15 Ways to Beat the Street in 2015

By Charles Sizemore, CFA, Research Analyst, Dent Research

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“Has anyone noticed a little volatility in the market?”— Rodney Johnson, Co-Founder of Dent Research

MARKET volatility has soared since the late summer of 2014. That’s not surprising after six long years of soaring stock prices, driven by nothing more than central bank stimulus and speculation. As Harry Dent would say: “The market has been on crack! And it still is!!” Eventually, something

has got to give.

And that’s why, in October 2014, Harry assembled a group of well-respected and highly trusted financial, market and economic experts. I’m not talking about your run-of-the-mill mainstream analysts. I’m talking about men who have taken the blinders off, rolled up their sleeves, and have dug deep into the numbers and history to uncover the reality. He brought this contrarian group together at the Loews hotel in Miami Beach with two purposes in mind:

1. To share their views of the short, medium and long-term prospects of the market and economy; and

2. To bring to the table their best strategies to help everyday investors survive and prosper through whatever the future holds.

Over three days of intense discussions, hundreds of charts and tables, and dozens of pointed debates, they presented some alarming conclusions. That is…

• We’re looking at a major stock market crash within the next year;

• We’re facing another recession, one that will be more severe than what we lived through between ’08 to ’12;

• The price of gold will continue to collapse and commodities will become an anchor around the neck of the emerging markets that export them;

• The euro zone will fall into outright depression;

• China’s bubble will burst, sending devastating shock waves across the globe;

• Geopolitical tensions will only worsen; and

• The occurrence of global pandemics will only steadily increase.

That’s certainly not an encouraging picture. In fact, it’s downright depressing. But, as they say: with knowledge comes power… and so the 15 Ways to Beat the Street in 2015 was born.

Before I give you the details, it’s important to note that these are the 15 trades that five of those gurus in Miami presented as possible ways to take advantage of the trends they believe will unfold in the market throughout 2015.

Now, with the exception of one expert — who added short-stock positions as several of the 15 ways to beat the street in 2015 — the rest provided long-stock positions. Of course, we all know that Harry expects a major crash in 2015… as do many of the experts who gathered together. So how can these guys present you with opportunities that seem to conflict with this overall forecast? Quite simply, they do so with the proviso that risk management is also in order. And that’s where I come in.

The plays you’re about to uncover are not part of an official portfolio. They are simply recommendations that each of the experts in Miami feel has potential in the year ahead. But, be prepared for any market turmoil by implementing a 20% trailing stop-loss on any of the recommendations you follow. This way,

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you’ll lock in potential gains when these stocks perform as this group of experts believes they will… and you’ll avoid the potential for major losses when the market rolls over.

And then watch out for quarterly updates from me.

So now, without further ado, here are your 15 Ways to Beat the Street in 2015… and the experts behind each one…

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The Irrepressible U.S. Dollar

THE first recommendation in the 15 Ways to Street in 2015 is the good old U.S. dollar. More specifically:

PowerShares DB US Dollar Bullish ETF (NYSEArca: UUP)

Rodney spoke at a Global Currency Watch event in 2012. He was the only dollar bull in a room full of bears. At one point, when friend and fellow investment writer Doug Casey was on an anti-dollar tirade, Rodney leaned forward and said: “Doug, I like the dollar. Why don’t you send me all of yours… I’ll take them!” Apparently Doug liked the dollar a little more than he let on, because Rodney is still waiting for his dollars to this day.

Rodney’s bullish case for the dollar can be summed up with a single question: If you want to leave the dollar… where would you go? Japan’s money printing makes the Fed’s look small by comparison, and the European Central Bank has publicly indicated that some form of quantitative easing is on the way. The dollar may not be a well-managed currency… but it looks pretty good compared to its major competitors.

The U.S. has “printed” $5 trillion via quantitative easing and other monetary stimulus following the 2008 meltdown. As dollar bears pointed out, this should have led to massive inflation and a collapse in the value of the dollar. So… why didn’t it?

