If it bleeds, it leads!...

 I (Porter) have said for some time that the for-profit education sector is full of high-quality businesses trading at incredibly low prices. Today, I'll show you a great example...

 Capella Education (CPLA) is a $700 million online-education company. It's pioneering a new way of online instruction that allows people to get credit for education accomplishments by focusing on testing.

 This is a very important step forward in online education. Capella is doing something useful for students and investors. If you look at the company's financials, you can see it's an excellent business. Its return on equity is 20% a year. It has essentially no debt, and the stock is trading at a reasonable price (around 10 times cash flow). This is just one example.

 I don't want to go so far as to recommend Capella. But I think it fits our model for capital-efficient companies. It has a high return on equity. It trades at an attractive price... And it's in a business that is unlikely to change much.

 The U.S. has found a new country to bomb. News of the upcoming adventure in Syria pushed stocks lower yesterday.

The benchmark S&P 500 dropped 1.6% yesterday... its worst day since June. Oil touched a two-year high. European stocks reached their lowest low in six weeks. Gold reached its highest level since May.

 With the Syria bombing campaign in mind, the investor asks, "How I can I 'play' the war for a profit?"

We have an unconventional idea for you...

 But first, realize that in the greater scheme of things, the current crisis in Syria is nothing.

Yes, it's a terrible human tragedy. Yes, we'd rather see everyone just get along. But the mainstream media is paid to hype things beyond belief. That's what it's doing with Syria right now. War sells. Crisis sells. The media does whatever it takes to scare the rubes.

The old newspaper maxim, "If it bleeds, it leads" applies here.

People have been killing each other in the Middle East for thousands of years. It's what they do (with plenty of help from white people). Syria is in a section of the world our friend Richard Maybury calls "Chaostan"... which means "land of chaos." Make sure to read our excellent (and free) interview with Richard here... and you can listen to Richard's interview with Stansberry Radio here.

Once you understand Richard's ideas, you realize that in the greater scheme of things, the Syria crisis is just business as usual. By itself, it's nothing that should affect your investment decisions... no more than news of a dog biting a mailman in Wichita, Kansas should affect your investment decisions.

 When a made-up crisis like Syria is in the headlines, it's important to remember Dan Ferris' urging that "shopping trumps politics." This is one of the most important ideas S&A Research has ever shared with readers.

This idea is so important – and so relevant to what's happening today – we're reprinting an excerpt from one of Dan's classic newsletter issues, where he described this powerful idea.

Note that this commentary is from 2011, when newspapers were filled with stories about the European crisis. You'll note references to that crisis... and what the world's greatest investor, Warren Buffett, thought about it...

As Dan writes:

 The key to investment success is not a technique or a strategy.

It's not position sizing, trailing stops, options, having inside information, or owning World Dominators. It's not even the ability to value a business (a skill without which you're virtually guaranteed to lose money in stocks).

The key is not "buy low, sell high," or "be greedy when others are fearful and fearful when others are greedy"... though both adages will certainly help.

The key to investment success is a simple, powerful truth.

 It's the reason U.S. stocks appreciated 1.5 million percent during the 20th century. It's the reason great investors are great... And it's the reason you can set yourself up for the biggest, safest gains the market has to offer.

You see, understanding this truth is what allows you to buy when stocks are down and everyone is scared... and sell when stocks are overvalued and everyone is complacent...

To succeed in the stock market, you must believe that shopping trumps politics...

 That's the simplest (and maybe the crudest) way to say that what happens in the business world is more important to your daily life and the daily lives of everyone in America than what happens in the White House or the Capitol.

The amount of shopping for hamburgers at McDonald's is more important than the debt-ceiling debate. The amount of shopping for beer at the local convenience store is more important than any contest for the Republican presidential nomination. And the number of shoppers occupying the aisles of Target and Wal-Mart is more important than the number of protestors occupying Wall Street.

 Save your hate mail. I already know what you're thinking...

"Dan has lost his mind. Politics is everything to investors. America could be ruined with so-and-so in the White House... and with so-and-so running Congress."

In reply to this phony concern, I ask you to remember the 20th century... The panic of 1907, Prohibition, the income tax, the founding of the Federal Reserve, the Great Depression (in which half the country's banks failed), World Wars I & II, the outlawing of gold, the Korean and Vietnam Wars, oil shocks, the end of gold-backed U.S. dollars, the great inflation of the 1970s, the market crash of 1987, the savings and loan debacle and recession of the early 1990s, and the Internet bubble and crash in 2000...

Some of those things scared the hell out of investors. But you'd have made a lot more money if you bet against them lasting forever and for the primacy of commerce.

