio is to outpace inflation,
provide diversification, and have exposure to crisis investments. Overall,
the portfolio accomplished these goals in 2013.
Recently, we added some new companies to the portfolio to increase our exposure to
the agriculture sector. First, we added Toro Corp. (NYSE: TTC). Toro Corp. is
engaged in designing, manufacturing, and marketing professional turf maintenance
equipment and services, turf and agricultural micro-irrigation systems, landscaping
equipment, and residential yard and snow removal products.
We also added Hormel Foods Corporation (NYSE: HRL), a multinational
manufacturer and marketer of consumer-branded meat and food products, many of
which are among the best known and trusted in the food industry. Products
manufactured by the corporation include hams, bacon, sausages, franks, canned
luncheon meats, stews, chilies, hash, meat spreads, shelf-stable microwaveable
entrees, salsas and frozen processed foods.
Additionally, we added The Andersons, Inc. (NASDAQ: ANDE), a diversified
company operating in three segments. The Andersons engages in grain
merchandising, operates grain elevator facilities, distributes wholesale agricultural
fertilizer and operates retail farm centers.

VETERAN PRECIOUS METALS ADVISOR, TOM CLOUD, SHARES HOW HE GOT


STARTED IN THE GOLD AND SILVER BUSINESS AND PROVIDES HIS OUTLOOK
FOR 2014.

Q: Tom, how did you get started as a


precious metals dealer?

A: I got my start in 1975 just as we were seeing inflation


begin to rise under President Gerald Ford. I was looking
for investments that had historically performed well
during inflationary periods. I realized that gold was a
fairly new investment in the U.S. as President Nixon
had only freed the trading of gold in late 1971. When I
first started really paying attention to the price of gold,
it was around $55/oz. I finally incorporated my
company the year after Ford lost the White House to
Jimmy Carter. By 1977, gold had risen to $77/oz. Three
years of Carters inflationary policies sent gold
skyrocketing to over $800/oz. It was a wild ride.

Q: Why precious metals?


A: I have long believed that God gave me a unique interest in precious metals so that
I could help others diversify their investments. I think that every investor should have at least some
exposure to precious metals in their portfolio. Today, only 1%-2% of U.S. investors have any precious
metals in their portfolio. That means that nearly 99% of investors completely missed the huge move in
precious metals from 2000-2012. It also means that as more people begin to demand gold and silver
as an investment vehicle, we will see prices climbing higher.

Q: That long-running bull market in gold, however, seemed to break


down in 2013.

A: Yes, it did. 2013 was the first down year for gold since 1999. But as you know, the future for
precious metals remains bright thanks to the growing amount of fiscal irresponsibility worldwide.
10

Q: Over the past 36 years, you have met with literally thousands of

investors and clients, and you have helped many of them make their first
precious metals investment. Can you share a few of your more memorable
moments in helping people?

A: Wow, there are so many stories, especially since the current bull market in metals began back in
2000, when gold was just $256/oz.
Well, I remember a doctor who eventually became a client. Due to some health issues, he was forced
to quit his medical practice. One day, in 2002, his financial planner called me to ask if I could help his
client invest into gold and silver. By 2011, the doctors initial investment of $250,000 had grown to
$900,000. During this same time period, his stocks and bond portfolio lost about 30%. But thanks to
his diversification into precious metals, he was able to offset his losses in the stock market with his
gains in gold and silver.
Back in 2008, right after the financial crisis, the doctor and his family called me after inheriting
$3,000,000. They were ready to invest even more into gold and silver. After several moves in and out
of the metals market, they have turned that original $3 million into $8 million.
Then there was the young salesman that sold his house in 2004 because he felt the housing market
was about to collapse. He sold his home for top dollar, which netted him about $350,000. He decided
to rent a home and put the proceeds from the house into precious metals. In late 2012, he liquidated
enough of his holdings to purchase his dream house. Despite a price tag of $875,000, he even had
enough money left over from his precious metals gains to furnish the entire house.

Q: Those are great stories. Give us one more.