The answer lies in arcane details of central-bank plumbing. In order for newly-printed money to make its way into the real economy — and thus affect prices — banks have to lend it into circulation. The only problem was, banks didn’t do that with all the Fed’s new money. That’s because there wasn’t exactly a lot of demand for loans after the collapse of the credit bubble.

And when the Fed started paying interest on excess reserves, there was even less incentive for banks to lend with wild abandon. So, the banks did the only sensible thing: They kept their funds on deposit at the Fed.

As of September 2014, U.S. banks had $2.7 trillion in excess reserves sitting on deposit at the Fed. And

Rodney Johnson works closely with Harry Dent to study how people spend their money as they go through predictable stages of life, how that spending drives our economy and how you can use this information to invest successfully in any market.

Rodney began his career in financial services on Wall Street in the 1980s with Thomson McKinnon and then Prudential Securities. He started working on

projects with Harry in the mid-1990s.

He’s a regular guest on several radio programs such as America’s Wealth Management, Savvy Investor Radio, and has been featured on CNBC, Fox News and Fox Business’s “America’s Nightly Scorecard,” where he discusses economic trends ranging from the price of oil to the direction of the U.S. economy.

He holds degrees from Georgetown University and Southern Methodist University.

Rodney Johnson • Co-Founder of Dent Research

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that “money” won’t be leaving any time soon. Fed Chair Janet Yellen has said that she intends to raise the rate she pays on excess reserves in line with any increase in the Fed funds rate. That’s certainly not showing those banks the door.

There are several other reasons to be bullish on the dollar. Love it or hate it, it’s still the world’s reserve currency. And our persistent trade deficit — which was a major plank in the dollar bears’ argument — is shrinking. A slower-growing economy and the energy conservation efforts of the past decade have reduced U.S. demand for crude oil. At the same time, the fracking boom has massively increased our domestic production. As a result, we’re sending a lot fewer dollars overseas to import energy.

In short, the dollar isn’t going anywhere but up and UUP is one of the best ways to enjoy the profitable ride.

UUP is an ETF designed to track the performance of the dollar index using futures contracts. In a nutshell, it goes long the dollar versus a basket of major world currencies and rises in value when the dollar appreciates. The breakdown of the portfolio looks like this:

As of September 30, 2014, UUP’s Long Dollar is relative to...

More that 70% of the portfolio is going long the dollar relative to the euro and yen, the two currencies Rodney singles out as being most at risk.

Remember, should you add UUP to your portfolio, implement a 20% trailing stop-loss.

Canadian Dollar 9.1%

British Pound 11.9%

Japanese Yen 13.6%

Euros 57.6%

Swiss Francs 3.6%

Swedish Krona 4.2%

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Alan Hall received his degree in Fine Arts from Berry College in 1975 and soon started a successful construction company.

He began studying socionomics in 1995, which gave him a framework for recognizing the housing mania in real time. In 2004, he exited his construction business and in 2006 began writing for the Socionomics Institute.

Alan has traveled and lectured widely and written extensively for The Socionomist, authoring prescient studies on such topics as Russia, authoritarianism, environmentalism, military action and many other social manifestations that are now unfolding.

In 2007, when Russia was the darling of emerging market investors, he successfully predicted a 78% drop in the Russian stock market, the return of polarized superpowers, conflict on Russia’s borders and the emergence of the dark side of Vladimir Putin.

In 2009, he warned of increasing global risk of epidemics. He’ll introduce socionomic theory, explain the link between stock markets and epidemics and discuss Ebola, Ukraine and ISIS, topics that have been in his sights for years.

Alan Hall • Researcher, The Socionomics Institute

Using Stock Market Indices to Anticipate Elevated Public Health Risks

ALAN Hall takes issue with the notion that “events,” such as economic data or Fed actions, cause movements in the financial markets. He believes that events actually lag the market and that, due to

changes in social psychology, markets — as a reflection of social mood — actually contribute to the events that supposedly cause the markets to move. He argues that social moods actually cause disease epidemics.

