The Grass Is Not Always Greener

Investing tips from the golf course... Jordan Spieth's timeless advice... The grass is not always greener... A buying opportunity in a capital-efficient sector... Coinbase's business is booming... Another reason to get good sleep...

The golf course might not be the first place you think you'll hear investing advice...

Or, depending on your line of work or list of hobbies, maybe it is.

Either way, as our colleague and Extreme Value analyst Mike Barrett wrote so eloquently in the February 24 Digest, you can pick up a lot of tips for investing, and life in general, by watching or playing golf.

In his essay, Mike used 2020 U.S. Open winner Bryson DeChambeau's approach to the game and his "single-plane swing" as an example... He explained how the golfer's approach translated to his own stock analysis.

We won't rehash all the details today, but just know we consider the essay a must-read. And it's especially timely, given that the annual rite of spring – the famed Masters golf tournament – is set to begin tomorrow morning in Augusta, Georgia.

That's where we heard some more great advice from the golf course this week...

You see, pro golfer Jordan Spieth had been mired in a huge slump...

Not long ago, in 2015, the then-22-year-old became the No. 1 golfer in the world.

That same year, he also became the second-youngest player, behind Tiger Woods, to win the Masters, making $1.8 million in the process. And still later that year, he became the youngest player to win the U.S. Open since Bobby Jones in 1923.

But more recently, the story about Spieth centered on his inability to win a tournament in nearly four years. A lot of people speculated if he would ever do it again.

And then, this past Sunday... he finally did.

Spieth won the Valero Texas Open by two shots in his home state. He earned another $1.4 million for the victory. But for Spieth, it was about much more than the prize money...

It was a cathartic moment for the now-27-year-old and the culmination of a long, circular road back to hoisting a championship trophy. And for us today, this trip is one that we can all learn a bit from...

In a TV interview on the Masters grounds earlier this week, a reporter asked Spieth what he learned about himself during the "winning drought" – or "losing streak," depending on how you want to term it. Here's how Spieth responded...

I went from one end of the spectrum of winning and doing things well without really knowing why. Then I was stuck in the middle for a while of trying to search, but not really knowing. Then I had to get all the way to the other side to be like, "This is what I did. Now I'm going to try to figure out how to do it more consistently than ever."

The key point is... by Spieth's own admission, he was doing well and gaining fortune and fame without really knowing why.

Anyone who finds at least a hint of success early in their career – or a pursuit of any kind – can fall victim to this mindset... Take the GameStop (GME) traders, for instance, who may have made some money early, but now might see their shares getting diluted by $1 billion as the company considers offering 3.5 million new shares to capitalize on its stock frenzy.

During the interview, Spieth also described how hard it is to 'stay on top'...

Spieth said it can be hard to stay grounded and understand what got you there in the first place. He specifically mentioned his old golf swing, which had gotten away from him...

When you're at the top, you're setting new goals, trying to win more tournaments, but at the same time you're also getting smoke blown up you from everyone, everywhere on how great everything is.

It's hard to get that "humble and hungry" approach when you're on top. That's always difficult for anyone at the top of anything that they do. Golf can be as challenging as anything else.

It took realizing that for Spieth to get back to his "DNA" and begin to understand what parts of his game were "weapons" for him before. And then, by mechanically copying his old swing, he could find success once again.

Here's the investment point...

It's often tempting to stray from your plan depending on the day or what you might hear on TV in favor of "something else" – like the next "hot" stock tip or seemingly compelling opinion.

But the grass is not always greener.

In many cases, it pays to not mess with a good thing, even as others tinker more than you might think... hoping to get an advantage.

In our view, Spieth saw some of his peers hitting longer and longer drives. And as that happened, he felt like he was missing something and tried to change his game too much.

The problem is... Spieth's body – a slighter frame than DeChambeau's "Incredible Hulk" build – doesn't fit this approach.

In Spieth's case, it got him into years of trouble, in part because he didn't fully understand what worked for him in the first place.

In other words, what is right for Bryson DeChambeau today (bombing huge drives over trees to record lengths) might not be right for Jordan Spieth (who is considered more crafty, a great putter, and "clutch" around the course).

There is always more than one right answer in golf... in investing... and in life.

For us as investors, we can turn to a few timeless ideas that definitely work...

You've heard our editors drill one idea into your heads and into their monthly issues, updates, and videos all the time – and for good reason.

We're talking about capital-efficient companies...

And Digest readers over the past few years may know that some of our favorite companies in particular are Software as a Service ("SaaS") providers. These SaaS companies make gobs of cash on recurring revenue and relatively limited expenses.

They're some of the most profitable and scalable companies in the world. And as we've explained over the past year, the "work from home" world turned a spotlight on many of these businesses – like Salesforce (CRM), for example, a SaaS pioneer.

