Looking Back at How We Did in 2021
A man for all markets... The importance of a risk-adjusted portfolio... Looking back at how we did in 2021... Scoring over a five-year period... A great depth and breadth to these teams... Here is Part I...
One morning in 1963, Edward Thorp's genius nearly got him murdered...
Thorp, a former math professor at MIT, was perhaps the single most successful blackjack player in America... That's where his trouble lay.
You see, Thorp devised a system of counting cards that shifted the odds of the game in his favor... and away from the house. That was great for his track record at Nevada's gambling tables...
He won $11,000 in the first weekend that he tried out his theories. He eventually even wrote a best-selling book, Beat the Dealer...
But it wasn't so great for his relationship with the mobbed-up casino operators of 1960s-era Las Vegas... In his memoir, A Man for All Markets, Thorp recounted how on more than one occasion his "hosts" at casinos like the legendary Sands had him drugged and dragged out by burly bouncers.
And the casino operators likely made their displeasure clear to Thorp after one particularly successful weekend for him. As he wrote in A Man for All Markets...
The six of us left Las Vegas the next morning to drive back to Las Cruces. I was at the wheel as we went down a mountain road in northern Arizona. We were going sixty-five miles an hour when the accelerator pedal suddenly jammed. The steep downhill and the wide-open throttle were too much for the brakes. The car sped up to eighty miles an hour and the turns in the road became unmanageable.
Thorp jammed the brakes... downshifted to first gear... pulled the emergency brake... and cut off the ignition. He managed to pull off the road.
A Good Samaritan who understood cars pulled over to help us. Opening the hood to see why the accelerator jammed, he found a part that had come unscrewed from a long, threaded rod, something he had never before seen happen and found baffling. He fixed it and we continued on our way, alive, relieved, and sobered.
As far as we know, Thorp has never explicitly accused anyone of trying to kill him...
But it's quite a coincidence.
Thorp's wild backstory aside, he's important to investors like us because he also used his understanding of probabilities and statistics that he practiced in Las Vegas to become one of the most successful hedge-fund managers in Wall Street history...
By 1967, Thorp was devising models to find mispriced options two years before Fischer Black and Myron Scholes published their Nobel Prize-winning work on the same subject.
As author Jack Schwager reported in his book Hedge Fund Market Wizards, Thorp's Princeton Newport Partners hedge fund averaged a 19.1% annualized compounded gross return over his 19 years in charge. As remarkable as that is... his win rate is what makes his investing career nearly unparalleled.
Between 1969 and 1988, Thorp only had three losing months – a 98.7% win rate. As Schwager noted, that's like flipping a coin 230 times and getting only three tails.
In a 2006 article, Thorp, who was then 74, said he had made more than $80 billion in trades for his investors over a 30-year career.
He was also one of the first people to figure out the returns claimed by now-notorious fraudster Bernie Madoff were bunk... He urged his clients to divest from Madoff's funds a decade before the Ponzi artist's schemes unraveled.
We've recommended A Man for All Markets before... and we still endorse it. It's a great read and an amazing education. Thorp is a brilliant thinker, and some of his ideas are mind-bogglingly complex for mortals like us.
But we bring him up today because we want to focus on the surprisingly simple concept at the heart of this work...
Whether you're gambling or investing, you must understand your risks and deploy your money accordingly.
Thorp's 2006 article "The Kelly Criterion in Blackjack, Sports Betting, and the Stock Market" makes this connection clear...
The central problem for gamblers is to find positive expectation bets. But the gambler also needs to know how to manage his money, i.e., how much to bet. In the stock market... the problem is similar, but more complex. The gambler, who is now an "investor," looks for "excess risk-adjusted return."
I (Brett Aitken) share Thorp's story for a few reasons...
For starters, he is a brilliant man who has achieved tremendous financial success. And A Man for All Markets reads more like a James Bond novel than an account of his fascinating life story.
But it's about more than his intellect or financial success... Thorp's approach is most impressive.
Most academics with half of Thorp's intelligence will bamboozle you with classroom theory that can never be put into practice in real life. Thorp, on the other hand, was a mathematical genius... He preferred to improve by doing.
That's what we can learn from Thorp's story...