A: I have many stories. One memory is of a client that I met in 2001. He was extremely eager to
purchase precious metals and began liquidating all of his stocks and bonds over a four year period,
slowly investing most of it into gold and silver. Despite my urgings to him to diversify, he was
determined to go all in to precious metals. Over the next ten years, his investment of around
$800,000 mushroomed to $3.2 million. He passed away last year, leaving approximately $780,000 to
each of his four heirs.

Q: Most stories about a lack of diversification dont have such a happy

ending. What is your usual recommendation to investors on how much of


their portfolio should be invested into precious metals?

11

A: This is a question
that you will get
many different
answers on, from
money managers,
financial planners
and from the investor
himself. I have seen
percentage
recommendations
running anywhere
from 5% to 75%!
While stocks have
done much better
than precious metals
in 2013, I do not see
that continuing for
the long-term.
For example, over the
past 13 years the
stock market has
gone virtually
nowhere. After
reaching their peaks in 2000, stocks finally just got back to breakeven levels last year! Meanwhile,
gold has gone up five times during that same time period. And yet, we continue to see investors
pouring more money into stocks than into precious metals.
So, the question that each investor has to ask himself is: Do I believe that the economic, fiscal, and
monetary problems facing America and the world are going to go away any time soon? If you
believe that politicians and central banks will be able to succeed in their vast fiat paper money
experiment, then gold and silver are probably not for you. But, if you understand the basic laws of
economics, and know a little bit about monetary history, then you know there is an extremely low
probability that this current world economic crisis will end well. I believe we will see bail-ins right
here in the U.S. in the coming years. The Feds continued money printing schemes will devalue the
dollar in the next 2-3 years. When you buy precious metals, you are doing so primarily to preserve your
own purchasing power. We invest in gold and silver as a shelter from the storm with little concern on
how much fiat currency we are going to gain. But, let me be specific. I believe every investor
should have a minimum of 33% of their investable money in metals. (Investable money
does not include assets such as homes, cars, and retirement savings accounts.)

Q: For the new investor just getting started in precious metals

investing, would you recommend that they purchase more gold, or more
silver?
12

A: Over the next 7-10 years I favor silver over gold, if you are talking only about percentage increases.
Over 90% of all of the known silver has already been mined. With the huge and increasing global
demand for electronics (all of which require silver), investors are going to have a much tougher time
finding reasonably priced silver for investment purposes. I just recently returned from a silver industry
meeting in Texas and the one thing I heard the most was the concern that silver wholesalers have over
future supplies. There is great concern among industry leaders that silver supplies are going to tighten
tremendously in the coming months, and certainly in the coming years. Some investors who complain
about the premiums on silver today will be amazed by the premiums we will see in the near future.

Q: Silver had a rough year in 2013. Even worse than gold. Why?
A: Silver performed poorly in 2013 due to ongoing manipulation in the paper markets. This will not
and cannot continue. Remember, over the past 12 years both gold and silver have average annual
returns of over 17%, even with the downturn in 2013. Silver and gold have beaten the manipulators in
the past, and will soon do it again. But if I were a new metals investor, I would begin by cost averaging
into silver. I wouldnt buy my entire position all at once. I would buy some every month until I felt I
had enough to meet my investment needs. While I especially like silver for the next 7-10 years, I should
add that gold is a more predictable metal. Gold is much less volatile and I believe one day in the near
future, it will once again be viewed as money, as it has for much of mankinds history.

Q: Briefly walk us through what a new customer can expect when he or


she calls you to place their first order for precious metals.
Its really just a simple four-step process.
1. Call Us. To begin, simply call us at (800) 247-2812. Together, we will determine your best options
in gold, silver, platinum, palladium, or even investment-grade diamonds.
2. Lock in Your Price. Once you decide upon what to purchase, we will then lock in the price and
send you an invoice via e-mail. Once you lock in your price, you are guaranteed that price, regardless
of whether prices go up the next day.
3. Pay Your Invoice. You have two weeks to pay us because we have to pay our suppliers within two
weeks for the items we purchased for you.
4. Receive Your Precious Metals. When we receive your payment it is deposited in our bank. Once
the check clears, (usually no more than two or three days), we ship your items to you. Because you are
an FTMDaily.com reader, we will cover all of the postage and insurance costs on your entire order.