Here's more background, as analyst Alan Gula explained in the latest issue of our flagship Stansberry's Investment Advisory, which was published last Thursday...

Unlike software sold under "perpetual licenses" – when you'd buy a CD (or, later, a download) that supplied lifetime access to the product – SaaS clients didn't install or maintain the software. Instead, the software company handled everything on its own servers. That made upgrades seamless. And all the clients' employees had to do was log in from any computer with a secure Internet connection.

It was quick and easy for customers to sign up. And they didn't need to pay a big upfront fee to buy software... just the recurring subscription cost. That model is also great for the SaaS companies, since revenue kept rolling in from happy customers.

We like these SaaS companies so much that our Investment Advisory team now has a generous section of its model portfolio dedicated to the space.

And when an opportunity to "win" presented itself recently, they added another SaaS recommendation... "pulling a Spieth" of sorts. (They described it all in the April issue. Current subscribers can read their full write-up right here.)

We've reported here about the 'rotation' from growth stocks to value earlier this year...

At the start of the year, Wall Street feared that the Federal Reserve would hike interest rates earlier than it previously said (next year or the year after). But the central bank said, "no dice."

This provided an opportunity, so long as you knew where to look...

The sell-off in many high-flying "stay at home" names in favor of "reopening" plays resulted in a great buying opportunity in the SaaS sector. Alan explained the situation in the Investment Advisory...

SaaS stocks had been market darlings for a while... Momentum traders continued to bid up SaaS stocks earlier this year. Then the momentum turned. Our Stansberry SaaS Composite Index is an equally weighted basket of 78 public companies that we consider "pure play" SaaS businesses. From the beginning of 2020 to mid-February of this year, the composite was up more than 160%. It's now up around 115% after a sharp pullback in recent weeks, although SaaS stocks are still trouncing the indexes over the longer term.

As Alan wrote, "there is no free lunch." But as he continued, if anything, this recent pullback in growth stocks gives folks a chance to add to their SaaS holdings...

If you want to own shares of some of the fastest-growing, most exciting companies, then you must weather some sharp corrections.

It's impressive that the market is holding up so well despite the pullback in growth and tech shares. The S&P 500 Index hit an all-time high this week – its 16th all-time high so far this year.

The energy, materials, industrial, and financial sectors are leading the market higher. This is a healthy rotation from growth to value.

At the same time, the long-term tailwinds for SaaS stocks remain.

We can't give away the stock that Alan recommended in today's Digest. But we can say that it's a SaaS stock trading at a generous discount to its peers... That's an idea that you always want to take into account, especially during a time when stock valuations across the board are so high.

This is the "knowing why" you were successful part of what Spieth meant in his interview before the Masters... and not venturing too far away from it.

Over the years in our Investment Advisory, our editors and analysts have helped subscribers profit from some of the world's biggest trends by applying a set of guiding principles. As our publisher Brett Aitken wrote in his annual Report Card earlier this year, the breadth of coverage is truly remarkable...

They've tackled the renaissance and subsequent boom of U.S. oil and gas production... shared the "secret" of property and casualty (P&C) insurance stocks, which we call "the best business in the world"... identified the "Global Elite" and most capital-efficient companies on Earth... tracked the latest breakthroughs in medicine... and spotlighted the latest technology trends, like 5G, artificial intelligence ("AI"), and SaaS.

Plus, as longtime subscribers know, the Investment Advisory is a little different...

More from Brett's Report Card analysis...

In this publication, our analysts also recommend shorting stocks when they identify the right opportunities. Our team looks for companies that are destined to fail because their products are obsolete... they have an impaired balance sheet (i.e., carry too much debt)... or the analysts detect fraudulent behavior.

As our editor-at-large Daniela Cambone talks about in today's featured video with XOUT Capital founder David Barse below, this is an often unrealized or underemphasized part of investing...

Often your biggest "wins" can be simply avoiding the biggest losers. That's another great golf-related lesson... Most of the time, the best golfers in the world try to limit their mistakes first – and attack the hole second.

All in all, our Investment Advisory team does a great job putting in this work for subscribers each month.

If you don't already subscribe, be sure to give our flagship newsletter a try to see exactly what we mean. You'll get access to our team's latest SaaS pick and much more. And best of all, you can do so at a 75% discount off the regular price today. Get started right here.

Moving on, as usual, our Stansberry NewsWire team has been busy this week...

We can't say it enough... If you don't follow our free, around-the-clock NewsWire service, make sure you at least give it a try. You can subscribe for free right here.

Every day, NewsWire editor C. Scott Garliss and his team give the latest news and analysis on what's moving the markets and what to watch for next. They provide unique insight into what the headlines mean for many of the ideas and positions that our editors cover in their model portfolios and newsletters.

