Editor's note: If you didn't read last Friday's Digest, do it now. Porter dedicated the entire issue to "the easiest way to get rich in stocks." We got wonderful feedback from the essay. One well-known New York-based hedge-fund manager sent us a personal note, calling the issue "among the most insightful essays on investing he'd ever read. You can read the full essay here. Also, if you had trouble ordering on Friday (Casey Research had some technical issues), you can do so here.
We begin today's Digest with a confession from Porter...
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We've been keeping a secret... one that's played a big role in some of our biggest gains over the past six months.
Don't worry... our secret is perfectly legal. It involves no insider knowledge. But some say what we've been using to generate gains as high as 120% in four months is darn close to using insider information...
We've been using a proprietary market timing system known as the "Grail" to locate major stock market winners.
I know what you're thinking: "An early April Fool's Day joke?"
I don't blame you for thinking a trading "Grail" must be a joke. That's what I thought when our editor in chief Brian Hunt first told me about it. But after months of seeing this mechanical trading system work, I can tell you it's no joke. It's one of the most powerful trading tools we've ever seen at Stansberry & Associates. I've been in the business for 15 years... and I've never seen anything like it. (Although, I've heard plenty of claims from hucksters who have "found the Holy Grail" of the markets.)
While some mechanical systems are occasionally used with success (some "Turtle traders" have done well over the years), I've found most mechanical systems that blindly follow waves, moving averages, cycles, or momentum are no better at determining trading action than flipping a coin... despite their claims.
The Grail, however, is different from your typical mechanical system...
The Grail has allowed us to time a series of trades with astounding accuracy. Shortly after taking over our small-cap trend service, Penny Trends, Brian Hunt used the Grail to confirm the timing on his recommendation of small-cap uranium producer Denison Mines. The stock has climbed 128% in the past four months.
We also used the Grail to time our January purchase of natural gas producer Encana in the S&A Resource Report. Just after our Grail-timed purchase, Encana jumped 12% in two weeks. It was a major price breakout for the stock... which had spent the previous year drifting lower. We nailed the start of the uptrend almost to the day.
In September, we used the Grail to time a silver and silver-stock trade. S&A Resource Report readers who bought the stocks Matt "re-recommended" made more than 60% in just three months... one such trade eventually closed out for a 350% gain.
These are just a few samples of the incredible timing calls the Grail has made since we found out about it last year. There are many more...
That's why over the coming weeks and months, we're going to talk a lot about the Grail in the Digest... and we're going to provide readers with "live" trading recommendations generated by the Grail. We'll even "open up the floor" to readers to ask the Grail about their own stocks. Make sure to follow this idea. (The S&A Grail Trader is already available to Alliance members in "beta" mode.) The Grail could double the results of your investment and trading performance this year. More on this soon...
In last Friday's DailyWealth, Dan Ferris told readers about "one sure path to a wealthy retirement." Dan wrote about buying and holding World Dominator Altria, which yields 6.5%...
Altria sells Marlboro – and brands like Parliament and Virginia Slims – exclusively in the U.S. But despite the declining U.S. cigarette market, Altria still makes substantial profits. It generates huge cash flow and pays out an ever-increasing dividend.
Altria has raised its dividend every year for 44 years in a row. In 2007, it spun off international rights to Marlboro and its other brands to Philip Morris International. Since then, its dividend has risen 31%.
While the domestic cigarette market is in decline, the three largest U.S. cigarette manufacturers are improving earnings. The results are a function of an improving economy and the diminishing effects of an FDA tax (as Dan explains below):
When the FDA raised excise taxes 150% recently, cigarette and cigar volumes fell, but smokeless tobacco volumes rose 7%. The impact of the new tax really only lasted for about the first six months of 2010. All the volumes returned to their normal trends in the second half of last year, with cigarettes declining at an annual rate of 4%, smokeless tobacco growing at 7% and cigars growing 3%.
Today, Lorillard, the third-largest U.S. cigarette maker, posted a 7% increase in net income. While industry wide volumes fell 4.7%, Lorillard's domestic volume rose 4.6% (boosted by higher shipments of Newport menthol cigarettes and discount-brand Maverick). Make sure to read Dan's full essay and learn how World Dominator stocks can improve your portfolio.
Doc Eifrig's Retirement Millionaire subscribers have saved thousands of dollars using certificates from restaurant.com when dining at their favorite restaurants. And if you haven't tried this invaluable service, now is your chance... Restaurant.com is selling $25 gift certificates to restaurants in your area for only $10... And if you use the special code "HEART" you can save another 70%, lowering the cost of $25 down to $3. Click here to buy your gift certificate. (By the way, we get nothing from the company for publicizing this.)
This tip alone almost covers the annual fee for Retirement Millionaire, and Doc has dozens more money-saving tips, including how to cut your cell phone bill in half, how to save hundreds on your property taxes, and how to save money on your power bill. In the past two years, Doc's tips have saved his average reader almost $3,000 (and these are conservative numbers). In his latest issue, Doc tells readers how to find the best Certificate of Deposit (CD) rates and an easy way to make money from any unwanted gift cards.
