Staying the Course: What You Can Learn From Don Yacktman…and Where He Has His Money Right Now! Dear Friend, If you ask the average person what it takes to be a successful investor, I am sure these two traits would be among the most frequent responses: hard work and intelligence. I, too, have had the image in my mind of a successful investor – someone who wakes up at the crack of dawn to check the overseas markets…and who juggles a desk filled with computer screens tracking every wiggle in the markets. But over the past several years, that image has changed. I have read about and have met many successful value investors, and they are a far cry from the image most people have in their heads. Sure, hard work and intelligence are very important to becoming a success. But there are several other traits that one needs to possess as well, the most important of which is the discipline to stay the course no matter how bad things look over the short term. Discipline Rewarded – The Rise…Fall… and then Rise Again of Don Yacktman I don’t think any value manager was more out of favor than Don Yacktman, president and CIO of Yacktman Asset Management Co. and co-manager of the Yacktman Fund (YACKX), in 1999. Don was named Morningstar Inc.’s Portfolio Manager of the Year in 1991, but a few years later, in 1999, his fund was one of the worst performers in its category, falling close to 17 percent while the S&P was up 19.5 percent – a difference of more than 36%! His board of directors disagreed with his value strategy so strongly that new directors were installed in the fourth quarter of 1998. Don is a very disciplined man. Even though he saw assets in his funds plummet – and was mocked in the media for holding onto stocks that kept going lower – he did not stray from a philosophy of buying stocks trading at a discount to their underlying value. His discipline was rewarded as the dot-com bubble burst and the stocks in his portfolio began to soar. In fact, all of the fund’s 10-year rolling performance has exceeded the S&P 500 index. And just last month, Don was recognized for his great work once again as he was nominated by Morningstar as one of the finalists for their Fund Manager of the Decade award. As Don’s discipline has shown, value investors are truly a breed apart. A few months ago, I had the opportunity to interview Don Yacktman – and in light of his nomination for the Fund Manager of the Decade award, I wanted to share with you some of his valuable insight…and some examples of his most successful long-term holdings. Enjoy… What Don Yacktman Looks For in His Long-Term Holdings Charles Mizrahi: One of the types of companies you like to invest in are businesses that are high quality and annuity like, that continue to generate huge amounts of cash flow and rack up earnings year after year. Could you give us a few examples of some of your long-term holdings? Donald Yacktman: Sure. Coca-Cola (NYSE:KO) would be a classic because it’s one of our top holdings. And here’s a company where our purchase cost is less than half of where it once sold. It sold as high as $89 a share back in 1998 and almost every year they have had rising earnings and raising their dividends. Our average cost on Coke in the Yacktman Fund is about $41 and about $42 in the Yacktman Focus Fund (YAFFX). The stock is currently trading at our purchase price now (Editor’s Note: This interview was conducted in March 2009…since then Coca-Cola shares have risen to more than $56 per share as of 12/18/09), but when you look at where it’s been and what this company is capable of over a long period of time, it’s almost like a press that prints out money simply because they have very high margins. 80% of their earnings are outside of the United States and they continue to have unit growth. Ther are really a very attractive business. Charles Mizrahi: So on one hand you have high quality businesses like Coca-Cola and on the other hand, looking at your portfolio, you have a nice position in AmeriCredit (NYSE: ACF)… Donald Yacktman: Yes. AmeriCredit’s a totally different concept. It’s similar but you get there a lot differently. In the case of AmeriCredit, it’s a financial and rarely do we put a lot of money in financials because they tend to be black boxes –we don’t know what’s in them. In other words you don’t know what the quality of the assets are, and you don’t know what kind of problems they have. While Americredit  sounds incredibly risky because they make subprime auto loans on used cars, is not nearly as risky as first perceived. There are several reasons for that. For one thing the average loan amount is probably $15,000. And keep in mind they are lending to people that tend to live in apartments, so they don’t have houses and huge mortgage obligations. In today’s market you really need a car to get around and you can’t very well drive your house to work. They changed the bankruptcy laws making it much more difficult to default on an auto loan. Plus about 40% of the loan is paid back in the first year, which reduces