Simply put, the NewsWire is a great resource... And it's our first stop each morning when we sit down to plot out the day's Digest.

Just today, for example... the NewsWire team covered the latest big news in cryptocurrencies... the ongoing microchip shortage... and why automakers are asking for government help because of it.

We'll get into some detail here on the latest crypto news...

The popular crypto exchange Coinbase – where you can buy and sell bitcoin, Ethereum, and other cryptos – is going public next week via the good ol' initial public offering ("IPO") route.

After the IPO, shares of the company will be listed on the Nasdaq stock exchange under the ticker "COIN." And ahead of the stock offering, the company decided to release its preliminary first-quarter 2021 earnings numbers and full-year guidance last night.

There isn't some new U.S. Securities and Exchange Commission ("SEC") rule requiring companies to report their most up-to-date numbers a week before their IPO (which is not a bad idea)... Coinbase did this voluntarily to show that business has been booming.

As NewsWire analyst Nick Koziol reported...

For the quarter, Coinbase reported revenue of $1.8 billion, up from $190.6 million in the same quarter last year. That represents a nearly 10-fold jump.

Earnings surged as well... Coinbase reported net income of between $730 million and $800 million for the quarter, up from $31.9 million in the same quarter last year.

And as Nick wrote, the company says its growth is nowhere near over...

Coinbase said it expects "meaningful growth" in 2021, driven by increased institutional demand for cryptocurrencies. As we've noted, institutions like Morgan Stanley and Goldman Sachs are set to open digital asset offerings to their clients in the coming weeks. And they're only the tip of the iceberg... More are sure to follow as crypto adoption gains steam.

From a business model standpoint, this gives investors a window into how Coinbase makes money. The company earns a small fee on every trade made on its exchange. So increased bitcoin and cryptocurrency trading means more revenue for Coinbase.

That brings up another point about why it's worth tracking Coinbase's progress... even if you don't want to own COIN shares. The company's numbers are a good gauge of cryptocurrency sentiment and could show patterns that emerge as cryptos become more "mainstream."

For example, as Nick also reported, in Coinbase's S-1 filing with the SEC (which is required to go public and was made public in February)...

The company said that trading volumes more than doubled from $80 billion in 2019 to $193 billion in 2020. As a result, revenue jumped from $533 million in 2019 to $1.3 billion.

The growth has carried over into 2021. And will likely continue to do so as more people warm to cryptocurrencies as investment vehicles.

Take this as another indicator of positive sentiment around bitcoin and other cryptos, as Crypto Capital editor Eric Wade covers in-depth in his newsletter... and just recently talked about in his latest "Beyond Bitcoin" presentation. If you missed the event's debut last week, be sure to check out the free replay right here.

Finally, we end today with a note from Dr. David 'Doc' Eifrig about COVID-19 vaccines...

We love reading and sharing information from Doc, our colleague and Retirement Millionaire editor. And we should probably pass his advice along in these pages more often...

Just yesterday, I (Corey McLaughlin) was sitting in a dentist chair talking about COVID-related stuff with the hygienist – like the immune system, for example – as a HEPA filter ran in the office.

Doc's advice over this past year and guidance on how to boost your natural immune system and avoid catching COVID-19 swirled in my head as well... as I prepared for this friendly woman to inflict pain on me.

I took some deep breaths and shared a bit of Doc's background – medical school graduate, Wall Street trader, financial-newsletter writer, and winemaker – as well as some of his general guidance on COVID-19. And the hygienist said, "Sounds like he should be my doctor."

See... it's an easy sell.

So here's another plug for Doc's work today, this time for his free Health & Wealth Bulletin e-letter... Each day, Doc and his research team cover a wide range of timely topics and give practical suggestions for how to improve your finances and your health.

In yesterday's Health & Wealth Bulletin, Doc wrote about the incredibly simple way to help your body get the most out of your COVID-19 shot – or jab, as the Brits say – if you have one coming up. It's called sleeping. As Doc wrote...

It turns out sleep has a very close relationship with the immune system. When we sleep, our immune system (within our bone marrow) produces and releases young and naive T-cells (a type of white blood cell) that make their way to mature in the little organ that is just below our breastbone, called the thymus. These kindergartener-like T-cells get "educated" there to patrol, attack, and manage foreign substances in the body, especially viruses.

While we sleep, our bodies also create immune modulating proteins, called cytokines, which also regulate our immune responses when our body is under attack.

To get the most out of your vaccine, Doc recommends getting both good-quality and a good quantity of sleep before and after your appointment.

