Editor's note: Our Baltimore headquarters has been almost empty since Friday. Our customer service department remains closed today and will most likely be closed for several more days. Why? Because we got hit with more than 30 inches of snow, and we're expecting another foot or so tomorrow. We will reopen as soon as it's safe to do so. In the meantime, we'll do our best to publish on schedule with as few disruptions as possible... The Digest included. If you have customer service needs... you'll have to wait until we can dig out our call center. We should be running at full capacity before the end of this week. We appreciate your patience during this time.
We've been telling our friends for months that sooner or later the U.S. Treasury secretary would come out and publicly say something ridiculous in defense of the U.S. dollar – much like a banana republic's finance minister on the eve of devaluation. Today, we got our first actual taste... On Sunday, Geithner said the U.S. "will never" lose its triple-A credit rating. Never is a very long time. And if you believe the representative of a bankrupt government, there's a bridge in Brooklyn you should look into buying...
Watching Geithner lie through his teeth reminded us of July 2008, when Fed Chairman Ben Bernanke assured us Fannie Mae and Freddie Mac were "adequately capitalized" and "in no danger of failing." One month earlier, I'd written an issue of my newsletter (Porter Stansberry's Investment Advisory) titled "Freddie Mac and Fannie Mae Are Going to Zero." I was watching Bernanke's testimony on TV in a hotel room on the 30th floor of the Four Seasons Hotel in Las Vegas. I could literally see more than $100 million worth of bankrupt real estate from my window – more than enough to bankrupt both Fannie and Freddie. As an investor, I had a simple choice to make: I could believe a government bureaucrat, who is in charge of running a paper money system backed by nothing by confidence... or I could believe audited financial statements and my own two eyes. I chose the latter.
More recently, I've been warning investors both our government and our biggest conglomerate (GE) are broke. On Friday, Moody's seemed to agree with me, warning the current deficits are unsustainable. Geithner and Bernanke will undoubtedly beg to differ. However, anyone who has ever paid interest on any debt before is welcome to simply look at the numbers and ask themselves a few basic questions... How can so few taxpayers be expected to repay more than $20 trillion worth of debt? How can a democracy where most people don't actually pay taxes ever be expected to run a balanced budget? Why would anyone expect America to repay its debts when millions of our consumers and a large number of our biggest companies are going bankrupt?
Big problems like these are easy for investors to ignore. And many investors will ignore these problems – for a long, long time. I can't tell you when, exactly, the scary numbers behind GE and our federal government will cause investors to take action. But I can tell you when that time comes you won't want to be holding dollars or GE bonds. And I can you with 100% certainty both GE and the federal government are going bankrupt within the next five years.
Earlier this week, billionaire investor Carl Icahn bought more than 300,000 shares of Penny Stock Specialist pick Take-Two Interactive (TTWO). He now owns 10.6 million shares, or roughly 10%, of the video-game publisher. Editor Frank Curzio recommended Take-Two in December after the stock fell 30% on bad earnings guidance. He knew the problems at the company were temporary, and Take-Two would soon release the latest edition of its famed Grand Theft Auto franchise. Icahn's involvement is just a bonus. Frank's readers are up more than 18% on the recommendation.
In Frank's latest issue, he told readers about a small, virtually unknown technology company that's about to skyrocket in price. This company recently signed an agreement to make chips for one of the best-selling gadgets in history produced by one of the world's largest technology firms. But hardly anyone knows this contract exists. To sign up for Penny Stock Specialist and receive Frank's research on this secret technology stock, click here. Also, tonight at midnight is your last chance to receive Penny Stock Specialist and a large discount.
I hope you won't object to a brief personal note... Last weekend, I hosted The Atlas 400 at my home in Miami Beach. It was, of course, Super Bowl weekend down here. About a dozen of us got together to go to the parties and the game. We pulled a few strings and ended up with first-row tickets... which blew me away. I think it's safe to say everyone who attended had a once-in-lifetime experience. I know I'll never forget posing with the Robo-Saint guy who was sitting right next to us. I know another member will never forget meeting one of his personal heroes – Jerry Jones, the owner of the Dallas Cowboys.
You're editor pinching himself at the Super Bowl.
Of course, there's a lot more to the club than just a good time. But there's no better way to get to know someone than spending a few days having a truly memorable experience – whether that's racing cars in Germany, going to the Super Bowl, or our next adventure, marlin fishing in Panama.
In Miami, I met three new people I'm sure I'll do business with for a long time – a major financier, a legendary software programmer, and one of the world's top fitness gurus. I don't know any other way to meet more interesting people and to do more interesting things...
Atlas 400 president, Sean Goldsmith (left), landed front-row seats for the club.
In the mailbag... one of the most disturbing e-mails we've ever received. Just keep this in mind: We will read whatever you send us. Drop us a note at feedback@stansberryresearch.com.
"First off I am Brian and I can tell you right now that I am 21. I started subscribing to stansberry research when i got retirement anarchist in the mail for retirement millionare. This is good information. Why I am into this so much would be because of how my life has been for me. I have never been one to trust authority or make alot of friends largely because of being diagnose ADHD which I now believe is caused by vaccines with mercury. I never did and still don't fit in very well with the crowds. So I filled my social voids through knowledge and being concerned with my surroundings. I grew up watching history documentaries. I would often aced geography and history tests. I was never one to enjoy public schools which is where I started hating authority and government for school was run by government. I especially hated it in high school when doing English and Math that I would never use or already knew. It was not until my second senior (I broke my leg in 8th grade which cost me another year of school) that I enjoyed High School at the career center where I barely had homework.
"But aside from all that I had been wondering, exactly how, whom, and/or where are you are investing money? I know it is offshore. I tried the online broker sharebuilder.com but they did [not] approve my account because they said my ssn is invalid. That make me mad considering that I wanted to invest in stocks that you recommend and that my transportation aka my mother only does so much before she gets tired from doing so little. So when I went to my credit union and she gave me $1,000 to use in stocks. She refused to reset my online account's password while doing so. She also did not let me deposit some change. She drugs me against my will with drugs like abilify, cexela, vyvanse, lamictal that will kill me someday. She is really hard to deal with and that is why I want to start making some money. It is so I can get away from her problematic way of life. I wanted piece of mind knowing I would not have to deal with her or my family. They are just holding me back now. So to answer my question in bold would be appreciated. Because I realized that I can only rely on myself and no one else. Even my family cannot help me." – Paid-up subscriber Brian
Porter comment: Brian... I admire your quest for knowledge, capital, and freedom. And I truly wish the best for your health... but I'm afraid you're making a few assumptions here that aren't correct. I don't have any offshore accounts. I use regular U.S.-based banks and brokers. (I do own foreign real estate, which I think is one of the safest ways of getting assets outside of the U.S.) Perhaps more importantly, we don't offer any kind of financial advice – not even through our mailbag. Finally... I can't help but offer my most sincere personal advice: Your mother undoubtedly has your best interests at heart. While she may not be perfect, she is probably the best friend and ally you will ever have in life.
"You probably already saw this but I think it's telling – meaning a reckoning is coming (I hope, anyway) – when economic theory and debate makes it into rap videos distributed via YouTube. I LOVE the drinking/hangover metaphor used for Keynesian economics." –Paid-up subscriber Jerry Young
Regards,
Porter Stansberry and Sean Goldsmith
Miami Beach, Florida
February 8, 2010