principal and pays off interest. It’s much better than a credit card company for instance. In a credit card company when the credit card holder gets into financial trouble they tend to run up their balance. In the case of AmeriCredit they doing the opposite — they’re running down their balance. Also the company has the car as collateral and typically they’ll get back 40% to 45% when an automobile is repossessed. So it’s a lot different than most financial companies. In addition, AmeriCredit is giving enormous amounts of data [to shareholders]. But the other thing, from a valuation standpoint, is this company has something in the neighborhood of a $15 book value. What’s happening now is because they can’t securitize loans, they’re really in a kind of a runoff position. But even at a worst case scenario the company is at least worth their book value. In addition to that, you’ve got two major holders who own 50% of the company–Leucadia National Corp. (NYSE:LUK) and Fairholme Funds (FAIRX). Leucadia has been in the business before – their cost basis on Americredit when they bought the stock last year is around $12 to $13 a share. We’ve actually owned AmeriCredit for a period of time over the years when we bought it low and sold it high. Back in ’03 we bought it at about $2 a share and sold out a lot of it when it got into the $30s. Our average cost now when we repurchased it is about $7 per share. (Editor’s Note: Since this interview was conducted back in March, shares of AmeriCredit have soared to more than $18!) Charles Mizrahi: One of your long-term holdings is Proctor & Gamble (NYSE:PG)… Donald Yacktman: P&G, again is very much like Coke or PepsiCo (NYSE:PEP). You get a great business that has high market share, high return on assets, and is still growing units while selling more products internationally. Again it’s another one of those “printing press” type of businesses. If the Fed isn’t able to reverse gears fast enough on all the money that’s coming into the system, the economy could be facing a lot of inflation. And it will be the Coke, Pepsi, and P&Gs of the world that will benefit by having the ability to raise prices and do very well in almost any type of economic environment. Where Don Yacktman Has His Money Right Now I’ll have more of my interview with Don Yacktman in next week’s issue – including how he’s used Benjamin Graham’s approach to achieve success…and how he rebounded from his 1999 performance to again be recognized as one of the top fund managers in the business. It’s important for all value investors to learn as much as possible from the true “masters” of the industry…and Don Yacktman is certainly a master, as Morningstar’s recent accolade has confirmed. But as a final value lesson for this week, I’ll leave you with The Yacktman Fund’s Top 10 Holdings as of 9/30/09. How You Can Put Warren Buffett’s Most Valuable Tools to Work For Yourself…FREE of Charge! Each month – in my Hidden Values Alert advisory letter – I provide two thoroughly researched “extreme value” recommendations that are based on the principles used by great value investors like Don Yacktman and Warren Buffett. But rather than just tell you about my Hidden Values Alert – I’d rather show you…with a FREE ISSUE. So right now – for a limited time – I’m offering you a no-risk, FREE trial to Hidden Values Alert …my highly successful advisory service that serves as the Ultimate Insider’s Guide to Value Investing. Click on the link below to claim your FREE 30-Day PREVIEW of Hidden Values Alert. Then you can decide if the service is right for you before you ever pay so much as a dime. No gimmicks…no catches…and no tricks. Just click here now to claim your 100% RISK-FREE trial subscription to Hidden Values Alert-and get immediate access to my complete list of open recommendations. Sincerely, Charles Mizrahi, Editor Hidden Values Alert P.S. The only companies who make it into my Hidden Values Alert portfolio are great businesses trading at deep discounts – companies like those that Don Yacktman has enjoyed such great success with. I’d like you to try my wealth-building service RISK-FREE with this special 30-day FREE preview. Click here to begin your journey right now!   Eastman Communications Inc. PO Box 290708 · Brooklyn, NY 11229 Hidden Values Alert, a general interest newsletter is not liable for the suitability or future investment performance of any securities or strategies discussed. Hidden Values Alert is published by Eastman Communications, Inc. As a publisher of a financial newsletter of general and regular circulation, we cannot tender individual investment advice. Only a registered broker or investment advisor may advise you individually on the suitability and performance of your portfolio or specific investments. Historical investment return examples given are hypothetical, and not to be taken as representative of any individual’s actual trading experience. Eastman Communications, Inc. is the publisher of Hidden Values Alert. Copyright © 2009 Hidden Values Alert. All Rights Reserved.

