The S&A Digest

Speedy recovery wishes for Porter… Not-so-speedy recovery wishes for Porter… $25 million spec homes… Citrus despair in California… Boone Pickens is long and wrong…

Editor's note: Porter Stansberry continues to lie bedridden with illness today. Filling in once again is Goldsmith.

 Icy weather in California3 has destroyed $1 billion – nearly three-quarters – worth of the citrus crop. Jacking up the prices will not be enough to recover the losses, and the Governator is asking the federal government for disaster aid.

Worried about the effects of the freeze on his NFL playoff party, 32-year-old Pasadena schoolteacher Joseph Vasquez despairs, "Avocados are expensive enough as it is. We may have to do without guacamole for a while. And we may be drinking our Coronas without limes."

Goldsmith comment: Sorry, Joseph. We'll all have to make sacrifices to get through this.

 In an attempt to focus more on its wireless and Internet business, Verizon plans to spin off landlines in three New England states in a tax-free deal worth $1 billion. The lines are rural, hard to service, and probably operate at a loss. Under the terms of the deal, which is expected to go through this year, FairPoint Communications would acquire 1.6 million phone lines in Vermont, New Hampshire, and Maine. Verizon will unload $1.7 billion of debt onto FairPoint, and Verizon stockholders will receive one share of FairPoint ($21.41) for every 55 shares of Verizon stock they hold.

 Another sign of a market top… Antares Investment Partners, a Greenwich, Connecticut real estate company, is building 41,000 square-foot, $25 million mansions on spec – meaning without planned buyers. The company has already profited by building office space for the wealthy in the hedge-fund capital of the world.

 Texas oilman Boone Pickens is maintaining his bullish stance on oil, predicting that prices will hit $70 this year. We think Pickens, who believes the market will not allow oil to fall below $48, is wrong. Every wild bull market has a prophet, and Pickens has been oil's prophet. At the end of every bull market, the prophet gets crushed.

 We said it, did you listen? "I've been bearish on oil for months. It was a lonely position to take. Saying anything bad about the oil industry is downright un-American… But I've seen many investment manias, and this one had all of the trimmings. For the last year, I've felt like a teenager watching a horror film. I knew all of the plot elements by heart, and I knew exactly how the movie would end – everyone was gonna get cut to pieces." – Porter Stansberry,

S&A Digest, October 4, 2006.

 New highs: American Capital (ACAS), American Eagle (AEOS), Ares Capital (ARCC), Anheuser-Busch (BUD), Convergys (CVG), Oakley (OO), Pope Resources (POPEZ), Telstra (TLS).

And now, the mailbag. We found the usual assortment of damnations and complaints today. Plus, some interesting wishes for Porter. Send yours to feedback@stansberryresearch.com.

 "You should do a sanity check before printing e-mail from subscribers. Subscriber Dave Burge claimed that GM trucks were made in Canada and Fords made in Mexico. As a soon-to-be-retired (early) Ford employee of 21 years, I can tell you that only SOME GM trucks are made in Canada (most are made in the U.S.), and that NO Ford trucks are made in Mexico, nor have they ever been. Ford's pickup trucks are only made at the Dearborn Truck Plant, the Kentucky Truck Plant, and the soon-to-be-closed Norfolk Assembly Plant (all in the U. S. of A.). About the only thing Ford makes in any quantity in Mexico is the Fusion/Milan/Zephyr cars in Hermosillo, and engines in Chihuahua."

– Subscriber Mike Breslin

 "I have long since forgotten what magic words came out of my mouth, but I remember vividly what went into my mouth. It was that old red Lifebuoy soap. The taste was terrible, but the lesson has lasted 60+ years. I can cuss when the occasion requires (like when I pound my thumb with a hammer), but I can usually find more civilized language to express my thoughts." – Subscriber BP Bardes

 "I am (among other things) a professional pickup truck buyer. I have singlehandedly bought well over 500 pickups over the last 25 years… Ford, Dodge, Toyota, Nissan, and GM products. I avoided GM at all costs for 20 years, but over the last 5 years have bought nothing but GM. In that ¾ ton and up market, there is absolutely no equivalent truck on the market for reliability, durability, payload… and comfort. 300,000 miles of hard hauling, often pulling trailers, with multiple drivers, is to be easily expected. If I were buying a luxury car, it would be an import. But a truck, as much as I hate to say it… is a GM." – Subscriber Gary Gorski

 "Without Porter around, the air quality seems to have experienced a definite improvement. Sincere wishes for a very, very slow recovery." – Subscriber Brian Humphrey

 "What a pleasant read [yesterday's] missive was! How nice not to have readers' comments snidely commented on. Could we make Porter's condition chronic?" – Subscriber Jim Wood

 "We are so sorry to hear Porter is ill – I would guess he has the ‘flu' bug like a lot of other people lately. We hope it is nothing more serious. Please tell him to rest, drink lots of liquids and don't rush back into work. He deserves a ‘down time' to re-coup. We enjoy your reports very much – keep up the good work." – Subscribers Miriam and Paul Neff

 "Sir, this msg is not PC but I offered a short prayer especially for you. May you get well soon, and continue to make us think, and bemoan the fact that materially we will never have your material wealth. And least you do not follow the herd over the cliff. Tell that idiot raving about GM products that yes I have a new Chevy van but I would have preferred a new Toyota or Nissan van if they made one. And I live in the country where every other truck is a Nissan or Toyota. Why? Dependability and affordability. Maybe the 2 cent supporter can fathom those words? Please get well soon, I miss your comments."

– Subscriber Bernie Krantz

 "To PS: get well soon, we need your expertise. Regarding GM, Ford and Chrysler: right now, the people on the West and East coast do not care if Detroit products are good or even better than the Japs nor Korea or Germany. Detroit has to fight the years of shoddy cars which were built without regards to quality and this will take a lot of good products. Also many purchasers do not consider Detroit cars COOL. Until they do, Detroit has a big wall to climb."

– Subscriber Frank Corti

Good investing,

Sean Goldsmith

Baltimore, Maryland

January 17, 2007

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