He took complex theories and simplified them so that anyone with normal intelligence could understand them... For example, instead of devising a complicated way to count cards at the blackjack table, he designed a simple three-step method that stacked the odds of success in his favor.
Then, he bet accordingly. When the odds of success were high... he bet heavily. When the odds were lower... he bet small.
Simplicity was his approach... and his edge.
Here at Stansberry Research, we too have always believed in simplicity...
We know that finding financial success in the markets is a challenging endeavor.
It's complex, time consuming, and difficult to succeed consistently. Many professional money managers who dedicate their entire life to it struggle. Most retail investors don't have the time, the research, or the resources needed to succeed.
Many folks don't have the needed emotional toughness required... The market has a habit of making investors do the worst possible thing at the worst possible time.
And as we have written about before, finding great investment ideas is just one part of the equation... Like Thorp, we know that risk management and asset allocation are far more important to building and protecting your wealth than simply finding the right stocks.
The importance of risk-adjusted portfolio allocation is a thread that runs through everything we do here at Stansberry Research...
That brings me to our annual review...
Today, we're publishing Part I of our annual Report Card.
If you've never read one of these reviews before, I hope you find these insights useful. Some of you may find it surprising... maybe even shocking... that we do this every year.
We've been publishing investment research since 1999. Our founder Porter Stansberry started writing these Report Cards in 2006. He wrote every single one of them himself until he handed me the red pen in 2017. As Stansberry Research publisher, I've carried on this tradition.
And every year, we get asked the same question... Why do we do it?
So before we dive into the grades, let me briefly explain...
First, we only want to publish high-quality investment research – advice that we would confidently send to our own friends and family. We are passionate about what we do.
And I'm confident that if you ever meet any of our editors, analysts, or staff at one of our conferences, you will know what I mean... Everyone who works here strives to help our subscribers learn the best investment strategies that will build real wealth.
Second, we now have more than 30 publications, more than 30 analysts, and more than 200 employees at Stansberry Research... Between daily, weekly, and monthly publications, as well as all of the special reports, we produce hundreds of issues each year. Our Report Cards ensure that our work is credible, trustworthy, and reliable.
And finally, these Report Cards give us an advantage...
By being transparent, it shows you – our loyal subscribers – how we do every year. You deserve to know how the research we publish performs.
Plus, it helps attract talented analysts who are serious about achieving results. We have a formidable lineup on our editorial team... It includes former Wall Street traders, hedge-fund managers, scientists, doctors, a Ph.D., certified public accountants, chartered financial analysts, an actuarial, an econometrician, and other impressive professionals.
Most hedge funds don't have this depth or breadth of talent.
They are all supercompetitive... Most important, they all hate to lose.
We've said this many times before... This group of talented individuals could work for anyone, anywhere in the world. Fortunately, they enjoy working for us.
For this year's Report Card, we're using a five-year period...
Now, the benchmark S&P 500 Index has more than doubled since January 1, 2017... So most investors have likely made good returns during that period.
But over the past five years, we've also experienced two big sell-offs. The market declined almost 20% between October and December 2018.
And of course, you all know the sharp sell-off in February and March 2020 when the market plummeted nearly 35% in about 23 trading days. Those major pullbacks can hurt results if you're in the wrong sectors, not hedging, or not managing your portfolio with risk-adjusted position sizing.
While many people like to think that stocks only ever go up, we know that volatility happens along the way... sell-offs, pullbacks, and the like happen. So for our Report Cards each year, we like to see how our editors perform in difficult times as well as boom times...
Five years ago, we launched Stansberry Portfolio Solutions...
The goal with these Portfolio Solutions products is to simplify successful investing for you.
Members of our investment committee scan all our publications that correspond to a specific portfolio (more on that below)... and select the best picks for you. Our team of more than 30 analysts has already vetted and researched these stocks in detail... And you can find their comprehensive reports in the individual publications.
We build the portfolio based on a $100,000 investment. But we don't necessarily expect you to invest that amount... We provide a portfolio calculator so you can easily adjust based on the total amount you wish to invest. We tell you exactly which shares to buy... and how many... based on the size of your portfolio.
Our three core portfolios are structured in a way to align with three investor strategies of capital appreciation... income... and a hedged, all-weather portfolio. We've designed them in a way for you to use our research, select the best positions, and allocate accordingly.
The three core portfolios are...
