The Rude Awakening
Lake Tahoe, Nevada
Wednesday, July 4, 2007 ------------------------- - The "Blue Gold" water story - one year on,
- Investing like it's your own money,
- Sating thirst in Lake Tahoe and plenty more…
------------------------- Eric Fry, reporting from the shores of Lake Tahoe… "Can I drink the water?" asked your editor's youngest son, Ethan, as he cupped his hands in the crystalline waters of Lake Tahoe yesterday. "Sure," your editor replied. "You'll probably be okay." Ethan took a slug of the lake water and declared, "Wow! That's good. It tastes like real water." For the sake of espirit de corps, Ethan's father also took a swig from the lake. Twelve hours later, neither Ethan nor his father exhibited any signs of gastro-intestinal distress. Maybe the two of them simply lucked out. Or maybe not. In a world of decreasingly potable surface waters, Lake Tahoe seems absolutely Edenic. Yesterday, your editor and his son went parasailing on Lake Tahoe. While floating along 300 feet above the lake, the waters below seemed even more flawless. Very few bodies of water are as impossibly gorgeous and as respectably clean as Lake Tahoe. In fact, many of the world's largest bodies of water have become impossibly polluted. At the same time, many of the world's largest underground aquifers are falling to perilously low levels. In short, the globe seems to be facing a water crisis. That's why your editor's colleague, Chris Mayer, drafted a special report on water-focused investments. Exactly one year ago, on Fourth of July 2006, Chris issued a report entitled, "Blue Gold," in which he recommended five specific water stocks. All of them have performed brilliantly (as Joel details below). But Chris continues to advocate a long-term commitment to these stocks and to this sector. Admittedly, lots of stocks have performed well over the last 12 months. But water stocks have performed particularly well. Maybe they're due for a rest, but Mayer still harbors a strong affinity for certain stocks in the sector. In the two most recent alerts that Chris dispatched to the subscribers of Mayer's Special Situations, he offered the following updates… --- The Agora Financial Reserve - Closing Tomorrow! --- Find out how you can grab a free subscription to our newest $995 Energy & Scarcity Investor service AND lock in all our best investment ideas…for life. The Agora Financial Reserve is off the table tomorrow night. Details Here: The Agora Financial Reserve -------------------------------------------------------- The Most Dangerous Religion
By Chris Mayer "Thinking the guy up ahead knows what he's doing is the most dangerous religion there is." --Kurt Vonnegut, "Brief Encounters on the Inland Waterway" I like this Vonnegut quote. It reminds me of Wall Street research. And it reminds me of the investors who trust in Wall Street research. I don't like the dangerous religion of blind faith in Wall Street. Instead, I prefer to operate where many professional investors fear to tread - in the small cap sectors where Wall Street analysts rarely venture. Needless to say, it's pretty hard to follow Wall Street advice when there isn't any. That's the area of the market we've been investing in of late. It's virgin territory. I plan to continue exploring for opportunities in this sector. You should know that I pursue every single investment idea as if it were entirely my own money. My own family invests in this stuff. Even my in-laws! Therefore, you know I gotta pay attention here! My investment approach hangs heavily on the fundamentals of the business involved. The fact is, they don't change all that much, even though the stock prices bounce all over the place. Water stocks are a perfect example. One year ago today, I issued a special report on water stocks, dubbed "Blue Gold." The recommended stocks in this report have performed brilliantly - up an average of 60% over the last twelve months! Very likely, these names are due for a bit of a pullback, but when to get back in? The Blue Gold Portfolio was the report I sent out when my service, Mayer's Special Situations, opened for business last June. I plan to hold those stocks for years, barring some fundamental change in the businesses. To be upfront with you, I have no interest in trading these stocks. If you want to ride along with me on them, do it with patient money. Right now, there are three Blue Gold stocks to think about. Gorman-Rupp (GRC:amex), Hyflux (HYFXF:pink sheets) and Lindsay (LNN:nyse) are the only stocks below my buy-up-to prices. Hyflux is the most appealing, as it has the most upside - but it is also the most risky. I don't think you need to rush into the other two, though I like both long term. I'd put Hyflux at the top of the Blue Gold heap and the other two about even behind it. The big news in our portfolio last week was Lindsay's (LNN:nyse) sterling earnings report, which sent the stock flying. Lindsay trounced Wall Street's estimates. The stock is up about 74% for us in about a year's time. Lindsay's main business is in irrigation equipment. In our new water-constrained world, modern irrigation equipment is one good way to use water more efficiently. Lindsay also benefits from the agricultural boom under way. Higher prices for corn and wheat and other staples mean farmers' incomes are up. That means they have a little more money to spend on things such as farm equipment. Agriculture is the largest user of water resources. You can see the rapid increase in water use relative to population growth. As the FT reports: "Annual world water use has risen sixfold during the past century, more than double the rate of population growth." Seems to me water conservation will only become more important as the years roll on - and Lindsay's irrigation equipment is part of that solution. The trends backing Lindsay's business are powerful and long term. Ride the wave. Hope that gives you some ideas. As to market timing, your guess is as good as mine. I don't know what the market will do. I thought it looked scary toward the end of the year. But instead, the market rallied hard. I just try to pick up good stuff that I can hang onto even in the face of a market decline. Everyone's tolerance for that sort of thing is different. You can hedge by using options - buying puts on the market, for example. Or you can lighten up on your stock holdings. Those are personal decisions based on your own stomach for volatility. In my own account, I don't use stop losses and I don't use options to hedge. I ride it out and accept the volatility. As an individual investor, I view my tolerance for volatility and low liquidity as one of my advantages against the big boys. Oh, and the best lifeboat is cash. In the rising tide of market volatility, the sinking level of worldwide water supply provides a fundamentally sound investment theme. Simply put, water is precious, especially when you don't have it. Joel's Note: I knew that Chris' water stocks had done pretty well since the water report was released last year. He and Eric spent a lot of time researching the sector, choosing companies they felt had the most upside exposure to the growing global water crisis. We wrote about it extensively and tried to urge Rude readers to take advantage of this unique investment opportunity. Even so, when we celebrated the water report's release last 4th of July, I had no idea they would skyrocket in quite the way they have. Yesterday I wrote Chris to find out exactly how his original recommendations had performed. Here is his reply: "Joel, the latest scorecard on the water report stocks is: +62%, +82%, +68% +56% and +32%…Pretty remarkable, eh? In only one year!" This year, we're offering another opportunity to fatten your portfolio. This offer includes a full, lifetime subscription to all our current services - including both of Chris' letters - for life. Whether you are a small cap investor, a resource trader, tech stock enthusiast or just about any other type of investor, you'll find all you need with the Agora Financial Reserve. I wish I could say that every Rude reader enjoyed the results of Chris' water stocks, but I can't. Not everyone took me up on last year's offer…and not everyone will do so this year. I truly hope you are able to take advantage of the Agora Financial Reserve offer I'm making today. It's sitting at the lowest price ever to be offered again and, what's more, it closes tomorrow night. If you're
interested, you'll find all the details, including the brand new $995 service we're throwing in up front, gratis, right here: The Agora Financial Reserve - Closing Midnight, Tomorrow P.S. If you are already enjoying an Agora Financial subscription, you should be aware that you might be eligible for a further discount. Read on here to learn how packaging your services together can save you a good deal more money: Package Deal For Existing Agora Financial Subscribers | 
