The Deep Woods: I’m the New Mr. Wonderful

You are receiving this email because you signed up to receive our free e-letter The Deep Woods, or you purchased a product or service from its publisher, Eagle Financial Publications. [The Deep Woods] [Successful Investing]( [Bullseye Stock Trader]( [About Jim]( In This Issue: • I’m the New Mr. Wonderful • ETF Talk: I Say, Let’s Wing It • Oh, Mexico • The Pleasure Principle I’m the New Mr. Wonderful by Jim Woods Editor, [Successful Investing]( and [Bullseye Stock Trader]( 06/05/2024 Sponsored Content [AI's NEXT Magnificent Seven]( The Original Magnificent Seven Produced 16,894% Average Returns Over 20 Years. But the Man Who Called Nvidia at $1.10 Says "AI's Next Magnificent Seven Could Do It Even Faster." [See His Breakdown of the Seven Stocks You Should Own Here.]( Want to take a guess at what one of my favorite TV shows is? If you thought of CNBC’s “Shark Tank,” then I’d say you know me pretty well (and if you also guessed “Miami Vice” or “Jeopardy,” then you get points, too). By far the best “character” on “Shark Tank” is [Kevin O’Leary](, also known as “Mr. Wonderful.” Mr. Wonderful is a favorite because he is an unapologetic capitalist who is all about making money. Unlike some of the more “socially conscious” shark investors on the show, Mr. Wonderful cares only about answering one question: How much of a return on his investment is he going to get? And guess what, that is the only concern that should be taken into account when one is investing one’s money. You see, for Mr. Wonderful and for me, “profit” isn’t a dirty word, but rather the most moral undertaking humans can engage in. The reason why is because one can only make a profit in a business if one is selling a good or service that makes its customers better off. So, if you have a product that helps meet a need, and that can be sold for more money than it takes to make, then you have engaged in the most moral activity one can ever engage in—the act of making money. Now, when I watch “Shark Tank,” I often put myself in the judges’ seat to see if I think the pitches I hear from the entrepreneurs seeking investment capital would be worthy of an investment. Sometimes I agree with the sharks (I almost always agree with Kevin O’Leary) and sometimes I don’t. But try as I may to voice my thoughts through the TV, that device is a one-way portal. Yet very soon, I will be living out my very own “Shark Tank” fantasy, as I have been tapped to be a judge at this year’s FreedomFest “Pitch Tank.” As you may already know, FreedomFest is coming up fast. This year’s [ultimate summit for liberty]( will be held in Las Vegas at the Caesar’s Forum from July 10-13. In addition to the incredible lineup of marquee names such as President Javier Milei of Argentina, best-selling author and one of my favorite public intellectuals, Steven Pinker and rapper/actor extraordinaire Ice-T, the conference also features the Pitch Tank. Your editor performing at last year’s FreedomFest Jam Session At FreedomFest, we celebrate the virtue of making money through entrepreneurship, as it is the profit motive that drives individuals to create the solutions of tomorrow for the problems of today. Pitch Tank competitors will compete for cash prizes and for professional services, and they’ll also be given guidance to help refine their concept. Much like its TV show counterpart, contestants will pitch their idea to a panel of judges in the initial rounds. The top three finalists will pitch again in the final round. It is here that I am honored to say that I will be one of those judges, and so now, you can call me the “New Mr. Wonderful.” If you’re an entrepreneur and you’re thinking about trying out your ideas to a tough-but-fair panel of experts, then the [FreedomFest Pitch Tank]( is for you. And as a fan of The Deep Woods, not only can you come and watch me judge the pitches, you also can come see me speak about money and ideas alongside my fellow Eagle Financial Publications colleagues George Gilder and Mark Skousen. In fact, George, Mark and I will be on a panel together discussing our favorite investments for “The New Roaring Twenties,” and that is a panel not to be missed. Here is a link to all of [my scheduled activities]( at FreedomFest 2024. In addition to these scheduled events, I will also be at many of the social events held by the conference, including my favorite, the FreedomFest Jam session. So, if you want to have a great time basking in the Vegas liberty sunshine, then FreedomFest is a must-attend event. And for The Deep Woods readers, you can get a very special discounted rate if you sign up NOW by going to [www.freedomfest.com](, or emailing Hayley at hayley@freedomfest.com, or calling her at 1-855-850-3733, ext. 201. Use code EAGLE50 to get $50 off the registration. The discount ends on July 1, and the price of a ticket goes up on that date, so now is the time to register. [China’s Global Conspiracy to Destroy the American Dollar]( China is nearing the end of its 40-year plan to dominate the world’s economy. Only one obstacle remains: The U.S. dollar. But not for long... because China has enlisted many co-conspirators to sink the dollar: Russia, India, Brazil, Argentina, Germany, and even Canada. And – no surprise – the International Monetary Fund (IMF) wants to jump in to help China win. This means China now has the power to crush the dollar almost overnight... and bankrupt America. But there’s still time to protect the money and retirement of investors. [Click here now to find out how... before it’s too late.]