*********************************

13

Follow the Money founder, Jerry Robinson, has long recommended that individuals create a pool of
liquid savings that is equal to six months of their gross income. For example, Jerry believes that
someone earning $3,000 per month should strive to save and maintain $18,000 ($3,000 x 6 months)
in liquid savings. But unlike most other financial experts, Jerry does not think that this savings should
just be stuffed away into a bank savings account. Instead, he suggests that this liquid savings be
diversified three ways. (34% U.S. Dollars; 33% Foreign Currencies; 33% Precious Metals)
This month, we are proud to unveil our latest service: The FTM Global Currency Monitor. This
new service is designed to help investors determine which foreign currencies may be appropriate for a
portion of their liquid savings. Our ratings are updated monthly.
14

by Jennifer Robinson,
FTMQuarterly Managing Editor

Bacon has spent


her entire career working low-wage
jobs. At 46 years old, Bacon, who lives
in Durant, Miss., says she has a tough
time envisioning an affordable
retirement -- even though that goal is
still decades away. Many workers, like Bacon, are settling into the notion that they will
be working in some capacity perhaps until they pass on. At the least, they admit they
will not have a traditional retirement.
This sentiment is in steep contrast to those who have already retired. Many workers in their 60s, 70s,
and older, were recipients of generous corporate pensions and government benefits that had yet to be
cut before they retired.
Younger workers, though, are facing a crisis of enormous proportions due to the unsustainability of
the current retirement scheme in America and across much of the developed world. There are several
factors underlying this impending crisis:
1. Governments are scaling back retirement benefits and are raising the age to start collecting
them.
2. Most corporations have eliminated traditional pension plans that guaranteed employees a
monthly retirement check.
3. Many retirement savings accounts were pillaged in the 2008 global economic crisis. This
led to an exodus of retirement savings out of stocks and into cash. Today, millions of individuals
who lost a large portion of their retirement savings in the crisis have locked in their losses by
remaining in cash, thus missing the five year bull market in stocks.
4. The unemployment crisis that began in 2009 has left millions without a job and without the
means to save as they approach retirement.
5. Rapid advances in modern medicine and healthcare that promise to prolong the average
lifespan will further aggravate most retirees greatest fear: Outliving their money.

15

VANISHING PENSIONS AND UNCERTAIN GOVERNMENT BENEFITS


Long before the United States introduced Social Security in 1935, Germany established the worlds
first widely available state pension system in 1889. Today, countries like the U.S. and Germany, who
established retirement programs on a massive scale, are now faced with a daunting predicament. The
nations are awash in debt since the economic crisis hit in 2008, and they face a demographics disaster
as retirees live longer and falling birth rates mean there will be fewer workers to support them.
According to a 2013 report on the worldwide retirement crisis from the Providence Journal, the
average retirement age with full government pension benefits fell from 64.3 years in 1949 to 62.4 years
in 1999, tacking on an additional two years of full retirement benefits that had not been calculated into
the formula decades ago.
Enter the pension reforms of the 2000s.
In recent years, many developed countries have sought to battle these shifting demographics through
targeted reforms including: increased retirement age, decreased or minimal cost-of-living
adjustments, and the replacement of corporate defined-benefit plans with defined-contribution plans.
According to the report, these reforms will result in a 20 percent reduction in retirement benefits for
the average worker.
The switch from defined-benefit plans (i.e. pensions) to defined-contribution plans, such as 401(k)s,
shift responsibility for saving from employers to employees, although some employers may match a
certain percentage of an employees contribution. Unfortunately, many workers have failed to take
advantage of these plans. Many fail to enroll, while others dont contribute nearly enough, even to
maximize employer matching contributions. Furthermore, many workers who do contribute to such
plans often lack adequate liquid savings, which causes them to dip into these accounts when they need
money. And to make matters worse, many workers make poor investment decisions often buying
stocks when times are good and share prices are high and selling only when the market corrects and
share prices are low.

