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Sara Nunnally
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Sara is Co-Editor of Smart Investing Daily. As Senior Research Director and global correspondent, Sara Nunnally's diverse resume includes studies in art history, computer science and financial research. She has appeared on news media such as Forbes on Fox, Fox News Live, and CNBC's Squawk Box,... More
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  • How You Make Truly Big Money In Stocks

    You've heard the phrase "Follow the money."

    I've got a new one for you...

    Follow the people.

    That's where the money's going. Like iron to a magnet. Consumerism... demand... growth. Follow the people, and the money will follow you.

    Let me throw a couple numbers at you...

    407: The number of emerging market "middleweight" cities with populations between 150,000 and 10 million

    40%: The amount these cities will contribute to global growth

    By 2025, these 407 "middleweight" cities will contribute more to global growth than the developed world and global "mega cities" (with populations over 10 million) combined.

    Over the next 12 years, 235 million households will earn more than $20,000 in the developing world. That's up from 80 million in 2007. It means an extra $3.1 trillion worth of consumption will hit the markets in developing economies.

    That's how investors will make the truly big money in stocks over the next decade and beyond. They will follow the people...

    Populations in these "middleweight" cities are expected to grow 1.6 times faster than the global average. That means more workers and more consumer demand. Countries with the strongest urban GDP growth are going to be places companies are likely to set up shop.

    Over the long term, the demographic shifts into a consuming society are going to keep the BRICs hot... and put other countries on the map you might not have considered hot spots.

    Here's what I want you to do. Take a look at your portfolio. Check out the big multinational companies you own. See how much exposure they have to these markets.

    Many of them will be underexposed to the big demographic shifts we're talking about. That means they'll be counting on developed markets to grow revenues. Not a smart move over the long term.

    If you're underexposed to global economies with growing "middleweight cities," one stock you should consider buying is Unilever PLC (UL:NYSE). This consumer goods, food and beverage maker has a major footprint in markets with growing consumer armies.

    Unilever - which owns brands such as Ben & Jerry's, Lipton and Dove among others - was setting up shop at the very start of the big surge in emerging market consumer growth. And even earlier than that in China, India, Indonesia and Brazil where the company has had a presence for half a century.

    As you can see from the chart below, Unilever's consumer beauty and health products rank in the top two slots of market share in major growth markets such as Indonesia, the Philippines, India, Russia, and, of course, China and Brazil.

    (click to enlarge)
    View larger image

    More than 2 billion people use a Unilever product every day. But there are about 1.8 billion people set to move up the consumer ladder and become consumers by 2020 - most of them in developing markets.

    Unilever is already positioned in these "high traffic" regions of the world. And it is looking to expand into the next untouched markets such central Africa, Myanmar and Peru.

    That makes it the perfect company to "follow the people"... and let the money come to you.

    Happy investing,

    Sara

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    Disclaimer

    Article brought to you by Inside Investing Daily. Republish without charge. Required: Author attribution, links back to original content or www.insideinvestingdaily.com. Any investment contains risk. Please see our disclaimer.

    Jan 14 11:55 AM | Link | Comment!
  • Uncle Sam Wants You... To Have A Roth 401(K)

    Attention, everyone holding a 401(k)! Whether you're on the verge of retirement, or just starting to contribute to your account, the U.S. government is recruiting you to join an elite squad of retirement plans...

    The Roth 401(k)s!

    Here are the terms: No signing bonus, and you have to pay your taxes up front.

    Sound like a deal? Who's ready to sign up?

    The truth is, this isn't a good deal for everyone, but for some of you, it's worth considering.

    This deal came out of the fiscal cliff talks, and is expected to generate $12.2 billion in revenue over the next 10 years. That would come from investors moving some $48 billion in assets from their 401(k)s to a Roth account.

    Previously, only certain funds and plans were allowed to switch to a Roth 401(k), but now the gates are open to all accounts, putting some $5 trillion in assets on the table. From Bloomberg:

    "This dramatically expands the number of participants who can use this provision," said Bob Holcomb, executive director of legislative and regulatory affairs for JPMorgan Chase & Co.'s (JPM) retirement plan services. "It will allow any amount to be transferred."

    That $48 billion seems like an achievable number... but what you need to consider is if a move is right for you.

    First, you pay taxes on your contributions, not your gains. That really simplifies things for you in retirement. You know what's in your account, and what's there is yours. You may pay a higher percentage of taxes up front, especially as your wealth bumps you into a higher income bracket, but what you take out is tax-free.

    The big wrench in that system, however, is the big chunk of change you'll have to pay out if you're converting a large 401(k) account to a Roth account. If you have a million-dollar account and you're taxed at the highest income rate of 39.6%, you will have to pay $396,000 to get that money into a Roth.

    That can really deplete your investments. If you've got the cash outside of your 401(k), that's one thing, but if you don't, you're putting a big chunk of your retirement wealth right into the government's coffers.

    (Which is the whole point of opening the gates to Roth accounts for all funds and plans.)

