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Dear Investment U Reader,
 Uncle Sam's bombs are falling on Iraqi oilfields, yet the price at the pump has fallen below $3 per gallon in many parts of the country. In fact, smart folks now predict a nationwide average below the critical $3 mark by the end of the year.
What gives?
How can the Middle East be on fire... and crude prices plunging?
It turns out America has quietly pulled herself together. We can't say this oil drunkard has significantly cut down on her use, but she has tamed her addiction to foreign crude.
The move was once deemed impossible. But now... it's happening. It's a driving force in what we're starting to see as America's newest "Golden Age."
The Oxford Club's oil expert David Fessler shares his notes on the subject below.
But first, let's continue to poke our finger in the can of worms we opened last week.
If you recall, we took a look back at Alex Green's popular essay "Are the Rich Smarter Than You?" It proves that being rich often has little to do with your bank account... and a whole lot more to do with your personal freedom.
The consensus from readers was unified... Amen.
This week, we turn to one of Investment U's most popular features, Steve McDonald's "Slap in the Face Award."
In his typical witty fashion, Steve answers a similar question. Are the rich taking shortcuts most others can't take? Here's a tease at the answer... "The whole rich thing is just stupid."
Slap in the Face Award 
(And don't miss tomorrow's edition of Investment U, when Alex takes up the mantle and explains why the self-made rich - which is to say, most wealthy people - have problems of their own.)
Like I said, this weekly "award" from Steve is one of our most popular features. But a lot of readers have missed it because it's typically been at the end of his weekly update. That's going to change. And we're quite excited about it.
We've worked with Steve to make his "Slap in the Face Award" a standalone weekly segment. It will now be a prominent part of each Sunday issue of Investment U.
It's hard to argue we're not in America's Golden Age. We've got more cheap energy than we know what to do with... and now, we even have better access to Steve's humor. How could it get any better?
Read on...
Good investing,
Andrew Snyder
Editorial Director, The Oxford Club
The Secret to America's Recovery
David Fessler, Energy and Infrastructure Strategist, The Oxford Club
It all started a few years ago with a handful of courageous companies. It has quietly gained momentum in the years since.
This phenomenon is so new, so off the beaten path, the mainstream press isn't writing about it. There's no government agency to track it.
In fact, experts can't even agree on what to call it.
Washington's political gridlock and even Europe's financial woes don't have an effect on it. But it's about to shift the tepid U.S. economic recovery into high gear.
It's been referred to as onshoring, reshoring and backshoring. The influx of companies bringing manufacturing jobs to American soil is truly the wild card in the U.S. economic recovery...
I call it the "Rust-Belt Revival."
Why Here? Why Now?First, let's look at why a slew of overseas manufacturers are coming to America. It all started with the damage that was done to the American manufacturing sector during the Great Recession of 2007-2009.
By the time the crisis was over in 2009, $14.5 trillion of global corporate value had vaporized.
And according to Reuters, of the 14 million U.S. manufacturing jobs that existed prior to the recession, 1,985,000 of them were lost. But get this: Data shows that every manufacturing job creates as many as eight downstream jobs.
That adds up to 15.9 million jobs that disappeared in just three years.
The reason foreign companies are coming here should now be clear.
There are plenty of well-trained Americans looking for work. Just about every state in the Union is rolling out the red carpet. But few are better suited than those in America's heartland.
Major Change on the Way Two hundred fifty years ago marked the start of the U.S. Industrial Revolution. It was a major turning point in our nation's history. Nearly every aspect of life in America changed in some fashion.
What was most notable?
According to Nobel Prize recipient Robert E. Lucas Jr., "For the first time in history, the living standards of the masses of ordinary people have begun to undergo sustained growth... Nothing remotely like this economic behavior has happened before."
The new American manufacturing renaissance, happening right in Middle America, promises to do the same thing... all over again.
The original Industrial Revolution was fueled by the transition from wood to coal. The new one is fueled by cheap oil and natural gas made available by horizontal drilling and hydraulic fracking.
Oil and natural gas are the main feedstock components for many manufacturing companies. Having a cheap supply of both in one place seems like an idea pulled from an economic fairy tale. It's a dream scenario.
Add to the idea America is home to one of the greatest transportation infrastructures on the planet, and you have the recipe for a great manufacturing boom. Not to mention that all of this is located in the heart of the world's largest consuming economy. Bingo!
The List Grows So who is coming from the Far East to take advantage of Middle America's energy advantage?
Some Asian companies are already here. Toyota Motor Corporation (NYSE: TM), Nissan Motor Co. Ltd. (OTC: NSANY) and Honda Motor Co. Ltd. (NYSE: HMC) all have plants here in the United States.