SAVINGS NEAR ALL-TIME LOWS


Consider Leslie Lynch, 52, of Glastonbury, Connecticut. Last year, Lynch lost her $65,000-a-year job
at an insurance company. Despite working for the company for 28 years, she had only accumulated
$30,000 in her 401(k) retirement account. Shes since depleted her retirement savings in an attempt
to stay afloat while seeking new employment. At first glance, Lynchs story is heartbreaking, as she lost
her job and was forced to spend her retirement savings in order to make ends meet. However, the most
depressing part of the story is that she was only able to save $30,000 for retirement during 28 years
of earning $65,000. This means that despite earning over $1.8 million over the course of three decades,
her effective savings rate was a mere 1.6%.

16

Stories like Ms. Lynchs are plaguing the nation and the globe as savings rates remain near all-time
lows. It is a misconception that all workers are too lazy to save for retirement. The more believable
theory is that workers today have fallen prey to the Consumption Trap. That is, many workers buy
into the idea that they must have every new gadget, a bigger house, and a newer car, while putting
retirement savings on lifes back burner.
Adding to this already ill-prepared generation is the stock market crash of 2008. Many workers who
were nearing retirement with a sizeable 401(k) or IRA in the mid-2000s were devastated by the crash
and have just recently begun to see those retirement accounts return to pre-recession levels. That is,
of course, if they had the fortitude to stay in the markets despite the downturn.
On a positive note, retirement accounts in the U.S. hit a record $12.5 trillion during the first three
months of 2013. But Boston Colleges Center for Retirement Research says the recovery in housing and
stock prices still leaves about 50 percent of American households at risk of being unable to maintain
their standard of living in retirement.

WIDESPREAD UNEMPLOYMENT LINGERS


Unemployment has burdened workers of all ages and skill levels in the wake of the 2008 economic
crisis. The dream of obtaining a college degree and securing a good job for life, followed by a worryfree retirement (complete with a gold watch), is a thing of the past. Recently instability in the global
labor market reveals that even highly educated people have not been immune from the downturn. In
addition, many of the job losses in recent years have been structural in nature, meaning that
permanent downsizing, offshoring, and increased technology have eliminated the positions entirely.
Put simply, many of the jobs that have been lost are not coming back anytime soon.
In America, for example, the instability in the labor market has had numerous unintended
consequences. One such example impacts the future amount of an unemployed persons Social
Security check. Since Social Security retirement benefits are based on total lifetime earnings,
individuals who have lost their jobs and are unable to find work quickly will receive lower benefit
amounts when they retire. According to the Providence Journal report, lost wages and a lack of pay
raises will shrink the typical American workers income at age 70 by 4 percent an average of $2,300
a year.

RETIREES LIVING LONGER


The most recent data from 30 of the worlds wealthiest countries suggests that the average worker will
live approximately 19 years after reaching retirement age. Thats up from just 13 years in 1958, when
many countries were devising their generous pension plans. This means that the average retirement
age around the world needs to be raised from age 63 to 67 in order to keep current pension costs
sustainable in the face of longer lifespans.

17

Declining birth rates, however, threaten to compound the problem. In America, for example, birth
rates continue to fall as the bulk of baby boomers retire. This leaves the burden of paying for the retired
generation upon the shoulders of fewer and fewer workers.
Additionally, in countries like China and South Korea, children have traditionally taken care of their
parents who are unable to work in old age. But children are increasingly shunning this task, moving to
distant cities to take jobs and leaving retired parents behind to take care of themselves. This disturbing
trend has left some countries in an awkward stage as old customs fade, but as new systems of caring
for the older generation are not yet in place.