Capital ‒ The goal for this portfolio is capital appreciation. It's our most aggressive portfolio. To assemble it, we take ideas from Stansberry's Investment Advisory, True Wealth, Retirement Millionaire, Stansberry Innovations Report, Commodity Supercycles, Extreme Value, and Stansberry Gold & Silver Investor.
Income ‒ This product includes access to everything you get with The Capital Portfolio, plus Income Intelligence and Stansberry's Credit Opportunities. This portfolio holds a mix of dividend-paying stocks, high-yield bonds, and hybrid stock-bond securities. We aim to provide investors with low-risk ideas that earn income and capital gains. It normally holds around 30 positions.
Total ‒ This portfolio combines everything from The Capital Portfolio, The Income Portfolio ‒ and seven of our elite research services ‒ to offer investors an all-weather portfolio. We include a few noncorrelated hedged and short positions to protect on the downside. You can usually find up to 40 positions in The Total Portfolio.
These Portfolio Solutions products are fully invested and managed in the same way that we would manage a fund.
Our investment committee overseeing the portfolio products includes Dr. David "Doc" Eifrig, Steve Sjuggerud, Matt Weinschenk, Brett Eversole, Alan Gula, and C. Scott Garliss. You can visit our website to read more about each of them. But just know, this talented group boasts more than 100 years of combined experience in the markets.
But before you scroll down to the results, please read this gray box first... It explains how we grade our publications.
Our Grading Criteria
I encourage you to read this explanation of the criteria we use...
It will help you understand what we're looking for from our analysts and editors. And it should help you understand the high standards that I set for all of our publications.
Also, keep in mind that the grades are mine – no one else's. I generally provide context to support my decisions. But there's no fudging... no excuses... no hiding from the results.
You may agree or disagree with the grades. But either way, you get to see the results for yourself. And as always, you're welcome to e-mail your feedback about my grades to feedback@stansberryresearch.com.
We'd also love to hear your general thoughts about our various publications... So whatever you subscribe to, send us a note to tell us how you're doing with those investments, as well as what you like most the research we are providing.
As for the grades, first, we aim for complete accuracy...
This involves tracking the exact entry and exit points. Please keep in mind... we're tracking our results ‒ not yours, which is impossible for us to do. We're not saying these results represent the exact prices at which you could get into or out of an investment.
Rather, it represents the value of our insights at the time we publish our material. Unless otherwise noted, we use the closing price for the day prior to publication for our entry price, and the closing price the day after we recommend closing the position or when we hit stop losses.
Next, we evaluate each publication's performance by focusing on three key metrics...
The most important metric for us is the win rate. With the exception of our "fully allocated portfolio" products, our newsletters and trading services make regular recommendations – in many cases, each month. So their "model portfolios" are essentially a list of recommendations – not an actual portfolio where you invest in an entire pool of risk-weighted securities. We can't know if subscribers act on every recommendation or try to cherry-pick the ideas they think will work out best. In most cases, we bet that it's the latter...
That makes the editor's ability to pick more winners than losers the most important criterion. This tells subscribers the likelihood that an editor's picks will end up in the black. When you follow an editor with a high win rate, you should stick with him.
Next are the average and annualized returns...
We compare how each recommendation ‒ not the entire list of recommendations at once ‒ performs against its benchmark over the exact period. That benchmark is the S&P 500 Index unless otherwise noted.
This is perhaps the most confusing metric for subscribers to understand. But we think it's the most accurate way to compare results. Since we're making recommendations throughout the evaluation period, we can't compare the newsletters with the S&P 500 over the full period... Not all recommendations were made at the start date. Porter once compared it with trying to figure out where a waterfall starts. As he said... it doesn't. It just flows.
Likewise, we don't close all our positions at the same time. That's why you will see a different number for the benchmark on each publication, rather than a flat rate of return for the evaluation period. By looking at the average gains for a publication, you can determine what kind of returns to expect from following the editor's recommendations.
In investing, annualized returns show what would happen if you were to repeat a trade's performance (up or down) throughout the year. Again, given that these are mostly lists of recommendations rather than an actual portfolio ‒ and that we are evaluating trades over multiple periods (some less and some more than 12 months) ‒ we believe this is the best way we can measure an editor's returns. It also allows you to compare different strategies over different periods.