Nissan has nine facilities, seven of which are located in Middle America. Three of Toyota's six facilities are in Middle America states. Honda's been here since 1979. It has 32 facilities in the U.S. making cars, ATVs, power equipment and motorcycles. Eleven of those are in America's heartland.
One of China's biggest electronics manufacturers, the Lenovo Group Limited (OTC: LNVGY), currently operates a fulfillment center in Whitsett, North Carolina But to our theme, it began manufacturing operations there last year.
Austal Limited (OTC: AUTLY) is an Australian-based shipbuilding company. Its Austal USA unit, located in Mobile, Alabama, is one of the most advanced shipyards in the world. Its U.S. business is growing so quickly its workforce has surged from 800 to 3,300 in just the last few years.
Another company finding fresh opportunity in the States is the 12th largest company in Germany and the largest chemical company in the world. BASF SE (OTC: BASFY) holds the No. 1 spot in more than 75% of its businesses.
It's moving some manufacturing to Middle America. More specifically, Louisiana.
In a Washington Post article, Harald Schwager, head of European Operations for BASF, had this to say about the move: "We Europeans are currently paying up to four or five times more for natural gas than the Americans. Energy efficiency alone will not allow us to compensate for this."
BASF's Louisiana plant isn't the company's first foray across the Atlantic. Including the formic acid plant, the company has invested more than $5.7 billion in new manufacturing plants here.
From an investment standpoint, you'd have to look long and hard to find a better-performing large-cap company than BASF. A decade of strong growth in sales and earnings has paid off handsomely.
Shareholders have averaged a 20% annual total return.
And income investors would be hard-pressed to find a better dividend grower than BASF. It yields 3.58%. But here's the best part: It's had an average annual dividend increase of 16% for the last 10 years.
It's clear that Middle America's cheap and abundant energy is attracting a variety of companies... and opportunities.
Good investing,
Dave
P.S. I am convinced this story is going to get even hotter. For instance, I recently told my Peak Energy Strategist subscribers about a company that's able to produce a barrel of oil at a price that's six times cheaper than water. It's pulling crude from the ground at a price of just $0.28 a gallon... click here for the full story.
To access the Investment U archives, please visit InvestmentU.com.
Have "Two Cents"? Just send your thoughts, ideas or comments by clicking here.
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This Week's Best-sellers:
What you need to know
Financial expert Marc Lichtenfeld believes $93 trillion could suddenly rush out of certain investments - and into others. Ironically, the ongoing bull market in stocks will hasten this event's arrival. Some investors will get very rich, while others will get crushed - especially when it comes to their "safe" holdings. But you don't have to be one of them - not this time. He's created this presentation to ensure that you come out on the winning side. View it here.
Why Is Our Safest Investment Being Banned in America?
From California to New York, strange bans are popping up. Not against guns, drugs or smoking. These bans are outlawing what many consider their safest investment. More than 99% of investors own, or have owned, this asset. Investors need to know what's coming. This special presentation reveals the truth about the new govt. bans... and how they are quickly leading to one $663 trillion event that could make or break your retirement. To watch it, for free, simply click here now.
OUTSMART OBAMA AND RETIRE EARLY
Gas prices are up 96.5%... Big oil had $93 billion in profits in 2013... And it's just getting started. We've uncovered an improbable energy development so you can outsmart Obama at his own game... And cash in big.
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Further Reading:
How to Be Smart You know you're pretty old when people start referring to you as "X years young."
So let's just say it. The current bull market is now nearly six years young.
Of course, old is not dead. This bull run may yet have plenty of life in it. But the time has come to recognize the characteristics of an aging bull market, as Chris explained on Tuesday. And we need to begin planning for its end. Alex had some great suggestions on Friday.
One suggestion that Alex emphatically did not make is to simply get out. "This bull market may last four more weeks, four more months or four more years," he explained. If you get out now and the bear stays in hibernation, "after a while, you start thinking about getting back into the market," he said. "But having missed the rally, you now risk being in for the correction... or worse."
So stay invested... but be smart. First, use the right metrics to evaluate investment prospects. Marc revealed the most important metric of all this week... and it's one you're likely not using. Second, in a market like this, remember to look overseas for value. You'll find more growth companies in fast-growing economies. Sean reported on the "ancient blood feud" between two Asian powerhouses that could present serious opportunities for you. It's smart to look hard at out-of-favor investments instead of just following the pack. And Sean argues that a huge opportunity could soon be opening in long-depressed precious metals.
Will the biggest IPO of the year, that of Alibaba (NYSE: BABA), spell doom for Yahoo (Nasdaq: YHOO)? Our exclusive Investment U Stock Grader reveals the answer. And we have insight into the prospects of apparel company Lululemon Athletica (Nasdaq: LULU), cell carriers T-Mobile (NYSE: TMUS) and Sprint (NYSE: S) and more. | |
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