OLDER AMERICANS GET ENTREPRENEURIAL


A growing number of retirees or near-retirees are now looking to their own entrepreneurial efforts to
create retirement income. A revealing Bloomberg article entitled, Older Americans Shun Retirement
at 65 for Risky Startups states that about a quarter of Americans between ages 44 and 70 are
interested in creating their own company or nonprofit venture. And due to the rampant unemployment
crisis, this desire to start a business stems more from a lack of job opportunities that match the skill
set of the individual than from the actual interest in launching a new venture.
People from ages 55 to 64 started over 23 percent of new companies in 2012, up from just 14 percent
in 1996, according to the report.
Many retirees actually want to do something besides play golf and go sailing, and starting a business
is a fun challenge that can provide satisfaction and provide a solid income if done right. Jerry
Robinson, Editor-in-Chief of the FTMQuarterly Journal, recommends that new business owners steer
clear of business debt if possible and work to create multiple streams of income to lower the risk of
failure. If a retiree can stay out of debt and get diversified in their new business, there will be less
risk of huge monetary losses if the business were to fail, says Robinson.

ONE SOLUTION: CREATE MULTIPLE STREAMS OF INCOME


As the global retirement crisis continues to unfold, an increasing number of individuals will be seeking
ways to aggressively protect their retirement savings and to supplement their income. One solution for
retirees, and those nearing retirement, is to focus on income diversification. The average U.S. retiree
typically has only two income streams: 1) Social Security and 2) a retirement plan (401k, pension, or
IRA). Social Security benefits are rarely enough to cover basic living expenses, much less a decent
leisurely lifestyle. Further, many retirees are fearful of outliving the money they have saved in their
401(k) or IRA.
Those who have created multiple streams of income do not lie awake at night worrying about losing
their jobs or whether or not Social Security will continue sending their checks every month. The
concept of diversification is not just for investments, but also for your income. In fact, diversification
is a Biblical concept as modeled in the life of Abraham:

18

NOW ABRAM WAS VERY RICH IN LIVESTOCK, IN SILVER, AND IN GOL D. (GENESIS 13:2)

Abraham also had herdsmen and servants, which meant he was an employer he was a business
owner. We would do well to pattern our lives after this
example in order to truly obtain financial freedom.
So, what is the best way to get started creating more
income streams? As an FTM Insider, you have exclusive
access to Jerry Robinsons Income University (right
there on your FTM Insider Dashboard!). In our Income
University, you will find tutorials on 22 different income
streams you can create both pre-retirement and postretirement. Here is a sample of the various income
streams you will find:
How to Maximize Social Security Income
Becoming a Landlord: Make Money with Rental
Real Estate
Make Money in Real Estate Without Being a
Landlord
How Seniors Can Live Mortgage Free in Their
Own Home (Reverse Mortgages)
Make Money Online With Affiliate Marketing
And 17 More!
If you havent visited the Income University yet, now is a great time to get started. Just login to your
FTM Insider account and click the Income University link.

19

by Jerry Robinson, FTMQuarterly Editor-in-Chief

TODAY we live in a very unique financial era. Never before have so many people had
access to the financial markets. Along with this access has come a wide array of investment choices
that is simply unprecedented in number. As a rule, there are only a handful of assets that I consider
worthy of holding for life. These include hard assets like gold and silver, real estate, and business
ownership interests. But recently, an associate of mine asked me if
there were any stocks that I would also consider holding for a
lifetime. With hindsight being 20/20, there have been a large
number of stocks that if simply bought and held for a generation,
would have yielded immense returns (Think: Walmart, Home
Depot, Microsoft, Coca-Cola, etc.).
But what about in todays economic environment? Is it still advisable
to put your money into the stock market and walk away until
retirement? Anyone who was close to retirement age during the
market crash of 2000 or 2008 would likely say NO! However, the
question stuck with me. As a swing trader, I rarely consider holding
stocks for more than several months at a time. But I must admit,
there are some companies with balance sheets so rock solid and with
business models so profitable that it would be foolish to ignore them
as long-term holds. And when I say long-term holds, I mean for life.
Upon further reflection, I decided to dig deep into the financial markets in an effort to uncover
potential stocks that I would personally buy and hold forever. After some research, I began compiling
a list of companies that I call Forever Stocks. To qualify as a Forever Stock, the company must have
strong and growing revenues and net income, strong profitability, plenty of free cash flow, relatively
low debt and a low price-to-book ratio, as well as a high return on equity.
Additionally, each company would need to have what famed billionaire investor Warren Buffett calls
a strong economic moat. That is, the company should have such a competitive edge over its peers that
its market share and continued revenue growth and profitability are insulated.
In this article, I have presented two stocks that I personally own and plan to hold forever. (In future
issues of the FTM Journal, I will provide more ideas until we reach a total of 10 Forever Stocks.)
20

