Government-Driven Investing: Answers to Your Top 10 Questions

Fellow Investor,

Over the past couple months the government's $12.8 trillion rescue package has become the number one area of interest for StreetAuthority subscribers -- at least if you judge by the number of questions flooding our inboxes. 

By far, the most common request has been on "government-driven investing opportunities" -- specifically, how to profit from the Fed's unprecedented spending spree.

I can't say that I'm surprised at your interest -- investors have been profiting from government action for ages. But today is different: this is the biggest opportunity any of us will live to see.

I've gone ahead and compiled, categorized and ranked over 2,300 survey responses on this topic from readers like you.  I now have a clear vision of what I need to include in my new Government-Driven Investing service to make this advisory as helpful (and profitable) as possible.

In the text that follows, I'm happy to present you with a list of my answers to your top questions on how to profit from government action...

     The economic crisis and the resulting government stimulus package is the biggest financial story of our lifetime.

     President Obama's stimulus plan alone accounts for $787 billion in government spending. It'd be one thing if this chunk of change was being spread out across hundreds of industries. But as you'll see below, the lion's share is being injected into just a handful of sectors...

Note: All numbers shown are in billions of dollars. *Tax Relief -- includes $15 B for Infrastructure and Science, $61 B for Protecting the Vulnerable, $25 B for Education and Training and $22 B for Energy, so total funds are $126 B for Infrastructure and Science, $142 B for Protecting the Vulnerable, $78 B for Education and Training, and $65 B for Energy. *State and Local Fiscal Relief -- Prevents state and local cuts to health and education programs and state and local tax increases.

     The $787 billion in stimulus funds actually looks like small potatoes compared to the total rescue package: if you include the Federal Reserve, the government has authorized $12.8 trillion to get business working again. That comes to $42,105 for every man, woman and child in the country.

     The opportunity you have today is much bigger than ever before, simply because the sums are so much bigger than anything we've seen before.

     This won't happen again in your lifetime. It can't, because there will be no more money left! You need to take advantage and profit from it now -- which is why we're launching Government-Driven Investing.

     Almost too many to list. But we've identified seven sectors that stand out for their pure return potential:

     These kinds of profits roll on for years. Our studies make it clear that government contractors beat the pants off regular firms who are forced to fight fiercely for every sliver of market share. Once one of our stocks gets on the government gravy train it's sitting pretty for years, even decades.

     Back in 2004 we identified a stock that would profit from policies implemented in George W. Bush's second term. We saw +34% gains the first year... and we're sitting on +68% gains to date.

     In 2005 Washington started fancying alternative energy... so we honed in on a security we thought would benefit. It sure has! A year later it was up +25%... and it's gone on to generate +65% gains to date.

     As you can see, pick the right government-driven stock, and the profits can roll in year after year!

     Still not sold? Here's one more for the road. In 2005 we highlighted a mortgage giant whose double-digit promise was guaranteed by none other than Uncle Sam. A year later it was up +16%... not too shabby. And those who didn't cash in after year one's profit run would be looking at +65% returns to date!
 

     Whenever the government gets involved, there is huge money to be made. Amgen's epic stock gains would never have happened if the government hadn't invested heavily in biotechnology in the 1980s. It was a government scientist in fact, working in partnership with Amgen, who made the discovery that led to Amgen's first blockbuster drug.

     Anyone who wanted to make a play on Amgen's government connections in the 1980s could have bought in at $7.75 a share. A thousand-share $7,750 flyer would now be worth $3.6 million. That's a life-changing stock. The same type of partnerships are happening today behind the secretive walls of government and industry. But most investors will never get inside those walls. Or hear about the early deals and discoveries that build real wealth.

     We see it again and again. Whenever Washington decides to help a new industry get off the ground, the investment profits follow in lockstep.

     When the government began its massive effort to modernize its technology in the mid-1990s, Oracle and Dell were the main suppliers. These lucrative contracts kick-started epic growth at both companies, as they branched out to consumers and businesses worldwide.

     Investors who got on board Oracle back then brought home gains of +1,185% by the end of the decade. Dell saw their shares skyrocket +7,861% over the same time, turning $10,000 into a sweet $796,100.

     The best way for you to get in on this action yourself is to pinpoint the companies like Amgen, Dell, and Oracle before anyone else does -- before their stock skyrockets from a sudden injection of government funding.