By "quality" sleep, Doc means you fall asleep within 30 minutes of lying down... wake up once in the night, if at all... and fall back asleep within 20 minutes if you do. And by good "quantity" of sleep, he means anywhere from seven to nine hours...

Everyone is a little bit different regarding exactly how much sleep is enough, but the bottom line is... if you wake up feeling alert, then you've gotten enough sleep.

You can also follow more of Doc's tips for a good night's sleep... like keeping your room dark and cool and not eating at least two hours before bed. You can read more about them here in another free resource... Our Sleep Expert's Answer to Pandemic Insomnia.

Make a 'Do Not Touch' List

In this interview with our colleague Daniela Cambone, XOUT Capital founder David Barse speaks about a paradigm shift when it comes to choosing winning stocks. "Forget about picking the winners," he says, advising investors to instead identify the stocks to avoid...

Click here to watch this video right now. For more free video content, subscribe to our Stansberry Research YouTube channel... and don't forget to follow us on Facebook, Instagram, LinkedIn, and Twitter.

New 52-week highs (as of 4/6/21): American Homes 4 Rent (AMH), Comfort Systems USA (FIX), Invitation Homes (INVH), IQVIA (IQV), iShares U.S. Home Construction Fund (ITB), Lennar (LEN), LGI Homes (LGIH), McDonald's (MCD), Markel (MKL), NVR (NVR), Invesco S&P 500 BuyWrite Fund (PBP), Starbucks (SBUX), Waste Management (WM), and W.R. Berkley (WRB).

In today's mailbag, a subscriber who self-describes himself as "probably the only libertarian in Europe" responds to our request for feedback in yesterday's Digest. Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.

"Dear Stansberry team, I'm a Dutch engineer who also invests in German real estate and a happy subscriber to Stansberry. With regard to the negative interest rates here in Europe, I opened an account at the Sparkasse bank last month with a partner to invest in a property together and was told that I could only have one account in which I could have 100,000 Euro before paying them 0.5% interest... This means that I have to regularly wire funds to prevent me from paying the bank interest on this account.

"It seems that all German banks now have the 100,000 Euro threshold before paying them interest. Haven't heard anything yet from the Dutch banks but willing to bet that it doesn't take long before they will follow the German limit. As I have several bank accounts, this will not be a problem for me for now but rest assured that I would rather take off my left arm before paying the bank interest!

"I agree that one way to prevent this would be buying stocks, although buying stocks as a private person in Europe is not as widespread as in the U.S. because the pensions are controlled by the big pension funds here. It's always funny how people say that they don't care stocks are crashing, and then I try to tell them that they own a lot of stocks through their pension fund.

"Real estate is also rising here, 10 percent a year, just like in the U.S., which of course is unsustainable longer term but with these kind of interest rates will probably continue for some years. Most rental apartment buildings are now listing for more than 20 years of rent for a worn down, to-be-renovated building from the '70s, so probably you're looking at a three percent return for getting calls about a clogged toilet at night and a regular lawsuit to evict a bum who wrecked your newly renovated apartment.

"Suddenly stocks don't sound too bad!! My limit for real estate is between 10 and 14 times yearly rent depending on the state of the building. The only way to find something is via other real estate investors who want a quick and easy sale.

"Obviously, there are bigger problems then not knowing what to do with your money and I won't lose sleep about it. For small investors like me, there are still good stocks to buy and enough silver, gold and real estate, but maybe if I had a billion dollars I would get worried.

"I'm much more worried about the ridiculous measurements governments around the world are taking attacking our freedom for a virus with an average age of dying of 82 years old, which is higher than the average life expectancy. How hard is it to understand that everybody can assess their own risk and protect themselves by avoiding other people or take appropriate measures?

"There is only one place in this world where you are absolutely safe, have free food and healthcare for everybody and nobody has to work... and that's prison. As I'm probably the only libertarian in Europe, which is quite lonely, I always had the U.S. in mind to escape to with my family, so really sad to see the socialist politics and division there. My hope is that Texas and/or Florida will secede and that all libertarians around the world will live there in freedom (don't worry about the immigration, most of them are already there ;)) and the rest can stay in their socialistic paradises.

"Unfortunately, I'm not holding my breath. Having been to the U.S. four times in different places and loved the mentality and friendliness of the people, I'm now waiting for my children of 4 and 7 to be two years older to make our first road trip there if we are ever allowed to leave our countries of course.

"Thanks for all the fantastic information as a Stansberry subscriber. I'm trying to beat the Capital Portfolio for three years now by adjusting some positions because I want to be better and still no success.

"Best regards from the Netherlands." – Paid-up subscriber Mark V.

Corey McLaughlin comment: Thank you, Mark. Great report! It's nice to hear your perspective from abroad.

All the best,

Corey McLaughlin
Baltimore, Maryland
April 7, 2021