If anything substantial changes regarding these stocks, then of course I would consider selling. In a
future article, I will explain what would prompt me to sell one of these Forever Stocks.
For now, lets examine two Forever Stocks that you can consider for your own portfolio.

FOREVER STOCK #1 NOVO NORDISK


Ticker: NVO
Sector: Healthcare
Industry: Biotechnology
Novo Nordisk is my favorite big pharma stock for the foreseeable future. The Danish company virtually
dominates the diabetes treatment market, making it a pure play on diabetes. Seventy-five percent of
the companys $14 billion in annual revenues are derived from their diabetes portfolio.

GROWTH OPPORTUNITY
Novo Nordisk currently treats approximately 23 million diabetes patients, despite the fact that an
estimated 371 million people suffer from the potentially deadly disease. While this is a tragic statistic,
it represents a tremendous growth opportunity for Novo Nordisk.
Diabetes is a massive health crisis developing in slow motion. If you are not familiar with the emerging
global epidemic of diabetes, consider these startling facts from the World Health Organization.
In the U.S. alone, the number of people diagnosed with diabetes has risen from 1.5 million in
1958 to 18.8 million in 2010, an increase of seismic proportions.
Diabetes is a silent epidemic and according to WHO, there are 246 million people in the world
living with diabetes. This is almost 6% of the world's adult population.
Diabetes causes 6 deaths every minute and one in 20 deaths in the world is due to the condition.
Every year it is estimated that 3.2 million people in the world die due to the diabetes or its
related causes.
Total deaths from diabetes are projected to rise by more than 50% in the next 10 years. Most
notably, they are projected to increase by over 80% in upper-middle income countries.
Reports of type 2 diabetes in children - previously rare - have increased worldwide. In some
countries, it accounts for almost half of newly diagnosed cases in children and adolescents.
80% of diabetes deaths are now occurring in low- and middle-income countries.
The current cost of treating diabetes and its complications in the world is estimated to be
upwards of $375 billion.
21

Novo Nordisk manufactures and markets pharmaceutical products


and services. Created in 1989 through a merger of two Danish
companies dating back to the 1920s, it has become one of the world's
leading companies in diabetes care. While Novo Nordisk pursues
research into pulmonary delivery systems, other companies, such as
Medtronic, have expanded into insulin pump systems. Novo Nordisk
also commands large sectors of the markets in haemostasis
management, growth hormone therapy and hormone replacement
therapy. They are beginning research in the areas of autoimmune and chronic inflammatory diseases,
using novel technologies such as translational immunology and monoclonal antibodies. With
headquarters in Denmark, Novo Nordisk has international production facilities in seven countries,
with affiliates or offices in 76 countries. Novo Nordisk employs approximately 29,000 people globally
(as of Q4 2009), and markets its products in 179 countries. Novo Nordisk is a full member of the
European Federation of Pharmaceutical Industries and Associations (EFPIA). Novo Nordisk has been
ranked 25 among 100 Best companies to work for by Fortune.