Despite all the horrible things that happened in the 20th century – despite it being the deadliest century in history (in terms of lives lost) – U.S. stocks... as tracked by Dimson, Marsh, and Staunton in their excellent book, Triumph of the Optimists... appreciated about 1.5 million percent.

 If you want an idea that'll help you cut through the noise and make great, winning bets when everybody else is throwing up, this is it. Knowing that the Dow Jones Industrials' value was highly unlikely to be permanently impaired would have helped you scoop up those businesses near the bottom in late-2008/early-2009. The Dow is up more than 100% since its early-2009 bottom.

Opportunities to appreciate the importance of business over macroeconomic issues abound in the roller coaster that is the market. For example, take the European crisis today... I can hardly think of a noisier event.

Yet, Warren Buffett is buying European stocks. That's right. The chairman and CEO of Berkshire Hathaway – and one of the richest men in the world – recently put about $1.9 billion of Berkshire's money into eight European stocks. (Sorry, we don't get to know which ones he bought. Buffett hasn't disclosed their names yet.)

 During a special, three-hour TV appearance last week, CNBC's Becky Quick asked Buffett why he bought those eight stocks. His answer shows how the primacy and dynamism of business trumps the relatively static, less-important business of government...

 Notice the words, "something else that's bothering the world." That's the stuff that terrifies the herd out of being able to make money in stocks... and has made Buffett a $43 billion fortune. Buffett effortlessly looks past the crisis in Europe and focuses instead on the fact that those eight businesses were "terrific companies that were cheap."

He's telling us what's most important to us as investors... owning a terrific company that's cheap and will still exist five, 10, 20, even 50 years from now is far more important to you as an investor than the European crisis, or any other government-created crisis, regulatory regime, or tax scheme.

 People will continue to drink Coke, use computers, and buy necessary household goods at a reasonable price. Buffett knows this as well as anyone. That's why he owns big stakes in Coke, IBM, and Procter & Gamble, among others, in his holding company, Berkshire Hathaway.

I'm sure there are folks out there – perhaps even readers of this publication – who are out of U.S. stocks permanently because they believe the U.S. is going straight to hell in a handbasket. It's not true. Yes, we have problems, many caused by goofy politics... But they're no match for the vigor of the marketplace. Shopping trumps politics. Business trumps politics. – Dan Ferris

 As we mentioned last week, there has been an unusual development in Dan's dividend-focused publication, The 12% Letter. Today, three of Dan's "World Dominating Dividend Growers" are trading below their "buy up to" prices.

These World Dominating Dividend Growers are the best businesses in the world. They're the best capital allocators. They pay the steadiest dividends. They have the strongest balance sheets. Even the 2008/2009 crisis couldn't dent their ability to pay dividends. They are the ultimate way to preserve your purchasing power during inflationary times (even better than gold).

When a phony crisis like Syria spooks people out of these elite businesses – and leaves them cheap enough to buy – you don't think twice: You buy them.

 This is our reaction to the Syria crisis.

It's how we recommend you "play" it.

We recommend you see any selloff as a chance to add World Dominating Dividend Growers to your holdings. By owning these elite stocks, you'll beat inflation, compound your money at high rates for many years, and sleep well at night. If the market drops, you won't care. You'll keep making more money year after year.

 New 52-week highs (as of 8/27/13): none.

 Another light day in the mailbag. Let us know what your experience has been with Dan Ferris' World Dominating Dividend Growers. Send your e-mails to feedback@stansberryresearch.com.

 "Being a big NASCAR fan myself, I like yesterday's submission of the NASCAR recession recovery indicator. Yes, like him I don't think we're quite there yet. But like Dr. Sjuggerud, lots of hated stocks out there right now but are beginning to be 'less bad' and showing an uptrend. My True Wealth subscription has been a must read for many years now and his mantra has literally paid for itself, year after year." – Paid-up subscriber Steve Russo

 "Subscriber Dan Hayes said 'I dare say that there is not one member, among the thousands, that joined because of your political beliefs.' Actually, I did join because of your political beliefs. I concluded some time ago that economics drives understanding of the world; without a solid understanding of basic, classical economic principles, a person cannot understand politics or predict the future course of politics or the economy anywhere in the world. With a solid understanding, one can do so, perhaps not infallibly, but fairly well. That being said, the only economic principles that consistently make solid logical sense and ably predict future events are those adhered to by classical economists, sometimes called free market economists and sometimes called Austrian school economists. Classical and particularly Austrian school economics relies on freedom – the opposite of Keynesian economics and the opposite of all leftist politics. Only through freedom can mankind thrive and prosper; all other systems stifle, corrupt, and degrade humankind." – Paid-up subscriber Bruce Finlay

Regards,

Brian Hunt
Delray Beach, Florida
August 28, 2013