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Peter Brimelow
Feb. 24, 2011, 2:29 a.m. EST
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By Peter Brimelow, MarketWatch
NEW YORK (MarketWatch) "” The decade's top performer is a hard-assets bull "” and he says the Middle East mess, and much else, means there's more to come.
Over the past ten years, Outstanding Investments was up an absolutely stunning 21.66% annualized by Hulbert Financial Digest count, versus 2.33% annualized for the dividend-reinvested Wilshire 5000 Total Stock Market Index.
That makes OI easily HFD's top performer over the decade "” the second-best, The Dines Letter, is up a mere (!) 14.7% annualized. ( See Feb. 14 column.)
Outstanding Investments' success has been sustained more recently. Over the 12 months through January, OI is up 44.16%, versus 23.93% for the dividend-reinvested Wilshire 5000 Total Stock Market Index. That makes it HFD's seventh-best performer.
Over the past three years "” which, remember, includes the Cash of 2008 and the simultaneous hard-asset stagger "” the letter is up annualized 1.87%, versus just 0.86% annualized for the total return Wilshire 5000.
Over the past five years, the letter was up an annualized 11.7%, versus 2.62% annualized for the total return Wilshire 5000.
In a recent note, OI editor Byron King modestly said he's the latest (4 years-plus) of several editors shuffled through by publisher Agora Financial in the past decade. I particularly miss the hugely entertaining Justin ("The crisis is truly devastating in scope and could end life as we know it in the United States") Litle.( See July 24, 2006 column.)
Nevertheless, King points to the common thread:
"So what's the "?secret sauce,' the editorial theme for OI? Hey, it's not a state secret or anything. I sure bang the drum with every note I send you.
"The most consistent theme in OI over the past decade was that all of the editors believed that "?real' assets "” precious metals, energy, hard and soft commodities "” are getting more and more scarce.
"In other words, the low-hanging fruit of this world is gone. If you understand that, you're halfway there.
"In my view, we live in an era of Peak Everything. Whether it's oil, gold, copper, coal, food, water, you-name-it"¦ we've got nearly seven billion people on this world all chasing for the same goods. This world is picked-over, and there's not enough to go around."
Well, OK, but this does bother me a bit. Thirty years ago, economist Julian Simon bet environmentalist Paul Ehrlich, author of The Population Bomb, that resource prices would increases or decrease, respectively, over the 1990s. Simon (whom I regard as a charlatan for other reasons) won "” basically because economies adjust, via substitution, to scarcity.
Still, that doesn't mean that a bad supply curve won't prevail in the end.
Among OI's recent recommendations:
"A Call on Future Oil Price Increases, and You Get Paid 4% to Wait "” Buy Royal Dutch Shell PLC /quotes/comstock/13*!rds.b/quotes/nls/rds.b (RDS.B 70.75, +0.36, +0.51%) up to $75."
"If gold soars to higher levels like $1,500, $1,700, or even $2,000"¦ and silver returns to its average historical relationship with the gold price"¦ now we're talking a breathtaking gain of at least 620%...At current prices, I believe that Hecla Mining Co. /quotes/comstock/13*!hl/quotes/nls/hl (HL 10.55, +0.15, +1.44%) could triple every dollar invested, in as quick as 12 months. Along with the increasing price of silver, Hecla's share price could rise many, many times over!
Outstanding Investments has been skeptical about the "Rare Earths" trace elements craze. ( See Nov. 4, 2010 column.) But now it says:
"There's a great future for the rare earths industry in the West"¦If any of those companies come on my radar and fit our investing philosophy here at OI, you'll be the first to know."
Peter Brimelow has been an editor at Barron's, Fortune and Forbes and is the author of "The Wall Street Gurus: How You Can Profit From Investment Newsletters."
Washington Post Co.'s education arm took a beating in the fourth quarter and investors should be concerned, writes Jon Friedman.
10:26 a.m. Feb. 23, 2011
"Peter Brimelow: Decade's top performer is a hard-assets bull http://on.mktw.net/hdBaZm" 3:05 a.m. EST, Feb. 24, 2011 from MKTWBrimelow
"Peter Brimelow: Ruff likes precious metals...and Sarah Palin? http://on.mktw.net/ht7Z5L" 2:30 a.m. EST, Feb. 17, 2011 from MKTWBrimelow
"Peter Brimelow: Dines says go with the flow, for now http://on.mktw.net/fmN2E1" 3:33 a.m. EST, Feb. 14, 2011 from MKTWBrimelow
"Peter Brimelow: End of the low-interest-rate era? http://on.mktw.net/i3d9gf" 12:18 a.m. EST, Feb. 10, 2011 from MKTWBrimelow
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