To learn more about Retirement Millionaire – and how to live a healthier and wealthier lifestyle on less – click here.
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New 52-week highs (as of 02/04/11): WisdomTree Japan SmallCap Fund, Fronteer Gold (FRG), Northern Dynasty Minerals (NAK), Harmonic (HLIT), AmeriGas Partners (APU), Integrated Device Technology (IDTI).
Once again we're "fake," "evil," and "fraudulent"... or possibly just misunderstood. Send us your feedback here... feedback@stansberryresearch.com.
"I'm a natural skeptic. I've been tracking the S&A picks since becoming a subscriber a few days ago. For the minimum amount, I seem to get something called the Digest which is filled with doom, advertising for other products, and some stock recommendations. From the issue of Feb 2nd, I reproduce the Top Ten Open Recommendations:
"Look what just appeared in the table. Fronteer Gold (which I own, and which in your haste you misspelled) popped onto the list, but after Newmont took it out for a fifty percent premium. This is way disingenuous, actually fraudulent. Fronteer appeared after the deal was done, as if you picked it and had it there all along. How many people fall for this krap?
"I would like an explanation of this evil please. I made real money on FRG, your subscribers were cheated and you are a fake." – Paid-up subscriber Wayne Bradley
Goldsmith comment: Take it easy, Wayne. Our Top 10 list is not intended as a guide to what subscribers should buy today. As you noted, it lists the 10 highest-performing open recommendations. It necessarily reflects what has already happened...
Fronteer is an excellent example. Matt Badiali recommended the stock to his S&A Resource Report readers last August when the stock was trading around $6. After Newmont announced the Fronteer takeover, the stock jumped 40% – bringing our total return to nearly 140%. That gain makes it our sixth-highest-returning open recommendation. It's "open" because Matt hasn't closed out the position. It's still in the S&A Resource Report's model portfolio... But it's listed as a "hold." The share price has risen past Matt's buy-up-to limit, so he's not advising new readers to buy at this point.
No "evil" or "fraudulent" activity going on here... we're just reporting the facts. Our subscribers, like you, made a fortune on the stock. As for the misspelling, our apologies...
"My name is Luke, paid subscriber of the PSIA. First I would like to say I have learned a lot from your publication; however, I have not made a single dollar investing! There is a reason and it is not your fault. It is that I had the insight to pull all of my money out of the market during the summer of 08. The problem is I did not put the money back into the market in 2009 or 2010 or in 2011. So I have a pile of cash earning nothing and I am now scared to pull the trigger!
"I understand the trailing loss methodology and am comfortable with it, but I just can't invest now and risk the 25% loss. I feel that I have waited too long and there will be better buying opportunities in the future (I have been saying that for 2 years). My confusion comes from reading the DailyWealth, GrowthStockWire and my monthly PSIA. Lots of mixed signals, from buy, hold, correction coming, etc.
"While I know no one can predict the future, I feel risking the 25% at this point is to great, in other words the risk right now outweighs the reward. I am far off base, or as a consensus from your firm would you be going for it? I am not going to immediately act on what your response is, I would just like a consistent message, which I do not get from reading all of your materials." – Anonymous
Porter comment: Luke, I appreciate your note, which is why I wanted to respond personally. But I have to tell you, I can't provide the "consistent message" you're seeking.
I've hired several of the best people in the world to serve as our analysts: Jeff Clark, for example, built a big brokerage firm largely on the basis of his expertise with options. He now writes for us... So does Mike Williams, who has been investing in corporate debt professionally since the year I was born... There's Steve Sjuggerud, one of the world's foremost experts on global macro investing... And Dan Ferris, widely recognized on Wall Street as one of the world's best value investors... Dr. David Eifrig was once a "master of the universe" trader on the derivatives desk of Goldman Sachs....
I could go on.
My point is, if I expect these people to continue working with me, I can't tell them what to write or what to think. They do their best. They stick their necks out every day and regularly put their reputations on the line by making bold calls. But they have different areas of expertise, and therefore, their outlooks differ too. If I didn't allow them to write what they believe, they'd never agree to work here.
I firmly believe that's helpful to most investors. For example, even if you're a "bull" on gold, Jeff Clark's opinion about why gold should pull back in the short term might prove useful to you. (Just to be clear, that's only an example. I don't know exactly what Jeff's opinion on gold is today.)
So we can't deliver a consistent message... because we don't all do the same things and we don't all believe the same things.
I've hired the best people I can find, almost no matter what they cost. I've encouraged them to do their best for our readers, and I've given them all the tools they've asked for. I allow them to write whatever they believe. And I hold them accountable for their results.
What else would you have me do?
(Can you imagine if I decided to spend millions of dollars every year on analysts... and then ordered them what to write?)
Regards,
Sean Goldsmith and Porter Stansberry
Baltimore, Maryland
February 7, 2011One of our 'most insightful' investing essays ever... A Digest confession... Why pro football is like ethanol... Your sure path to a wealthy retirement... How to save 70% on restaurants... Why our analysts sometimes have different opinions...