     In the first issue of Government-Driven Investing, I'll give a pretty strong case for the company I think is the next way the government will make investors rich.  
 

     You're right that the U.S. government isn't the only game around. Dozens of other governments around the world have enormous financial clout. We're just as happy to profit from these governments as our own.

     China recently announced an $808 billion stimulus plan. They are also loaning money directly to foreign firms like Petrobras. (We've found a great way to profit in Chinese infrastructure plays.)

     Japan is spending $154 billion... Great Britain is spending more than $30 billion... France is spending $33 billion...  and in a bid to kick-start its own slowing economy, Canada is spending $9.5 billion on road, bridge, water and other infrastructure over the next two years. The move is part of a $32 billion stimulus spending spree.

     We'll provide specific picks in all these markets in Government-Driven Investing.

    
     We've been covering government-triggered profit opportunities at StreetAuthority for years. I've already told you about a few, but here are some more...
 

	Way back in 2002, we recognized that Moody's benefits from stringent government regulation as to who can enter the ratings market. It is basically a government-induced oligopoly, which Moody's shares with Standard & Poors. We added this stock to our portfolio on May 7, 2002 and five years later it had returned +185%.
	In June 2004, we picked five defense stocks that would prosper under the increased defense spending of George Bush. A year later, they were up an average of +16.1%.
	Bush re-election picks. In November 2004 we picked seven stocks that would be helped by the policies we saw taking shape for George W. Bush's second term. They were all up a year later, ranging from +3.5% to +59.6.
	Homeland Security Picks. In January 2005 we found three stocks that were in line for huge contracts from the Homeland Security Department. They were up an average of +47.4% a year later.
	In January 2007, we singled out a company that would benefit from increasingly strict government pollution controls: South-African based Sasol. A year later it was up +42.2%.
	In October 2008 we looked forward to a post-election market and fingered United Healthcare as a likely winner. It is now up +33.7% in just these few months. All the more impressive in light of the market's loss of -3.8% over the same period.
	Presidential Picks -- Since President Obama took the White House, our top Obama-related picks have delivered gains of +20.5%, +21.7% and +24.0%.
	Since the stimulus package was signed in February, all nine of the infrastructure picks we highlighted have moved higher, and the top gainers have soared +41.7% and +32.0%.
	We recommended Fuel Tech just this past February. It provides pollution-control systems, and it could see a ton of new business thanks to new environmental policies of the Obama administration -- including a "cap and trade" system. It's already up +23.4%.
	When we saw the wild run-up in Treasury Bonds as the Fed pushed rates down to basically zero, we decided it was unsustainable. So we recommended the UltraShort Lehman Treasury ETF, which benefits from a downturn in Treasuries. We added it to our portfolio on 01/15/09 and our total return so far is +15.7%.

     So at StreetAuthority, we've already seen how profitable it is to invest in the companies that benefit from government action.

     The problem is, we've never committed any resources to focus complete attention on this area.  That means there's a lot of money being left on the table.  Just imagine what kinds of profits you'd realize if we had a service that focused entirely on government-driven investment opportunities.

     Well, the the bosses at StreetAuthority imagined.  And they asked me to head up Government-Driven Investing -- an advisory 100% dedicated to helping you build wealth through government action.

 

     Although now is the best time to capitalize on this opportunity, it looks like we have an endless horizon of opportunities ahead of us. There's never a bear market in government spending... and the bailouts and stimulus spending will continue for at least three more years. Much of the spending doesn't take place until 2010 or later, giving you plenty of time to profit.

     Even when the economy is back on track, the government will continue to exert enormous power, influence and money. Washington spends more than $3 trillion every year -- even in normal times.

     Bailout or no bailout, good year or bad, our federal government is gargantuan. It's the most significant financial force on the planet. And each time a public dollar is spent, a private-sector profit is realized.

 

     Income investors who like bonds, preferred stocks and other yield-oriented plays will find plenty of ways to use the government to tilt the investing odds in their favor. For example, we've found a security backed by Uncle Sam that is yielding nearly 14.4%.

     This company buys long-term securities -- but only those with a government guarantee. So its securities have virtually zero credit risk.
   