That may sound a little far-fetched at first. But Alan has proof that major disease epidemics tend to cluster around secular bear markets. He theorizes that this is due to the stress caused by a prolonged economic contraction. Less money is spent on public health, and aggregate levels of chronic stress make the population more susceptible to disease. Be sure to watch Alan’s video. In it he gives you all the evidence you need.

While Ebola has faded from the U.S. headlines, Alan doesn’t believe we’re out of the pandemic woods yet. The disease continues to rage on in Africa. And in other parts of the world, we see what could be the start of measles, polio and enterovirus D68 epidemics. That’s why Alan added the following eight plays to the 15 Ways to Beat the Street in 2015:

1. Lakeland Industries (Nasdaq: LAKE)

2. Alpha Pro Tech (NYSE: APT)

3. Tekmira Pharmaceuticals (Nasdaq: TKMR)

4. Sarepta Therapeutics (Nasdaq: SRPT)

5. Inovio Pharmaceuticals (Nasdaq: INO)

6. NewLink Genetics Corp (Nasdaq: NLNK)

7. Hemispherx Biopharma (NYSE: HEB)

8. BioCryst Pharmaceuticals (Nasdaq: BCRX)

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Let’s start with Lakeland Industries and Alpha Pro Tech, makers of hazardous material (“hazmat”) suits. Lakeland shares shot up by over 200% in less than two weeks in early October after the Ebola news broke, and Alpha Pro’s shares weren’t far behind. Both have since given up most of those gains as Ebola has drifted from the headlines. But with the new threats rearing their ugly heads, these companies could well see such share-price spikes during the next year.

They’re small companies with market caps of $69 million and $56 million, respectively, though both have healthy trading volumes. And they’re definitely ones to consider should any news bring yet another health risk to our attention.

Tekmira Pharmaceuticals is another Ebola play. Tekmira is a small Canadian biotech company that is producing an experimental Ebola treatment for the U.S. Department of Defense. Like many antiviral treatments, Tekmira’s drug attacks Ebola by preventing the virus from replicating.

Here, the usual caveat on biotech companies applies. That is: The company is at the mercy of the FDA. If the government decides that the Ebola drugs are unsafe — or that a competitor’s drug works better — then the profit model goes out the window. That makes the 20% trailing stop-loss particularly important for this play.

Sarepta Therapeutics is less of a pure play on Ebola, though it does have an Ebola drug in Phase 1 clinical trials. And one of its main areas of research is Marburg virus, which is closely related to Ebola.

Sarepta also has Eteplirsen, an experimental treatment for Duchenne muscular dystrophy, in the pipeline, as well as treatments for dengue fever and influenza. And while its primary focus is on rare genetic diseases rather than infectious, but its drug pipeline is a nice mixture of the two.

Inovio Pharmaceuticals is a vaccine maker that also has an experimental Ebola vaccine. But its pipeline is actually more focused on treating HPV-associated cancers and HIV/AIDS.

Inovio, like any of these companies, could hit the Ebola jackpot with a successful product. But I would view this more as an anti-cancer trade and secondly as an anti-HIV trade. With the U.S., European and Japanese populations aging, fighting diseases associated with old age — such as cancer — is a move that makes demographic sense.

NewLink Genetics Corp, like Inovio, has an Ebola vaccine in the works. But also like Inovio, it is more of a play on cancer than anything else. NewLink’s therapies focus on stimulating the human immune system to fight cancer internally. Its lead product candidate is actually a pancreatic cancer drug, which is noteworthy because pancreatic cancer is one of the deadliest. The late Steve Jobs died from pancreatic cancer after a long struggle.

Hemispherx Biopharma has an interesting approach to fighting disease. Rather than fighting directly, it works on boosting the patient’s immune system so it can do the fighting itself. Hemispherx’s experimental drug Ampligen, which is being tested for treatment of chronic fatigue syndrome, Hepatitis B, HIV, renal cell carcinoma, and malignant melanoma, also has potential uses in fighting Ebola. One of the biggest problems with attacking a virus is that viruses are constantly mutating. It’s like a general continually going into battle with plans from the last war. But in attacking the virus indirectly, through strengthening the patient’s immune response, viral mutations are less of a problem.