( *************************************************************** ETF Talk: I Say, Let’s Wing It As a reader of The Deep Woods, I suspect you understand that while I am a man of calculation and principle, I am also one to live life to the fullest and embrace the challenges that have that the chance to reap reward. So, when I say, “let’s wing it,” there is potential reward to be reaped. The world-renowned theoretical physicist, Albert Einstein, once said, “Strive not to be a success, but rather of value.” I understand this sentiment and so do “fallen” angel bonds. The term fallen angel is used to christen bonds of companies that were once rated investment-grade but have been downgraded to “junk” status. Often, these downgrades tend to result in forced selling by investors who cannot hold sub-investment-grade debt, which, in turn, suppresses the bond’s price. So, going back to Einstein’s quote, these fallen angels have targeted the former part of the quote quite nicely. To focus on the latter part, let’s talk about what gives our fallen friends value. While the bond itself has been downgraded, it still holds qualities that once made it a success. A 2019 report by The Chartered Alternative Investment Analyst Association (CAIA) found that bonds entering a fallen angels index are priced 150 basis points cheaper than high-yield peers, on average. This, combined with their higher credit quality than typical high-yield bond portfolios, makes them of potential value for fixed-income investors, as a portfolio of these bonds offer upside potential and less credit risk than most high-yield peers. Now, it’s time to wing it and discuss one exchange-traded fund (ETF) that offers investors exposure to these fallen angels – the [iShares Fallen Angels High Yield Corp Bond UCITS ETF (WING)](. Before we dig any further into this fund, and before any due diligence is done on my readers’ part, this ETF trades under multiple symbols including, QDVQ.DE and WIAU.L, which are the international symbols, as it trades on various indexes. This ETF tracks the Bloomberg US HY Fallen Angel 3% Capped Index and offers physical exposure to bonds from developed-market issues whose credit ratings have recently fallen from investment-grade status. Currently, the fund offers exposure to 158 holdings that are primarily in the consumer cyclical, consumer non-cyclical and communications sectors. The fund’s goal is to exploit the underpricing of these downgraded bonds with the hope that the price appreciates as the market for each bond stabilizes. Since the fund’s 2016 inception, it has seen a 6.1% annualized return, which is two percentage points better than the high-yield category norm and over five percentage points better than the Morningstar U.S. Core Bond Index, according to Morningstar.com. Further, the fund has over $900 million in net assets and more than $400 million in assets under management. It further offers a dividend yield of 5.42%. Now, I would be remiss in my writing if I did not warn my readers of the potential drawbacks to this fund. Because WING often adds to its portfolio during volatile price action, the fund itself may be riskier than those in the investment-grade universe and other high-yield funds not in the fallen-angel sphere. Ultimately, fallen angel bonds have the potential to be high-risk, high-reward vehicles for savvy investors. However, for investors looking for a fund of this nature, iShares Fallen Angels High Yield Corp Bond UCITS ETF may be a sturdy bet. It offers a handsome dividend yield, diverse physical exposure to 158 holdings and more than enough assets to keep itself afloat. As always, I am happy to answer any of your questions about ETFs, so do not hesitate to [email me](mailto:askjim@successfuletfinvesting.com). You may see your question answered in a future ETF Talk. On a final note, if nothing else, I have answered a question that the band Aerosmith has had since 1997. In a song titled “Fallen Angels,” one question remained, “Where do the fallen angels go?” The answer? Into exchange-traded funds with the goal of rewarding brave investors. [Don't let the market burn you out]( You can either maintain full throttle, navigating the turbulence, or opt for a smoother ride with greater control. Traditional sources of trading insights often rely on lagging indicators and historical data, leaving you a step behind, struggling to keep pace and risking burnout. Imagine having access to a [revolutionary dual-patented tool]( that leverages past data to forecast future stock movements effortlessly. Our Pro Trader is ready to unveil 4 real-time A.I. scanned stock trends in this complimentary [LIVE A.I. TRAINING CLASS.]( ***************************************************************** In case you missed it… Oh, Mexico Oh, Mexico, I’ve never really been but I’d sure like to go Sing, whoa, Mexico, I guess I’ll have to go now –James Taylor, “[Mexico]( The presidential election is just about six months from now, but so far in 2024, investors have largely ignored politics. I suspect that will gradually begin to change in June with the presidential debate, and as the two candidates come more into investor focus, we can expect lengthy discussions of the policy implications for markets. Most of the policies between the two candidates are starkly different. But one area they are in agreement on is being tough on trade with China. In one of last week's issues of the [Eagle Eye Opener](, my “secret market insider” and I explored the issue of China policy and how that may have filtered down to concerns about the emerging markets more broadly. And as you are about to read, there is one emerging market that usually flies under the radar that’s in good standing in trade terms with the United States, and that has outperformed and could be the beneficiary of U.S. companies diversifying away from China and other Asian countries. That beneficiary is Mexico. When most investors think of emerging markets, countries such as China, Taiwan, India and Korea are top of mind. That makes sense, as these countries account for over 70% of emerging market indices. But Mexico is just 2.7% in the MSCI EM Index, and we think it stands to benefit from the ongoing trends of “friendshoring” and “nearshoring.” Friendshoring is a deliberate policy decision to encourage trade with friendly neighbors at a time when geopolitical tensions are high. The U.S.