    But for those of you not in the top tax bracket now, but expecting your tax rate to be higher in retirement, this step could save you a lot of money. Some tax experts say that if you're in the 15-25% tax brackets, and have a while before you expect to retire, it might make sense for you to take advantage of this new legislation.

    Outside of the tax situation, however, there aren't many other reasons you should consider a Roth 401(k) account.

    If anything, you should be looking to roll over your traditional 401(k) to a Roth IRA account. You'd be subject to the same taxation as if you were getting into a Roth 401(k), but here's where things get really interesting.

    Roth IRAs offer a number of different investment avenues not available in your traditional 401(k)... Things like real estate, private equity, business startups and other unconventional investments.

    These asset classes are off-limits to traditional 401(k) holders. You could buy land, or condominiums, or even tax lien certificates.

    There are differences to how much you're allowed to contribute to your 401(k)s and your IRAs, to the tune of thousands... and your employer won't be able to match your contributions.

    But for some folks looking to take their investment access off of Wall Street, and into the world of tax-free distributions, a Roth IRA is the way to go.

    Happy Investing,

    Sara


    This Unique "Retirement Plan" Can Make Your 401(k) and IRA Obsolete...

    It can pay you four times more cash than regular stocks.

    And it even pays you a check each month.

    It doesn't matter your age, your occupation or your income.

    Simply click here to find out how to start collecting your monthly checks immediately.

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    Disclaimer

    Article brought to you by Inside Investing Daily. Republish without charge. Required: Author attribution, links back to original content or www.insideinvestingdaily.com. Any investment contains risk. Please see our disclaimer.

    Jan 04 4:37 PM | Link | 1 Comment
  • How To Lock In Gains In A Rally

    "Let the winners ride!" This is what almost every expert will tell you to do... unless the market is too choppy. Then they say, "Make gains, take gains."

    I use a strategy that allows me to do both in my Macro Trader portfolio.

    It's called a trailing stop, and it's allowed me to lock in cumulative gains of 36.12% on open positions in my portfolio. This is a key distinction... I'm still holding these stocks, but I've captured double-digit gains in the past eight months.

    Here are real examples of my two favorite holdings.

    On April 18, 2012, I told my Macro Trader readers about Watson Pharmaceuticals, Inc. (WPI:NYSE). I said:

    Watson is making waves because of a $6 billion takeover bid for generic Swiss drugmaker Actavis.

    This would be one of the biggest takeovers of the year, and banks are falling all over themselves to get a piece of the action.

    Bank of America is said to be the front-runner, but the play isn't in the banks. It's in WPI itself.

    You see, WPI is one of the top five biggest generic drug companies in the world. Actavis isn't much smaller. So this deal would bring together two of the biggest companies in the field, and give WPI unprecedented access to Central and Eastern European markets.

    WPI has since completed its acquisition, and is now the third largest generic drug company in the world, and the new company is going to save hundreds of millions of dollars in costs. Here's how the markets liked the news.

    (click to enlarge)). ICA is a heavy construction company with projects in Mexico and other Latin American countries.

    It builds things like bridges and airports, dams and highways, commercial real estate, energy infrastructure, and plants and factories... I said:

    Between 2013 and 2018, Mexico's investments in infrastructure are expected to be 5.5% of GDP, much higher than the average 4.6% of GDP between 2007 and 2011.

    In the first quarter of 2012, ICA had a backlog of $2.79 billion, and over the past year, ICA's share price has climbed 40.49%.

    Well, ICA has kept climbing. The black circle marks our entry point at $7.45.

    (click to enlarge).

    By Oct. 17, we were sitting on a 23% gain after a fast move higher. Our 10% trailing stop was placed on the closing high price of $9.13. That gave us an exit point of $8.21, a gain of more than 10% above our entry price.

    And like WPI, ICA has kept on climbing... moving our trailing stop ever higher and locking in more and more gains.

    Just yesterday, ICA closed at $10.45, giving us a locked in gain of more than 26%!

    But the best part is that ICA is up again today, and we're still in the play to keep capturing those gains.

    The trailing stop is a great tool to use in rallies. And it's especially effective with fast-moving stocks.

    Happy Investing,

    Sara


    Someone Has to Be This Decade's Financial Legend... Why Not You?

    In the 1980s, with the U.S. market crashing, one brilliant investor made a killing.

    In the 1990s, while the British pound was collapsing, another savvy investor took advantage of crisis opportunity to make a fortune in one week.

    And in the 2000s, when the mortgage bubble was bursting, a certain hedge fund manager pocketed a hefty sum.

    Now another economic crisis is looming. This could be your lucky decade. Go here to find out why.


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    Disclaimer

    Article brought to you by Inside Investing Daily. Republish without charge. Required: Author attribution, links back to original content or www.insideinvestingdaily.com. Any investment contains risk. Please see our disclaimer.

    Tags: ICA, ACT
    Jan 04 11:02 AM | Link | Comment!
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