And finally, we come to BioCryst Pharmaceuticals, another biotech specializing in antiviral therapies. BioCryst develops small-molecule drugs that block key enzymes involved in infectious and rare diseases. In other words, BioCryst tries to nip viral infections in the bud by essentially starving them. Its most effective efforts have been against the flu and a chronic skin disease called angioedema. But as you might have guessed, there is also an Ebola angle. BioCryst has an experimental Ebola treatment in the pipeline

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designed to be effective within 48 hours of infection.

At the end of the day, Alan’s view of these companies is that they’re well positioned to bloom on the news of any new pandemic… or even a resurgence of Ebola. And seeing as he firmly believes we’ll see an increase of such events, these are all good companies to have on your radar.

Again, if you invest in any of these, implement a 20% trailing stop-loss.

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Profit With Low-Cost Energy Reserves

DON Hosmer has been involved in developing natural gas and oil fields throughout major geologic basins in the U.S. for decades, so he knows a thing or two about the industry. And strongly believes

that the future of natural gas, unlike commodities in general, is very bright indeed. The fact that it is now legislatively demanded is just one of the factors in its favor.

Don describes natural gas as an “international weapon” because, with it, we can diminish Putin’s power and undercut the oil tycoons of the Middle East. (Actually, our growing energy independence is one of the reasons Rodney is so bullish about the U.S. dollar.)

And the demand for the commodity grows daily. Right now, exports of natural gas to Mexico are on the rise, with the forecast that soon we’ll see three billion cubic feet of the stuff cross the border daily.

That’s why Don added the following play to the 15 Ways to Beat the Street in 2015:

Royale Energy (NYSE: ROYL)

Royale is an independent oil and natural gas explorer and producer in the continental U.S. and Alaska. Its reserves include both conventional and nonconventional shale reserves, but the company is best known for the latter.

While most of the news these days focuses on continental fields, such as the Barnett and Marcellus shale formations, Royale’s biggest new investments have been in Alaska.

And its latest Mendocino II project shows great promise.

But a word of warning here: Exploration is the riskiest area of the energy sector, and the stocks of exploration companies can be wildly volatile based on the success or failure of a drilling project. So it is vital that you implement that 20% trailing stop-loss if you add Royale to your portfolio.

Donald Hosmer is CEO and President of Royale Energy, Inc. Royale Energy is developing natural gas and oil fields throughout the major geologic basins in the United States. Under his leadership, Royale became one of the fastest-growing independent natural gas and oil producers that explores, develops, produces and markets natural gas and oil.

Royale Energy’s operations include acquisition of natural gas and oil production: proven reserves, and drilling of both exploratory and developmental wells using 3-D seismic imaging. The company diversifies the development of its properties by allowing participation of industry members and individuals in up to 50% of the acquisition and drilling.

This strategy of shared ownership in multiple wells provides investment opportunities that minimize risk, while seeking returns for shareholders and direct working interest investors. The company owns wells in California’s Sacramento and San Joaquin basins; Utah, and in the Gulf Coast basins of Texas and Louisiana.

In 2011, Royale also acquired 100,000 prime acres in the state of Alaska’s North Slope.

Don Hosmer • President, Royale Energy

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How to Profit From the Widening Gap Between Haves and Have-Nots

YOU can summarize TrimTabs CEO Charles Biderman’s investment methodology with two words: supply and demand. He applies it both to the broad market and to individual stocks, and it makes intuitive

sense. When demand outpaces supply, prices rise. When supply outpaces demand, prices fall.

Biderman compares the stock market to a casino in which the individual companies run the house. As is the case in all casinos, the house has the edge. The people running the companies always have a much better idea of what’s going on than average investors do.

And Biderman raises a good point: While it is illegal for company insiders to trade on material insider information, there’s nothing stopping companies themselves from doing so. Companies can, and do, time the pace of their share repurchase and new share issues based on management’s view of the stock’s value.

So, rather than try to beat the house, it makes a lot more sense to follow the house: Buy when companies are buying their own stock, and sell when they’re selling.