America is NOT a Sinking Ship!

Dear Fellow Investor,

Pundits have been foretelling the Stock Market Apocalypse for so long you’d think the Book of Revelations was an investment manual.
Now, once again, the prophets of disaster are giving the U.S. up for dead and trying to scare you out of U.S. stocks …

… They say the American economic ship is sinking…
… They say the dollar is dying…
… They say the Good Times are GONE forever.
… They say the economic sun has set on Old Glory…

What a bunch of chicken-little bullcrap.

If you listened to them in 2009 – YOU LOST MONEY.
Just like if you listened to them in 1999…the 1980s … or the 1970s – YOU LOST MONEY.
If you listen to them in 2010 – YOU’LL LOSE MONEY AGAIN.
Investors who got suckered into their anti-U.S. market, fear-mongering have already lost out on some of the best gains of their career … just like every other time.

History has not been kind to investors
who bet against the U.S.A.

We’ve been making money all year long in this market.

But all of a sudden the investment gurus, pundits and media want you to believe this ship is lost. That the crooks on Wall Street and the idiots in Washington have completely destroyed all hope for a stronger, wealthier America.

I say they’re wrong. American is NOT sunk. And the American Economic Juggernaut is NOT dead. The sun HAS NOT set on Old Glory.

This week I’m going to show you why the U.S. stock market is still the #1 place to grow your wealth and get rich. In the short term, the mid-term and the long-term.

And I’m going to GIFT YOU with our Speed Value Investing system for cashing in quickly on volatile markets while limiting your risk (it’s been making money hand over fist all year).

The Prophets of Disaster have a perfect batting average
for counting the U.S. economy out – so far they’ve consistently
been…100% WRONG

The Prophets of Disaster have a perfect batting average for counting the U.S. economy out – so far they’ve consistently been…100% WRONG

Disparaging the U.S. economy must be the national-pastime in investing-pundit land because they’ve been doing it for decades with no signs of slowing…

➢ They were dead-wrong in the 1970’s when the recession, peak unemployment, the oil embargo, the Great Inflation and more meant the end of U.S. stock investing …

➢ They were dead-wrong in the 1980’s when they said U.S. companies would be totally surpassed by the Japanese economic miracle…

➢ They were dead-wrong in the later 1980’s when the dollar lost 40% of it’s value and they said the sky was falling – right before our best years ever…

➢ They were dead-wrong in the late 1990’s when the said Y2K was going practically destroy the world in general and the U.S. in particular …

➢ They were dead-wrong at the start of 2009 when they SUCKERED investors into staying OUT of the biggest market run-up in 80 years.

They’ve got a track-record counting the U.S. out only a mother could love.

Now they’re calling for the death of the dollar. They’re calling for the toppling of the U.S. as the world’s greatest economy. They’re telling us we’re going into the “The NEXT Great Depression” and worse.

They telling us to take our money out of U.S. stocks and go… just about anywhere else. They want you to believe your money is better off in the hands of the Red Chinese and the Russian Bear than it is the land of Washington and Lincoln.

This entire week we’re going to poke BIG GIANT HOLES in these arguments using cold, hard FACTS. And show you where the real money is right now.

Investing pundits are the personification of that
drunken psychopath, “Mr. Market”

I know for a FACT after the crash of 2008 pundits were scaring investors into high-ticket “crash-portfolios” that went NOWHERE.

Because the crash ALREADY HAPPENED!!!
WORSE: They used fear to suck millions of dollars OUT of investors who had the good “fortune” to PAY these fools for the opportunity to MISS OUT ON the single greatest stock market run-up of the last 80 years.

So not only did they suffer during the market crash – they paid good money for BAD ADVICE that LOST them their best chance to make it back fast.

It may not be illegal – but I’ll be damned if it’s not immoral.