     To pay for these securities, the company borrows money, but only very short term -- and at very low rates. Result: The company borrows at a low rate and lends high -- and pockets the spread.

     This is almost as good as printing money. And because of its corporate charter, it is legally obligated to pay the profits to its shareholders in dividends. And that's how this government-backed gem is yielding 14.4%.

     All its assets are short-term obligations and all are backed by the full faith and credit of the federal government of these United States. If you're looking for a rich, double-digit return -- and the strongest guarantee available, then these shares are for you.

     You'll get all the details on this company with your subscription to Government-Driven Investing.
 

     Not at all. New government regulations, policies and tax laws are sparking equally lucrative opportunities.

     For example, the tax code change in 2003 fueled a huge boom in REITs, master limited partnerships, preferred stocks, royalty trusts, and just about every sort of income investment. REITs, to pick just one example, soared 166% between the start of 2003 and the end of 2006. We think a similar boom is on the horizon in alternative energy and digital medical records.

     The hands-off era of laissez-faire capitalism is over. Government is playing a bigger role in every aspect of our financial lives. The bailout is just the start of Washington's increased involvement in the economy. The government now has taken partial ownership of our nine largest banks. Our financial services sector is on its way to being transformed into a regulated utility.

 

     No. Plenty of firms receiving a "helping hand" from Washington are none too happy about it. (Just look at the finance firms that are itching to give back the billions in TARP money they've taken now that they realize how onerous its conditions are.)

     Some companies are truly helped and are generating huge profits. We're finding those firms. However, just as many companies are hurt by government regulation and policies.

     The Federal octopus is now so large that its tentacles reach into every cranny of the economy. And it's not always benevolent. It tries to be helpful, but often as not, it triggers the Law of Unintended Consequences.

     That means you can make a lot of profits over the next few years by going short on corporate government victims. A looming disaster is even easier to spot than a looming triumph. And when you go to the store, a downside dollar spends just as well as an upside dollar.

     We've created a blacklist of firms that could be forced out of business by the government. They are some of the most widely-held stocks in America. You'll get this list included with your subscription to Government-Driven Investing.

     I understand that many investors may be wary of jumping back into the market -- and I know this newsletter will not be for everyone.

     However, this is the biggest financial story of our lifetimes and the numbers are so enormous that they are bound to create huge opportunities. With an unprecedented amount of money flowing out of Washington (and foreign governments), and with the traditional media only covering stories that whine about the crisis (and not how to profit from it), savvy investors need a resource that can cut through the smoke and mirrors and hone in on the stocks that will benefit the most from government action.

      With this in mind, I sincerely hope you'll decide to join me for the upcoming launch of Government-Driven Investing.  Let's get ready to profit together from the biggest financial story of our lifetimes!
 

Sincerely,

Andy Obermueller StreetAuthority, Editor Government-Driven Investing

 

Concluding Letter From The Publisher

From: Lou Betancourt, Publisher and Co-Founder of StreetAuthority

     First of all, on behalf of the entire team at StreetAuthority we'd like to extend a warm "thank-you" to all of you who offered your input by filling out Friday's survey on government-driven investing.

     The response to this survey was overwhelming. Although we couldn't get to every question, we hope that at least one of your questions appeared on the list that Andy answered above.

     I wanted to take the time to answer one of the questions that didn't make the list above. Several of you asked:

Are there any services that cover
government-driven profit opportunities?

     Up until May 9th, there was no government-driven newsletter on the market. But since the opportunity is so huge -- and since we've had such success in this area -- we decided to launch one ourselves. It's called Government-Driven Investing. We've racked up so many profits without even devoting our full attention to the subject --  just imagine what we'll do when we devote our full resources to the topic!

     By contrast, looking for the profit angle is all we'll do at Government-Driven Investing. Our researchers will cover unique opportunities that you aren't hearing about elsewhere: prisoner healthcare, banks that are acquiring their failed competitors and payday lending, just to name a few.

     So if you want to profit from what is undoubtedly the biggest financial story of our lifetimes, then you need a publication that puts partisan bickering and government bashing aside, and instead devotes 100% of its attention exclusively to finding easy, simple ways for you to profit from everything that's going on. And that's exactly what we'll do at Government-Driven Investing.

    
Sincerely, 

Lou Betancourt
Publisher
StreetAuthority, LLC