FOREVER STOCK #2 BRITISH PETROLEUM


Ticker: BP
Sector: Energy
Industry: Oil and Gas Integrated
BP was founded in 1889 and its stock became available to investors on the New
York Stock Exchange in 1970. The company, which is headquartered in
London, is the worlds third-largest energy company and is the fourth-largest
company in the world based upon revenues. BP takes an active role in all
aspects of the oil and gas industry, including exploration and production,
refining, distribution and marketing, petrochemicals, power generation and
trading. The company also has a large and growing presence in the renewable
energy sector, including in biofuels, hydrogen, solar and wind power.
British Petroleum is a controversial company. After the 2010 explosion of an oil rig located in the Gulf
of Mexico, which spilt 200 million gallons of oil into the ocean, the company has struggled to regain
credibility and market share. In the latter part of 2013, the companys share price began to break out
of a multi-year slump and trek higher towards its pre-Gulf Oil Spill price levels.
My selection of BP as a forever stock is in no way an endorsement of the more controversial aspects of
the company. (However, I admit that I was impressed that the BP executive management took full
responsibility for the tragic oil spill and was quick to pay billions to victims of the tragedy.) Instead,
my analysis is simply based upon a strict set of financial criteria.

22

When compared to its oil and gas peers, BP appears to be a bargain. Currently, BP is trading at just 6.3
times earnings. This is much lower than its 5-year average price to earnings of 8.4, according to data
from Morningstar. And it is also much lower than the P/E ratios of its peers: Chevron (9.7), Shell (11),
and Exxon Mobil (13).
BP pays a current yield of 4.7% and offers an impressive 19.5% return on equity, which is higher than
both Chevron (17%) and Shell (11.6%), and just shy of Exxon Mobils ROE of (20.4%).
While I personally prefer Chevrons overall business model to BPs, it is ultimately BPs beaten down
stock price that attracts me as a bargain hunter. The company is an oil giant and a cash cow. And at its
current share price of $48.50, I think that it is a bargain for those who are seeking long-term exposure
to the oil and gas sector at a very reasonable price.

23

RECENT TRADING PERFORMANCE


Ticker

Buy Date

Buy Price

Sell Date

Sell Price

Days
Held

Profit/Loss
%

HAR

1/13/2014

$86.03

1/22/2014

$90.33

4.99%

GDX
CI
DAL
PKG
MAN
SKM
STX
ROK
SLM
CECO
AUXO
SID
FB

1/13/2014
1/14/2014
1/8/2014
12/18/2013
12/16/2013
12/2/2013
12/6/2013
11/29/2013
11/26/2013
12/23/2013
12/30/2013
12/18/2013
12/13/2013

$22.58
$88.67
$29.53
$62.65
$83.02
$24.12
$50.65
$114.45
$26.43
$5.54
$1.45
$5.86
$52.17

1/22/2014
1/22/2014
1/17/2014
1/17/2014
1/13/2014
1/13/2014
1/9/2014
1/9/2014
1/8/2014
1/3/2014
1/3/2014
12/30/2013
12/30/2013

$23.39
$90.12
$31.23
$65.07
$85.55
$23.99
$59.07
$116.74
$26.44
$5.57
$1.31
$6.21
$54.77

7
6
8
21
19
29
23
28
29
8
4
8
12

3.58%
1.63%
5.75%
3.86%
3.04%
-0.54%
16.62%
2.00%
0.03%
2.58%
-9.65%
5.97%
4.98%

JERRY ROBINSONS TRADING TIP

Never buy a stock within the first 30 minutes of the trading day.
While die-hard day traders often live for the excessive volatility that occurs within the first 30 minutes
of the markets open, this volatility is not a friend to Trigger Traders. Why? Put simply, the markets
are full of distortions in the early minutes of each trading session as buy and sell orders from the
previous evening and early morning hit the markets during this time. Many investors place buy or sell
orders before the markets open in the morning, which are nearly all filled within the first 30 minutes.
Because of this excessive volatility, it is not unusual for a particular stock to rise above its trigger
price within the first 30 minutes only to fizzle later in the trading session.
However, when it comes to selling a stock, the exact opposite is true. In fact, I almost always take
advantage of the volatility in the first 30 minutes to sell out of my positions and lock in gains. In fact,
many traders are extremely successful at buying a stock one day and selling it for a small profit amid
the volatility of the first 30 minutes of the following trading day.
As a rule, I dont put money into the markets within the first 30 minutes of the markets open. But I
will often use that same time period to take money out of the markets.
24