This is why Benjamin Graham, the God-Father of modern investing, and his army of Super-Investors, generalled by Warren Buffett, tell you “Mr. Market” is a drunken psychopath who is there to SERVE YOU. Not there to guide you.

The pundits are just histrionic MOUTHPIECES of Mr. Market. After the crash in late 2008 they couldn’t even imagine how the market could recover. They’ll ONLY start declaring the bull market long AFTER you missed out on all it’s major gains.

Yes, there are STILL very REAL problems in the economy but there’s a lot of money to be made in the markets. We’ve been doing it all year long.

Just remember: 99% of investing advice on the news and internet is just lemming minded B.S. trying to predict where the market is going by looking in the rearview mirror.

We’ve ALWAYS had CROOKS on Wall Street
and IDIOTS in Washington!

There is NO DOUBT whatsoever that Wall Street is full of crooks.

And the ones who aren’t crooks are just looking out to get their share.

Trying to pretend the traders at Goldman Sachs, JP Morgan and other banks are anything but 100% greedy, self-interested S.O.B.s is a fairy-tale too far-stretched even for even Disney to make a movie about.

And politicians? “Idiots” is about the nicest thing I can say about them.

99 politicians out of 100 (maybe more) are moronic, self-interested boobs.

GUESS WHAT? THAT’S HOW IT’S ALWAYS BEEN!

And the American Entrepreneur and the American economy succeeds in SPITE of them – not because of them.

But ask yourself this:

Do you REALLY believe the politicians
in other countries are the
“Philosopher Kings” Plato dreamed about?

If you’re getting scared out of the market because the FED’s actions … the President’s spending … or because or regulators fell down on the job you are NOT going to find solace in foreign markets.

Good lord folks – journalists who just CRITICIZE Russia’s PRESIDENT live in fear of their lives…CEOs are thrown in jail and their companies nationalized on the spot… do you believe the Red Chinese are suddenly a capitalist’s best friend?

South America? Do you even watch the news?

There isn’t a country on the planet where you could invest that is NOT full of crooks, idiots and that “perfect storm of greed and incompetence”– the crooked politician.

You know that as well as I do. I mean, seriously, “Welcome to planet earth.”

If you can’t face these facts you shouldn’t be investing anything, anywhere.

Secrets of Speed Value Investing
For cashing in on the volatile U.S. markets

We are in the middle of a crazy, volatile market.
And our readers have been making a FORTUNE all year long.
Because we’ve been following the #1 rule of successful, rational investing:
Be fearful when others are greedy, and greedy when others are fearful.

We’ve bagged 18 winners out of 18 closed positions. Every single one of them with 50% gains or more.

I know, it’s scary. We’ve got a FED printing money like crazy and we know for a fact that will lead to high rates of inflation. We’ve got a president who hasn’t seen a spending bill he didn’t like. The dollar is falling in value.

In other words, as investors – we’re about to make a fortune!

This week I’m going to be laying bare the secrets behind our “speed value investing” strategy for cashing in on these volatile markets.

So watch your inbox as I start to show you where the biggest profit opportunities are right now.

I’m going to show you why you don’t have to sacrifice safety for speed. And why the fastest way to multiply your portfolio is also the safest.

The Speed Value Investing Portfolio & System
will be FREE – watch your inbox this week

PLUS: I’m going to GIFT YOU with the speed value portfolio making its members a fortune this year because I’m sick and tired of talking heads scary investors out of smart investments.

So I’m going to letting investors get what I consider the most profitable system for investors who want to make fast profits –WITHOUT sacrificing safety – in these volatile markets.

I can only do it for a small group – just 500 investors out of the 250,000 or so who follow our emails. But I want everyone to know the truth about why America is NOT Sunk.

So all week I’ll be shining a light on the fear-mongering B.S. the internet pundits, the mainstream media and the gurus are laying on thick in order to sell you investing systems and strategies that don’t work.

So watch your inbox this week to see why things are not as bad as you might have been led to believe.

Feel free to leave a comment below and let me know what you’re most worried about in terms of the economy and the market.

And if you listened to pundits who lost you money this year I want to make sure you’re one of the few investors who can get the speed-value system that has been making money hand over fist all year – so post below if you were led astray by gurus or pundits this year.

