How to join us in Zurich for free... The Harrisburg municipal bailout... Mike Williams' latest winner... Last day for Extreme Value... More praise for S&A... 
Dear subscribers, we owe you a debt of gratitude. Without you, we couldn't spend our time researching topics we love. Because of you, we remain an independent research firm, delivering what we think is the highest-quality financial research around today. To show our appreciation, we host a world-class conference every year in the finest locations across the globe. Last year, we held the conference at The Sanctuary on Kiawah Island. The year before that, the Four Seasons in Hong Kong.
This conference is only for Alliance members – subscribers who have paid us a one-time fee to receive all the research we publish and ever will publish (excluding Phase 1 Investor) for life. We fly our team of analysts to the conference to present their best, never-before-heard investment ideas. We also invite experts from outside our firm to tell our readers about other opportunities. For example, two years ago in Hong Kong, our friend Eduardo Elsztain (one of the wealthiest men in Argentina) gave Alliance members an opportunity to invest alongside him in a private, U.S. real-estate investment. Everyone who participated made a fortune.
This year, our conference is in Zurich, Switzerland on November 15. Our guest speakers are all experts on international asset protection. Current Alliance members have already received their invites. If you're not yet an Alliance member, we'll tell you how you can travel to Zurich with us for free. We'll give you the full details later this week.
We called it. From Friday's Digest...
Unless you happen to live in Harrisburg, you probably didn't see this item in your local paper. And you probably wonder why we'd lead with it in the Digest. After all, why should the impending bankruptcy of a small Pennsylvania city matter to you?
We led with it today because it represents the next leg of the debt crisis – the failure of municipal finance. We were also struck by the logic of the mayor... who clearly views paying the city's debts as optional. [Harrisburg mayor Linda Thompson] knows the state of Pennsylvania will be forced to bail out her city. (If the state doesn't intervene, it will be impossible for any other city in Pennsylvania to issue bonds.) And even if the state refuses, the bonds are insured by Ambac, which means, in the eyes of the mayor, it's likely that no one will get hurt by her decision. That's how a $288 million loss can become irrelevant to an elected local official. Like a subprime borrower living in a house without paying his mortgage, the mayor of Harrisburg thinks paying for its debts is someone else's problem. She's bringing Obamanomics to city finance. – Porter Stansberry, September 10, 2010, S&A Digest
Sure enough, Pennsylvania stepped in over the weekend. On Sunday, Pennsylvania Governor Ed Rendell announced a $4.3 million bailout for Harrisburg, saying missing the bond payment was "not an option." Rendell continued... "Harrisburg's financial future is still very cloudy, and difficult decisions still need to be made to return this city to financial stability. Allowing a missed bond payment, however, would not be a good decision."
As we said on Friday, Pennsylvania couldn't allow Harrisburg to default on its bond. If it did, no other city in Pennsylvania could issue debt. And muni rates across the board would skyrocket. This bailout proves the government will backstop these payments once the municipal defaults accelerate. Yet another reason to start preparing for inflation.
While we think municipal bonds are a bad investment, you can still find values in other areas of the bond market. Mike Williams just closed out another big winner in True Income. On September 2, 2009, Mike recommended readers sell one Sears bond (banking 35.7% in just four months) and buy another – 6.875% paper maturing in 2017. In the update, Mike wrote:
The creditworthiness of our borrower has not changed. Sears has a powerful balance sheet and an indestructible retailing franchise. We still have a loan to one of America's most powerful and well-known retailers.
The new Sears bond now trades at a premium, so Mike is selling. True Income readers made 78.4% on the bond (or a total 139.7% on their original money). For more information on True Income, click here.
Today is your last day to sign up for Extreme Value at a generous discount. If you're on the fence about an Extreme Value subscription, I urge you to go through the past two weeks of Digests and read the gushing feedback we've received (here, for example). It turns out, if you consistently make people double-digit returns every year, they're grateful. And Dan's track record is one of the best.
Dan is still finding plenty of values in his World Dominator portfolio (a collection of the best businesses in the world). The World Dominators are one of the only undervalued sectors in the market today.
And in his most recent issue, Dan recommended a tiny resource company with the potential to gain hundreds of percent – like Matt's ATAC pick. Dan says the stock "combines the upside potential of a stock with the safety of secured loan contracts, and adds the benefit of a growing stream of income as well, a highly unusual combination, one you pounce on when you find it." He believes this stock will be his highest-returning recommendation this year. To learn more, click here...
New highs: WR Berkley (WRB-PA), AuEx Ventures (XAU.TO), DirecTV (DTV), Altria (MO), Philip Morris (PM).
Light mailbag today, but we did receive one e-mail gushing with praise. While we tease you about your praise, we always enjoy it. Have any more? Send it here... feedback@stansberryresearch.com.
"I was a total greenhorn with no experience whatsoever who 4 or 5 years ago decided to join Stansberry; I bought two letters and started the journey of trading and investing. Appropriately for a total greenhorn I lost more money than I made. That ticked me off so I became an S&A Alliance member. I have learned so much from these guys and I am sorry that I paid so much money for college for my son to obtain a MBA degree. I should have given him a subscription to S&A. Oh well, water under the bridge.
"At one point I have given in to the begging of Porter to please try to sell puts. Petrified and with trepidation I finally succumbed and did it. Hallelujah... all my expenses have been paid for and then some by following among others his latest gold put, my little fortune is established and I am on my way.
"And you Dan are the best 90% of your recommendations are sitting pretty in my portfolio and I like them to grow roots there. Don't worry I will pay attention to my stop losses; I have burned myself enough not to do it. Thank you guys so much; I refuse to think or accept the discontinuation of any of your letters; they all have to offer treasures for the many different investing styles, thanks again.
"[I also want] to express my appreciation for the Retirement letter. It definitely has improved my health and wealth. Thank you so much. My husband, a doctor as well, regularly inquires about your monthly plans and unique tips. He is a wine connoisseur as well. We drink to your health and wealth as well. This is FYI only. Thanks again." – Paid-up subscriber Paula
Regards,
Sean Goldsmith
Baltimore, Maryland
September 13, 2010