Charles’ company, TrimTabs, focuses its research on these kinds of money flows. And his ETF puts those insights into action. That’s why he added the following recommendation to the 15 Ways to Beat the Street in 2015:

AdvisorShares TrimTabs Float Shrink ETF (NYSEArca: TTFS)

TTFS has three criteria for stock selection. Firstly, the company should be reducing its float. This is primarily done through share repurchases that reduce the number of shares outstanding. Secondly, the float reduction should be funded with free cash flow, not asset sales. And finally, the float reduction should not be purely a result of leverage. TrimTabs is not interested in companies that are simply swapping equity for debt.

After earning his MBA from Harvard Business School, Charles Biderman began his career as Alan Abelson’s assistant at Barron’s.

He founded TrimTabs Investment Research in 1990 in Santa Rosa, California. TrimTabs Investment Research developed into the only independent research service that publishes detailed daily coverage of U.S. stock market liquidity.

The premise of TrimTabs Investment Research’s approach is that current stock prices are a function of the supply and demand of shares of stock and money, having little to do with value.

Charles holds a B.A. from Brooklyn College and an MBA from Harvard Business School. He is interviewed regularly on CNBC and Bloomberg and is quoted frequently in the social and financial media.

He is the author of TrimTabs Investing: Using Liquidity Theory to Beat the Stock Market (John Wiley & Sons, 2005).

Charles Biderman • Founder and CEO, TrimTabs Investment Research

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The TTFS portfolio is made up of 100 companies from the Russell 3000, equally weighted, that score the highest based on TrimTab’s criteria.

As an actively managed ETF, TTFS is rebalanced at TrimTab’s discretion as new float-shrink data is announced.

As with all the other plays in the 15 Ways to Beat the Street in 2015, place a 20% trailing stop-loss if you introduce TTFS to your portfolio.

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John Del Vecchio is principal of Ranger Alternative Management, L.P. and co-portfolio manager of AdvisorShares Ranger Equity Bear ETF (NYSEArca: HDGE), an actively managed all-short ETF that shorts individual stocks without the use of leverage or derivatives.

Prior to the launch of HDGE, John managed short-only portfolios for Ranger. His professional experience includes working for well-known short seller David Tice as well as renowned forensic accountant Dr. Howard Schilit.

Additionally, John is the creator of an index that tracks the earnings quality of companies, and co-author of the book, What’s Behind the Numbers? A Guide to Exposing Financial Chicanery and Avoiding Huge Losses in Your Portfolio.

John graduated summa cum laude from Bryant College with a B.S. in Finance and was awarded Beta Gamma Sigma honors. He earned the right to use the Chartered Financial Analyst designation in September 2001.

John Del Vecchio • CFA Portfolio Manager, Ranger Alternative Management

The Best Way to Hedge Market Risk

TO this point, the focus has been providing recommendations on what to buy, but John Del Vecchio — a professional short seller and co-manager of the AdvisorShares Ranger Equity Bear ETF (NYSEArca:

HDGE) — has added a few sell short recommendations to the 15 Ways to Beat the Street in 2015.

It takes thick skin to be a professional short-seller. When you celebrate a successful trade, you do it in private because chances are good that everyone else you know lost money. And when you lose? Well… you’re not going to get a lot of sympathy.

One of the tricks of his trade is to first and foremost understand that while the market tends to rise over time, its performance tends to be driven by a small handful of winners. The reality is, individually, most stocks underperform.

To illustrate, the Russell 3000 index was up nearly 900% from 1983 to 2006. But 64% of the stocks underperformed the index, and 39% had outright losses. Some 19% declined by 75% or more! In other words, even in a rising market, there are ample opportunities for a short seller willing to go against the grain.

Many investors believe that shorting stocks is all about looking for and finding certain chart patterns in expensive or over-valued stocks. But John takes the analysis much deeper. He digs into the financial statements to look for aggressive accounting.

Chart patterns can deceive you, and expensive stocks can stay expensive for a long time. But when management starts to fudge the numbers with aggressive revenue recognition, it’s only a matter of time before the gig is up.