Sincerely,

Charles Mizrahi
Read more…

Dear Friend,

If you’re like me you’re more than a little sick of all the hyped-up claims showing up in your inbox about 1,000% gains and other such nonsense.

A friend sent me an email asking me about a stock picking “system” promising to double your money every 90 days. Leave a comment and let me know what you think about my rant explaining why this type of claim is a flat-out lie.

Yes, you CAN beat the market – we’re doing it right now with 45.9% returns for the year – BUT I’d never promise 45% returns EVERY YEAR – not even Warren Buffett could deliver on that.

But every day you and I get emails from folks promising the moon.

So I put this video together to set the record straight because people are getting suckered by wild financial claims that are impossible.

Leave a comment and let me know what you think, I read them all.

Sincerely,

Charles Mizrahi, Editor
Hidden Values Alert & The Inevitable Wealth Portfolio

Hidden Values Alert & The Inevitable Wealth Portfolio, are general interest newsletters and are not liable for the suitability or future investment performance of any securities or strategies discussed. Both are published by Eastman Communications, Inc. As a publisher of a financial newsletter of general and regular circulation, we cannot tender individual investment advice. Only a registered broker or investment advisor may advise you individually on the suitability and performance of your portfolio or specific investments.

Historical investment return examples given are hypothetical, and not to be taken as representative of any individual’s actual trading experience.

Copyright © 2009 Hidden Values Alert. All Rights Reserved.

Dear Friend,

Wow! Folks are fired up about government spending and what it means for our economy and our investments.

More than 370 readers logged in to express their outrage and say “No! The government can’t have its cake and eat it too. If we print money like there’s no tomorrow we’re headed for inflation.”

And here’s more proof that you were right.

Look at this graph published in The Wall Street Journal yesterday showing the more than TENFOLD increase of our money supply.

According to the article written by noted economist Arthur Laffer (who was an influential member of President Reagan’s Economic Policy Advisory Board), “To date what’s happened is potentially far more inflationary than were the monetary policies of the 1970s, when the prime interest rate peaked at 21.5% and inflation peaked in the low double digits. Gold prices went from $35 per ounce to $850 per ounce, and the dollar collapsed on the foreign exchanges.”

Scary stuff indeed.

Bill G. wrote, “I am very mad and afraid about the amount that the government is squandering, and I fear that my grand children and my great grand children will not have a good life. I see massive poverty.”

Chuck wrote, “I believe inflation will zoom upward and the dollar will drop downward as a result of spending so much money that we do not have. I am trying to revamp my investments to counter these twin evils.”

TL said, “I used to wonder how those 3rd world countries that experienced hyper-inflation allowed it to happen to themselves…. Now, I get to experience it first-hand… This is incredibly depressing… I know what’s happening and what the end result will be, but I still don’t know what to do to lessen the effects on my family.”

Just remember: There’s a way to get rich in every market

Including this one – we saw it in the late 70s and early 80’s when some investors made a killing because they knew exactly how best to invest.

And we know simply buying some gold or a few commodities is NOT enough to protect your wealth, let alone grow it!

That’s why my team and I are working double time to put together a special presentation detailing the most profitable investing strategies for you in the face of inflation.

We’re NOT going to sit back and let stupid decisions in
Washington destroy your wealth

We’re going to get through this together and come out on the other side far richer than we are now. Starting with the presentation on wealth building strategies you can use to profit wildly in an inflationary environment.

But to make sure we give you the most useful information that fits your investing style and your investment needs I need to ask you a few more questions:

1. First of all, are you interested in getting a free presentation detailing investing strategies for protecting and growing your wealth in the face of rising inflation?

2. What, if anything, are you doing right now to hedge your wealth against inflation?

3. Would you like a system that gives you specific “buy”, “sell” and “hold” signals proven to substantially grow your wealth even in the worst inflationary environments? Or even in deflationary times?

Just post your comments below.

I can’t wait to hear your thoughts and like I said, we’ll get through this together.

Best wishes,

Charles Mizrahi
Editor, Hidden Values Alert