Now, let's move on to what you've all been waiting for...
Today, I will cover The Capital Portfolio and five corresponding publications (plus a special section under one of those publications). Next week, we'll get to The Income Portfolio, The Total Portfolio, all of their corresponding publications, and anything else we haven't covered.
The Capital Portfolio: A+
The Capital Portfolio has performed exactly as we expected.
Well, better actually... much better.
For the five-year grading period, The Capital Portfolio produced a 156% return – or almost 32% annualized gains. It outperformed the S&P 500 by a wide margin in both of those metrics.
Naturally, I'm delighted with these results.
During the five-year grading period, stocks sold off by 10% in early 2017, nearly 20% in late 2018... and then the 34% brutal sell-off in March 2020. The speed and severity of the 2020 crash put most investors into a tailspin.
Almost every investor I know was down – at least on paper – during the chaos of March 2020. That's when the emotional strength I mentioned earlier comes in... You need nerve and conviction to step in and buy when everyone else is running for the exits.
I'm thrilled to say that our investment committee embraced the opportunity... and bought when most people were still selling.
As you know, stocks went on to make new highs the same year. And the market has roughly doubled since its March 2020 low.
Over the past couple of years, The Capital Portfolio team has made huge triple-digit gains on international stock Sea Limited (SE), cloud-based Software as a Service ("SaaS") company DocuSign (DOCU), and of course, bitcoin.
The investment committee has done an excellent job of selecting stocks... And as I alluded to earlier, its management of the portfolio proved even more important.
For example, allocating a small amount to bitcoin in the portfolio provided outstanding overall returns when the world's most popular cryptocurrency soared. And knowing when to take some profits off the table was equally important...
The team trimmed the position, booked profits, and reduced the overall exposure of the portfolio to a volatile security. Likewise, exercising risk management got them out of tech giant Alibaba (BABA) around $200 per share before the stock plummeted to near all-time lows at around $125 per share.
The investment committee made other smarts calls as well...
I can't give away too many secrets here, in fairness to paying subscribers. But they also trimmed a significant position in a SaaS recommendation before the market began punishing some of these stocks late last year.
In the spirit of Edward Thorp, we've now applied our theory for five years. It's a simple approach. And it's working better than we expected.
Congrats to the investment committee... and all subscribers to The Capital Portfolio who have enjoyed these gains. It's an impressive performance.
Our Capital Portfolio gets an A+ for this year's Report Card.
With a five-year track record to prove this strategy works better than even we expected, I'm more convinced than ever that our Portfolio Solutions is the easiest, most effective, and profitable way for our subscribers to maximize the quality of our research. Plus, you can spend less time each month managing your investments.
If you're not using Portfolio Solutions yet, you really should consider it.
The investment committee just released its new portfolios for 2022. And it's not too late to join us...
Our marketing team put together an incredible offer that includes a performance guarantee, plus a bonus. But they tell me this opportunity is about to close... And to be honest, I'm not sure I will ever agree to these terms again. You can go right here to sign up or call our customer service team at 800-679-1335.
Now, let's review some of the publications that feed the ideas for The Capital Portfolio. And next week, we'll continue the Report Card with our other publications.
We'll start with...
Retirement Millionaire: A+
These results are world class.
But those of you who've read this publication for a while probably aren't surprised...
Since launching Retirement Millionaire in 2009, Doc Eifrig has shown his subscribers how to earn safe, steady returns without taking huge or outsized risks.
In this publication, Doc has a 75% win rate since inception... And he has produced average annualized gains of 20.4%. Impressive stuff.
He has scored an "A" more times in our annual Report Cards than any other editor since he joined Stansberry Research in 2009. In fact, he has scored an "A" more than any other editor since we started publishing Report Cards in 2006.
For this publication, he has scored an "A-" or better in 11 of the 13 years we have published Retirement Millionaire. The other two results were hardly disasters. His lowest grade was a "C" in the 2016 Report Card... which at the time we knew would disappoint him, but it also fired him up.
And sure enough... it did. He got an "A-" the following year. After a "B" in 2018, he earned an "A" and an "A+" in 2019 and 2020, respectively. And as you can see, he has earned another well-deserved "A+" for 2021.
Naturally, I'm thrilled to see editors like Doc perform so well – and consistently – for subscribers.