So, based on studying the numbers and spotting several areas of “financial chicanery,” as he would call it, he added the following three plays to the 15 Ways to Beat the Street in 2015:

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Short Deutsche Bank AG (NYSE: DB)

Short Santander Consumer USA (NYSE: SC)

Short Harley-Davidson (NYSE: HOG)

Deutsche Bank is a German bank, and one of Europe’s biggest financial groups. Yet, from the research he’s conducted, John believes that it will not only be worth less in the coming years, but worthless. The bank is simply too poorly capitalized and highly exposed to the risky European periphery.

And if German taxpayers get tired of keeping the entire euro zone afloat, then Deutsche Bank’s solvency comes into question.

John also believes Santander Consumer, a Dallas-based subprime auto lender, is also a good candidate to sell short. Once the economy really turns south, this one company will be left “with its pants down.”

Santander’s loan quality is deteriorating, and net charge-offs have shot up over the past year. Santander Consumer is also facing class action lawsuits from both borrowers and investors. Borrowers are suing because of the aggressive tactics used to collect, and investors are suing because Santander allegedly failed to disclose how much risk it would be taking in its subprime auto lending.

And then there is Harley-Davidson. Harley is the “ultimate demographic short” based on its reliance on a shrinking pool of middle-aged men.

Men aged 45 to 49 are responsible for a disproportionate amount of large bike sales, and the baby boomers have now aged beyond that demographic sweet spot.

Harley is compensating for lack of demand by loosening its credit standards and selling more hogs with subprime loans, but that’s only setting this company up for a harder crash.

Finally, if you’re not comfortable shorting stocks yourself, John’s short ETF might be a viable option, so that is the final play in the 15 Ways to Beat the Street in 2015:

AdvisorShares Ranger Equity Bear ETF (NYSEArca: HDGE)

Managed by John and Brad Lamensdorf, this short-only ETF puts into practice the forensic accounting tools that is John’s bread, butter and dreams.

Its three largest short positions as of November 2014 were Santander Consumer, Harley-Davidson and Deutsche Bank. Other familiar names include Facebook (Nasdaq: FB) and LinkedIn (Nasdaq: LNKD). And right in line with Harry Dent’s bearish demographic outlook on the luxury goods sector, HDGE is also short Tiffany & Co (NYSE: TIF) and Michael Kors (NYSE: KORS).

During times of market euphoria, a short-only fund is going to have a hard time keeping its head above water. But during a prolonged bear market, shorting at-risk stocks is one of the few ways to earn a decent return. And HDGE allows you take short positions with the benefit of experienced active management.

Here again, should you make any of the plays, set a 20% trailing stop-loss.

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15 Ways to Beat the Street in 2015

AND there you have it: 15 Ways to Beat the Street in 2015, from five of the greatest economic, financial and market minds.

SPEAKER RECOMMENDATION TICKER

Rodney Johnson PowerShares DB US Dollar Bullish ETF UUP

Alan Hall Lakeland Industries LAKE

Alpha Pro Tech APT

Tekmira Pharmaceuticals TKMR

Hemispherx Biopharma HEB

BioCryst Pharmaceuticals BCRX

Sarepta Therapeutics SRPT

Inovio Pharmaceuticals INO

NewLink Genetics Corp NLNK

Don Hosmer Royale Energy ROYL

Charles Biderman AdvisorShares TrimTabs Float Shrink ETF TTFS

John Del Vecchio ProShares Ranger Equity Bear ETF HDGE

Deutsche Bank AG Short DB

Santander Consumer USA Short SC

Harley-Davidson Short HOG

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Publisher ..................................... Shannon SandsEditors .......................................... Harry Dent and Rodney JohnsonPortfolio Manager ................... Adam O’Dell

Dent Research55 NE 5th Avenue, Suite 200 Delray Beach, FL 33483 USAUSA Toll Free Tel.: (888) 211-2215Contact: http://www.dentresearch.com/contact-us/ Website: http://www.dentresearch.com/

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