Find us online at
www.ftmdaily.com
D ISCL AIME R : TH E FTM JOUR N AL C ON TAI NS IN FOR M ATI ON A B OU T EC ON OM IC S, GEOP OL I TI C S, AND I N VESTI N G. TH E
I N FOR M ATI ON PR ESEN TED I S N OT AD VIC E, AN D SH OUL D N OT BE TR EATE D AS SUCH . Y OU M UST N OT R EL Y ON TH E
I N FOR M ATI ON IN TH I S N EWSL ETTER AS AN AL T ER N ATI VE TO FI N ANC I AL , L EG AL, T AX, I N VESTIN G, OR AN Y OTHER AD VIC E FR OM
AN AP PR OPR I ATEL Y QU A L I FI ED PR OFESSI ON AL. I F Y OU H AVE AN Y SP EC I FIC Q U ESTI ONS AB OU T AN Y OF TH ESE M ATTER S, Y OU
SH OUL D C ONSU L T AN AP P R OP RI ATELY Q U AL I FIED PR OFESSI ON AL. FTM D AI L Y.C OM ("FTM OR " WE" OR " U S" ) I S N OT
R EGI STER ED AS AN I N VESTM EN T AD VISER. I T R EL I ES U P ON TH E " PU BL I SH ER S' EXCL U SI ON" FR OM TH E D EFIN I TI ON OF
I N VESTM EN T AD VI SER U ND ER SEC TI ON 20 2(A)( 1 1) OF THE IN VESTMEN T AD VI SER S AC T OF 1 9 4 0 AND C ORR ESP ON DI NG STATE
SEC UR ITI ES L AWS. AS SU CH, I T D OES N OT OF FER OR P R OVI D E P ER SON ALI ZED AD VIC E. WE P UB LI SH IN FORM ATI ON AB OUT
C OMP AN I ES IN WHIC H W E B EL I EVE OUR R EAD ER S M AY B E I N TER ESTED AND TH I S I N FOR M ATI ON R EFL EC TS OUR SINC ERE
OP I NI ON S. TH E I N FOR M ATION TH AT WE P R OVI D E OR TH AT IS D ER I VED FR OM OUR WEB SI TE AN D OR SER VIC ES I S N OT I N TEN D ED
TO B E, AND SH OU LD N O T BE CON STR U ED IN AN Y M AN N ER WH ATSOEVER AS, PER SON ALI ZED AD V IC E. AL SO, OU R WEB SI TE AN D
OR SER VIC ES AN D TH E I N FOR M ATI ON P R OVI D ED B Y U S SH OUL D N OT B E C ON STR UED B Y AN Y SUB SC RI BER OR P R OSP EC TI VE
SU B SCR I BER AS I TS SO LI CI TATI ON TO EFF EC T, OR ATTEMP T TO E FFEC T, AN Y TR ANSAC TI ON I N A SEC UR ITY. IN VESTM EN TS I N
TH E SECU RI TI ES M AR KE TS, AN D ESP ECI ALL Y I N OP TI ONS AN D FU TU R ES, AR E SP EC UL ATI VE AN D I N VOL VE SUB STAN TI AL R I SK.
TH E IN FOR M ATI ON TH AT WE PR OVID E OR TH AT I S D ER I VED FR OM OU R WEB SI TE AND OR SER VIC ES SH OU L D N OT B E A
SU B STI TU TE FOR AD VIC E FR OM AN I N VESTM EN T P R OFESSI ON AL . WE EN C OU R AG E Y OU TO OB TAIN P ER SON AL AD VI CE FR OM
Y OUR PR OFESSI ON AL IN VESTMEN T AD VI SOR AND TO M AKE IN D EP END EN T I N VESTIG ATI ONS BEFOR E AC TI NG ON THE
I N FOR M ATI ON TH AT Y OU OB TAI N FR OM I T OR D ER I VE FR OM OUR WEB SI TE AN D OR S ER VIC ES. ONL Y Y OU C AN D ETER MI N E WH AT
L EVEL OF RI SK I S APP R OP RI ATE FOR Y OU.

25