For the grading period 2017 through 2021, Doc made 44 recommendations. Ten of those are triple-digit winners... meaning for every recommendation Doc made, roughly a quarter of them went on to at least double your money.
His biggest winner over the past five years came from software giant Microsoft (MSFT).
Some will yawn at that and say, "So what?"
But you have to remember where Microsoft was at the time. And I don't just mean its nominal share price...
Today, Microsoft is the second-largest company on the planet, with a $2.3 trillion market cap. But when Doc re-recommended it in 2017 ‒ he first recommended it in 2010 ‒ it was just starting to break new ground under the direction of its new CEO Satya Nadella.
At that point, its share price had finally just made new highs from those previously set in November 1999. You read that right... investors who bought the 1999 high had to wait roughly 18 years before the share price returned to breakeven.
There are all sorts of reasons behind the lousy performance that I won't go into here ‒ although the previous CEO Steve Ballmer clearly played a role. Just know that Doc showed subscribers why his outlook was so bullish when recommending the stock.
Most important, Doc recognized that this tech behemoth wasn't just growing and innovating under new management... It was a giant cash cow and was still one of the smartest tech companies in Silicon Valley.
Of course, we all know what happened next...
If you followed his advice in 2017, you more than quintupled your money by the end of last year. And if you got in on his original recommendation in 2010, you were sitting on a 12-bagger when 2021 ended. Extraordinary stuff. And the position remains open today.
At the end of 2021, Doc was also sitting on big triple-digit gains from dating-website owner Match Group (MTCH) – up more than 370%... HVAC-equipment maker Trane Technologies (TT) – up 220%... and communications giant Motorola Solutions (MSI) – up 116%.
Equally important, he contains his losses... During the March 2020 crash, the 34% market sell-off only hurt three positions in his model portfolio ‒ for an average annual loss of just 28%.
Despite what some people like to believe, no one can predict market crashes consistently or accurately. But this stat shows that Doc is not only picking the right stocks... he is getting in at the right prices and giving his positions enough room to move.
Today, the investing world is full of "financial experts" appearing all over social media to pitch the next "hot" stock tip... for free. For many new investors, it seems as if these "experts" are blazing an easy path to riches.
Sure, some of it's entertaining. But if you've been investing a while... you know that's not how to build real wealth in the markets.
Following Doc and his team is a much safer, more reasoned, and effective way to grow and protect your wealth.
Doc has proven for more than a decade that he doesn't just pick winners... he picks them at the right time.
Remember, selecting good stocks is just one part of the investing equation. Buying them at the right time is what ultimately determines your results.
With a win rate of 66% and average annualized gains of 28.9%, Doc's numbers say it all...
He crushed the S&P 500 over the same span. That's why he gets another "A+" for Retirement Millionaire in this Report Card.
Congratulations to Doc, his research team, and all of you who have followed his work. I hope you're enjoying some of these gains.
Stansberry's Investment Advisory: B+
This is Stansberry Research's flagship publication.
Porter began publishing Stansberry's Investment Advisory when he launched the company in 1999. Today, five talented and experienced analysts regularly contribute to each monthly issue.
In this publication, the Investment Advisory team has covered – or uncovered – some of the biggest investment trends in America for more than two decades. If you want an education on the inner workings of industries and the companies within them ‒ as well as developing investment strategies based on the team's research – you won't find a better source.
Taking Porter's lead, the team consistently reminds subscribers about the importance of investing in capital-efficient companies like Microsoft and chocolate maker Hershey (HSY).
With the possible exception of Warren Buffett, you won't find a team anywhere in the world who knows more about property and casual (P&C) insurance stocks – what we've long called the best business in the world.
For more than a decade, our Investment Advisory team wrote extensively how the U.S. would once again become the No. 1 oil producer in the world... when everyone else was calling "peak oil" in America. And they identified the winners and losers along the way.
Plus, they've covered the latest breakthroughs in medicine... as well as technology like 5G, artificial intelligence ("AI"), and the latest trends in SaaS... to name just a few.
Stansberry's Investment Advisory also differs from other publications in that the team occasionally recommends shorting stocks when they find the right opportunities. The three core tenets that guide them in deciding to short stocks are...