-Mexico economic partnership has strengthened due to Covid-19 and the United States-Mexico-Canada Agreement (USMCA, formerly NAFTA), which offers mostly duty-free trade zones. Nearshoring is the practice of outsourcing a service to a third-party provider in a nearby country. This is obvious with Mexico’s close proximity to the United States and a nearly 2,000-mile U.S.-Mexico border. Goods from Mexico can often reach their U.S. destinations in a day or two by truck or rail. (Additionally, Mexico has sea access to Asian and European export markets via the Pacific Ocean and Gulf of Mexico, providing another way for foreign goods to get to the United States. And Mexico has free trade agreements with roughly 50 other countries). In fact, Mexico became the No. 1 trade partner of the United States in 2023. It took the spot from China, which was the leader for about a decade. Mexico offers numerous advantages that should allow the continued diversification of global supply chains by multinational companies (nicknamed “China plus one”) to make a sustained impact in the years ahead. Advantages include a skilled and young labor force, cheaper labor, government incentives (discounts, grants, training, tax incentives, etc.), solid infrastructure in the north and easy access to the United States (beneficial to foreign countries, too). Some manufacturers estimate up to 25% production cost savings in Mexico versus equivalent U.S. facilities, and hundreds of U.S. companies are taking advantage. Here’s a sampling of large U.S. companies with headquarters, R&D, operations, outsourcing and/or investments in Mexico: Ford, Procter & Gamble, American Express, GM, Microsoft, John Deere, Amazon, FedEx, AT&T, Meta Platforms, Coca-Cola, McDonald’s, Walmart, Pfizer, IBM, Exxon Mobil, General Mills and Nike. Notice the diversification, with companies from many sectors and industries. As Bradford Freer, portfolio manager of the New World Fund, said regarding a recent visit to Mexico, “I was shocked to see the magnitude of what’s happening. It reminded me of the cities I visited in China during the 1990s and early 2000s, with these bustling multi-million square foot facilities and thousands of workers building at scale. That’s now happening in northern Mexico at a rate I think is surprising to a lot of people.” Beyond the friendshoring and nearshoring catalysts, Mexico has other solid growth and value characteristics in play. The country has momentum, as the MSCI Mexico Index was up 41.5% in 2023, strongly outperforming the S&P 500 Index’s 26.3%. (Mexico also outperformed 19 of the other 23 emerging market countries last year.) The iShares MSCI Mexico ETF (EWW) has a 2.4% dividend yield, which is double SPY’s 1.2%. And it’s considerably cheaper in terms of price-to-earnings (P/E) ratio, 11.4 (EWW) versus 22 (SPY). That’s not to say there aren’t risks, which include: 1) Mexico’s electricity grid needs to be strengthened, 2) Southern Mexico is underdeveloped compared to northern Mexico, 3) Corruption, 4) Presidential elections are coming for the United States (early November) in 2024 and 5) U.S. recession (the biggest risk). For investors, there are three good Mexico exchange-traded funds (ETFs) to choose from: iShares MSCI Mexico ETF (EWW), Franklin FTSE Mexico ETF (FLMX) and Direxion Daily MSCI Mexico Bull 3X Shares ETF (MEXX). EWW is likely the best option if you’re inclined to make a direct bet. It has the highest assets under management (AUM) ($2.1 billion), most liquidity (trades two million shares per day) and longest history (1996 inception). FLMX is the least costly option (0.19% expense ratio). And MEXX, although very risky with its leverage, provides the most bang for your buck. EWW also has a 0% weight in the technology sector. So, if you’re overweight technology, it can serve as an offset. ***************************************************************** It’s a Wonderful World I spent all this time building a dream But none of it came true ’til you were here with me It’s a wonderful world filled with fabulous things I’d trade it all away to have you here with me It’s a wonderful world --Ben Rector, “Wonderful World” Since “wonderful” is the theme of this issue, I thought I’d leave you with the wonderful sounds of the great Ben Rector and his song “[Wonderful World]( The adorable video features his daughter Jane, and some cool puppetry, as it reminds us of just how wonderful the world is, not only abroad, but especially right at home with family. Watch the video and try not to smile—I dare you. Wisdom about money, investing and life can be found anywhere. If you have a good quote that you’d like me to share with your fellow readers, send it to me, along with any comments, questions and suggestions you have about my newsletters, seminars or anything else. [Click here](mailto:askjim@successfuletfinvesting.com) to ask Jim. In the name of the best within us, [Jim Woods] Jim Woods Editor, Successful Investing & Bullseye Stock Trader About Jim Woods: [Jim Woods]Jim Woods has more than 25 years experience in the markets, as a stock broker, hedge fund money manager, author, speaker and independent analyst. Today Jim serves as editor and investment director of the long-running newsletters [Successful Investing](, [Bullseye Stock Trader]( and a new Live Coaching service offered exclusively to his readers. His articles have appeared on many leading financial websites, including StockInvestor.com, InvestorPlace.com, Main Street Investor, MarketWatch, Street Authority, and many others. 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