- Obsolescence
- Balance-sheet impairment
- Fraud
While uncovering fraudulent behavior is tough, it's even tougher to prove... Still, the team regularly finds one or two companies that meet the other criteria to short and hold in the portfolio at any given time.
While these short positions can drag on the model portfolio when everything is going up, they can help offset losses when volatility strikes.
The open portfolio boasts several triple-digit winners, including capital-efficient companies like Hershey – up more than 450% – and Microsoft – up more than 880%. And like Retirement Millionaire, the performance of this publication's recommendations over a more than 20-year period is outstanding... It has produced 15.8% average annualized gains since its inception in 1999.
But remember, we're focused on a five-year period this year...
For this grading period, the Investment Advisory team shared several triple-digit winners with subscribers – including a 150% gain in Texas Pacific Land (TPL), a royalty play with land in the oil-rich Permian Basin. The team also produced triple-digit gains in sports-betting firm Flutter Entertainment (PDYPY) and bond-exchange pioneer MarketAxess Holdings (MKTX).
However, it wasn't all positive returns during the grading period. The team had its share of losses, too... And frankly, a few were larger than we like.
For example, it took a 43% hit in a speculation with Overstock (OSTK) in 2019.
Losses always hurt. And you must learn to accept them if you're investing. The key, of course, is keeping them contained. The loss with Overstock stung a little more than others because it hit so quickly – within roughly a month.
A similar thing happened with gunmaker Smith & Wesson Brands (SWBI)... The team suffered a 33% loss on the position in less than 30 days in 2019.
While losses come with any investing strategy, a few of these larger (and quicker) losses did tarnish the track record for the grading period of this year's Report Card.
Still, most hedge funds in the world can't boast a 57% win rate and average annualized gains of 18.5%... That's what the Investment Advisory produced over that period.
Yes, I know... that average annualized gain is slightly lower than the S&P 500. But as I've mentioned, holding a few short positions can weigh on a long portfolio. And many savvy investors would argue that's a small fee to pay for a hedged portfolio – and less stress.
Given that, some other folks might ask, "Why not give them an 'A'?"
I've mentioned this in previous Report Cards... For our regular publications with what we call "model portfolios" – which are really a list of recommendations rather than a fully allocated risk-adjusted portfolio – I want to see a higher win rate before handing out an "A".
So given the overall performance of the portfolio, the Investment Advisory team earned a "B+" for this year's Report Card.
True Wealth: C
Big macro calls are True Wealth editor Steve Sjuggerud's specialty...
Among them were picking the top in tech stocks in 2000... going long gold in 2001, when it traded for less than $200 per ounce... and going long stocks at the market bottom in 2009.
Steve became convinced after the 2008 financial crisis that then‒Federal Reserve Chair Ben Bernanke would do whatever he could to restart the economy... And beyond that, he believed it would result in a huge bubble in asset prices, including stocks. Steve's "Bernanke Asset Bubble" thesis has played out so accurately that it's now onto its third Fed Chair – Jerome Powell.
Longtime subscribers know Steve's mantra is simple... He loves to buy what's cheap, "hated" (his word), and in an uptrend. Then, he rides the trend for as long as possible. His long-term track record spanning two decades is about as good as you'll find in the markets.
Since launching his True Wealth publication in 2001, Steve has a win rate of 54% and average annualized gains of 12.7%. The great thing about Steve's investment strategy is that you can reap these steady gains without taking huge risks.
The goal with this publication is to produce market-like returns with far less risk than you would be exposed to in the overall market. And in most years, Steve has done this successfully.
For example, subscribers who followed his recommendation to buy tech stocks in May 2020 could've earned more than 200% gains. Likewise, he helped readers buy a homebuilding stock that has more than doubled in about 18 months. And his recommendation in Tencent (TCEHY) in early 2017 gave readers the opportunity to book gains of more than 60% within an 18-month period.
But choppy markets can bump you out of positions before the good times gain momentum. And while Steve often gets the big macro calls right, he's sometimes early.
For example, the 18% decline in stocks in late 2018 forced him out of a couple of emerging-market recommendations. And the March 2020 crash triggered several stops – with one or two larger-double-digit losses along the way.
That hurt Steve's overall performance for True Wealth during the five-year grading period. And it has earned him a "C" this year.
I know this grade will disappoint Steve and his research team. But before I move onto the next publication, let me share something with you...
Steve hasn't received a "C" for True Wealth on the Report Card since 2011 – more than a decade ago. I met him soon after... I knew he was competitive and that he would adjust his strategy to improve performance.
Not surprisingly, he earned an "A" the very next year... And the year after that.
I expect we will see a similar response from Steve and his team this time, too. I wouldn't bet against them.
Commodity Supercycles: F
A new bullish cycle might finally be gaining traction... And I'll get to that in a minute.
But no one can hide from the fact that the past 13 years have been a nightmare for commodity investors... And this commodities-focused publication hasn't escaped the carnage.
Since July 2008, the benchmark – the Bloomberg Commodity Index – has plummeted 54% through today. Through the low of April 2020, it fell a total of 78%.
"Brutal" is one word to describe the performance in this sector. Other more colorful words likely come out of the mouths of those trying to make a buck or two in this space over the past decade.
I recall saying in 2018 that we should expect to start seeing upside in commodities. Boy, was I wrong... Despite the odd glimmer of hope here and there, commodities dropped in half again over the next two years.
Fortunately, though, for the past year or so, commodities have finally turned a corner... They've been a little more friendly to investors.
This is where context matters...
You see, over the past 18 months, Commodity Supercycles editor Bill Shaw has identified several areas in the commodity space that are proving fruitful.
As 2021 ended, he had shown subscribers an 80% gain over roughly a year on a materials company. He was also sitting on a nearly 50% gain with one stock benefiting from the surge in global demand for natural gas. And he led subscribers to a 64% winner in less than a year with a copper company.
Over the 18-month period, Bill made 21 recommendations. At the end of 2021, 14 were profitable, resulting in a 66% win rate and average gains of around 14%... That's in line with the benchmark over that span.
Those results in isolation are worth at least a "B"... And they indicate that Bill is on the right track. I'm looking forward to seeing plenty more successes moving forward.
Still, for this Report Card, we must focus on the results for the five-year grading period...
We don't like handing out "F" grades. But sometimes a sector-focused publication can suffer for longer periods than we anticipate.
While I'm pleased to see Bill showing strong results over the past year or so, unfortunately, 2017 through 2019 dragged heavily on the five-year performance. As a result, the average returns over the grading period ended in the red ‒ compared with a tiny gain for the benchmark. And for this reason, I must give an "F" to Commodity Supercycles.
Despite the grade, our outlook on commodities is optimistic...
When supercycles hit in the commodity sector, the gains can be life changing. And the past 12 to 18 months give me confidence that we'll see more positive results moving forward.
You don't have to bet the farm to see real results. But you do have to participate to win. As with any strategy, we urge that you invest wisely.
Stansberry Innovations Report: A
We launched this publication in April 2018... so it has not been around for the full five years of this Report Card's grading period. We're measuring its results since inception.
Similar to our flagship publication, Stansberry Innovations Report covers big trends. The difference here is that the team focuses primarily on technology. They've written extensively on gene editing, 5G, robotics, video games, SaaS, military and space technology, cloud computing, digital payments, the blockchain, and crypto technologies.
And the track record is outstanding...
Some people think picking winners during a bull market in tech stocks is easy. And yes, that environment certainly helps... But it's far from a guarantee of success.
For example, at the moment, the Nasdaq Composite Index trades just 10% off its all-time highs from November 2021. However, roughly 42% of stocks in the index have dropped by more than half from their 52-week highs...
So while I've mentioned this before, it's worth reiterating... The immense intellectual capacity behind this publication is a huge reason for its success.
John Engel worked in the laboratory of a large, publicly traded pharmaceutical company and holds a master's degree in science. Dave Lashmet, who is also the editor of Stansberry Venture Technology, contributes research and recommendations. He brings two decades of research experience in technology and biotech.
Plus, a couple of years ago, we introduced Crypto Capital editor Eric Wade into the mix... Eric spearheads coverage of the blockchain and crypto technologies in the Stansberry Innovations Report's "Crypto Corner" each month. As readers learned in January, we'll be expanding coverage on this sector as opportunities arise.
Among Stansberry Innovations Report's big winners is Intellia Therapeutics (NTLA) – an innovative gene-editing company using CRISPR technology. As John told subscribers in December 2019...
CRISPR/Cas is the most accurate, cost effective, and easy to use gene editing system in the world. It can cut and disable bad genes. But it can also replace and edit the genes of living cells.
John went on to tell subscribers that this is the most profound scientific discovery in decades. And with 6,000 diseases resulting from genetic mutations, this technology has the potential to change the future of medicine.
At the time, in December 2019, John recommended a group of three stocks in the gene-editing space. A year later, he suggested selling half of each position to take some profits off the table. One of the stocks had already soared more than 300%. He continued holding the rest of that position... And it was up roughly 660% at the end of the 2021. So the combined position in this one company alone was up 484% in roughly two years.
To show how diversified the sectors covered in this publication are, look at The Trade Desk (TTD) – a digital interface for advertising. John introduced subscribers to the current landscape of the advertising market, highlighted who the main players are, and detailed what was up for grabs for companies like The Trade Desk.
He recommended buying TTD shares in October 2019. A little more than a year later, he said to sell half the position to lock in a 300%-plus gain and ride the rest for future profits. The combined position showed a 359% return as 2021 ended.
These are just a few of examples of what you can expect from this newsletter. Others include a triple-digit gain in cybersecurity... another triple-digit gain in cloud-based software... yet another triple-digit gain in space technology... and several high-double-digit winners across multiple companies in tech and biotech.
Now, like every investment strategy, some losers do happen... And as you would expect, several positions hit their stops during the market sell-off in March 2020. Fortunately, the carnage was contained in terms of losses to the portfolios.
Some positions closed higher than their opening prices, while a few triggered minor losses. Overall, the 12 closed positions averaged a loss of just 6.6%... And yes, John's model portfolio has hit a few stops since then. But nothing has put the overall strategy at risk...
As you know by now, it's not only about the wins. You must contain the losses if you want to succeed in the markets.
One thing we would love most for subscribers to embrace is risk-adjusted allocation in their portfolios.
The single most common mistake we hear from folks is that they simply don't know how to construct a portfolio...
In a publication like Innovations Report, every idea seems like the next greatest thing – and it might be... But you need to know how to build your portfolio with adjusted position sizing so no single mistake will blow up your entire portfolio.
At the risk of stating the obvious... you need capital to invest. So if you want to continue investing, don't do anything with your individual investments that will put everything at risk.
Before we wrap up, I want to spotlight the work in one particular part of this publication...
Stansberry Innovations Report 'Crypto Corner': A+
In December 2019, Crypto Corner became a feature in the Stansberry Innovations Report.
Here at Stansberry Research, we expected a new boom in the blockchain and cryptos. And since this market sector is complex, we wanted to provide as much expertise as possible about the underlying technology – the blockchain – and the opportunities to invest that come along with it.
Crypto Capital editor Eric Wade leads these efforts. He kicked off Crypto Corner in January 2020 with a recommendation to buy bitcoin at around $8,750. Needless to say, subscribers who took his advice are sitting on massive gains... Even with the most recent pullback from its November 2021 highs, folks who followed Eric's advice are up more than 300% on the overall position (including taking some gains along the way).
While Crypto Corner is aimed at providing educational material and market insights, Eric has made a few other recommendations – one that has soared several hundred percent, as well as others that are still in buy range today.
As you know by now, the gains in this sector can be outrageous. Likewise, you should also know that these investments can also drop like a rock. So don't get too greedy... Adjust your position size accordingly. That way, you can pounce when volatility hits and positions fall by 50% or more.
Eric's track record speaks for itself. With a 100% win rate and an average annualized return of 302% on these recommendations, he earns an "A+" for Crypto Corner.
That concludes Part I of the 2021 annual Report Card.
Stay tuned next week for Part II and Part III, covering the remainder of our Portfolio Solutions products and research publications.
New 52-week highs (as of 2/3/22): Alcoa (AA), AbbVie (ABBV), Continental Resources (CLR), Hershey (HSY), Coca-Cola (KO), McCormick (MKC), Raytheon Technologies (RTX), Shell (SHEL), and W.R. Berkley (WRB).
A quiet mailbag today... What do you think about Part I of our annual Report Card? Let us know at feedback@stansberryresearch.com... And stay tuned next week for the rest of our grades.
Until then,
Brett Aitken
Publisher
Baltimore, Maryland
February 4, 2022