The S&A Digest: Shipping rolls over

Stansberry & Associates Top 10 Open Recommendations
(Top 10 highest-returning open positions across all S&A portfolios)

As of 06/25/2013

Shipping rolls over... "Fair" taxes... A bottom in retail?... Bond insurance downgrade... Us, "skanky"?…

Signs of a slowing global economy: Dry bulk shipping stocks are "breaking down." Dry Ships fell more than 15% today alone (down to $70) and is now almost 50% down from its recent high. Dry bulk shipping companies move commodities – like coal, iron ore, and bauxite – to manufacturing sites around the world (e.g. China).

Our hypothesis is that the world's economy has been driven higher for the last several years by real estate-related borrowing and development. With the credit "spigot" turned way down, we suspect global demand will fall sharply next year. If we're right, dry bulk shipping rates will plummet... as will the price of copper, a key industrial commodity. Take a look at "Dr. Copper."

This from the IRS: The top 1% of wage earners paid nearly 40% of the total federal income tax collected. The top 5% of wage earners paid 60% of the total receipts. And the top 10% of wage earners paid 70%. Meanwhile, the bottom half of all wage earners – 50% of U.S. households – paid a mere 3% of the total income tax receipts.

In a democracy, when half of the population enjoys all the fruits of government but only pays for 3% of the cost, you can be sure that politicians will promise more taxes and more spending. The majority is living at the expense of the minority.

The main argument you'll hear in support of our steeply "progressive" income tax scheme is "the rich should pay more, because they earn more." I agree. But the top 5% of all wage earners garnered 36% of all income in 2005. Meanwhile, this group paid for 60% of all the taxes. In other words, high wage earners pay far more than their "fair share" based on their income.

The truth is, unless high wage earners continue to pay taxes at much higher rates than the general population, the government will quickly become insolvent. So... what are the chances we'll see a "flat" tax in our lifetimes?

Signs of a bottom in retail... Insiders are loading up. Limited Brands CEO Leslie Wexner bought $19.2 million in stock since November. Ten other insiders bought millions more. Dillard's director Warren Stephens bought $1.75 million in stock, the biggest purchase in the history of the company, as the department store's stock fell the most since 1980. In total, retail insiders bought $346.4 million in stock since the start of November. Such large purchases undoubtedly caught the eye of Inside Strategist editor Graham Summers. He will cover the retail industry in his issue this Wednesday. To read more from Graham, click here.

Tom Dyson tells you all you need to know about cash in today's DailyWealth.

Moody's latest target... Bond insurers. The ratings agency put FGIC Corp. and XL Capital Assurance on notice that they may lose their Aaa ratings. Moody's also lowered the outlook for MBIA, the largest bond insurer, and CIFG Guaranty to "negative." Bond insurers loan their triple-A rating to more than $2.4 trillion in debt.

In the mailbag... Our readers continue to badger us about our advertising. What irks you? Let us know: feedback@stansberryresearch.com.

"I agree that you should screen any advertising that you post. Your intigrety as a financial publisher will be brought into questioned and probably tarnished. We readers grow to trust your writings over time and would like to believe that anyone that you would choose to allow onto your page wether as an advertiser or otherwise can be trusted... Keep in mind that your newsletters are trying to gain the trust of the reader on an ongoing basis." – Paid-up subscriber Steve

Porter comment: We do screen all of the advertising we publish. However, we don't endorse all of it. At issue in the most recent case was a course about currency trading. It carries a money-back guarantee. And it has been well received by many customers. We have gotten positive feedback about the product from our customers. We didn't endorse it, though, because we're skeptical about currency trading in general. It's not something we do ourselves.

"Dear Porter – what a bunch of BS regarding 'what you have to do to grow your business.' How PATHETIC! I guess I am naive and really just plain stupid to think that when I get an email from Stansberry & Associates regarding your advertisement 'What's all the excitement about?' with the build up from Mr. Rayburn 'Well... what I'm sending you today (below) has generated more excitement in our industry than anything else this year' that this would not be something that you would not feel entirely good and confident enough to recommend to your clients. I can't believe your mind set and values – you state 'Truth be told, I didn't want to run that advertisement' 'I think the odds of our typical subscriber making money by trading currencies (which usually requires a lot of margin) is close to zero – secret code or not.' Your Pathetic! I have run my own business for 17 years and I would never consider giving anyone access to my database of loyal customers unless I felt truly convinced they could help them in a positive way. You should be ashamed of yourself." – "Very disappointed" paid-up subscriber Eugene Williams

Porter comment: Just because I wouldn't personally buy a course on currency trading doesn't mean a lot of people aren't interested in the subject. From time to time, my own analysts write things and recommend trades I personally think are foolish. But, guess what? I'm wrong sometimes. Sometimes what seems like a foolish trade ends up being a great trade. And just because I personally wouldn't buy a given product or take a given recommendation, that isn't a good enough reason not to publish something. We allow for different opinions around here because we're modest enough (just barely) to admit we don't know everything.

"Unbelievable to me that you would send this crap out to us. You should read the forums about this over priced scam. Of course, you won't respond to this complaint either. You should change your business model from research to Internet marketing since now you are becoming more and more like Agora everyday." – "Unhappy Alliance Member" Tommy Hiett

Porter comment: Is the currency course overpriced? I guess that depends on your point of view. If you think so, don't buy it. If you bought it and you're not satisfied, ask for a refund. You'll get it. How is this a scam?

Many people have said our business is a "scam" over the years. I remember when we first offered our Alliance program, nearly five years ago. We charged $2,900. We promised all of our products (except Phase 1) and we said you'd get anything we create in the future. Hundreds of subscribers demanded to know how they could be sure we'd be in business the next year. They called our offer a rip-off, said they'd never get their money out of the deal.

Now, those Alliance members receive 13 different monthly advisories, three weekly trading services, and three free daily e-letters. I'd say they've gotten their money's worth. But let's ask... Do Alliance members out there feel scammed?

What's a "scam" to one man is a bargain to another. We don't pretend to know whether or not this product is worth what they're charging. That's up to you to decide.

"…This is the first time I've ever read anything written by you that is downright skanky. Integrity does not depend on anything. You have it or you don't... I hope you took a rope with you when you jumped into that well." – "Erstwhile admirer" Michael Meek

Porter comment: Downright skanky, huh? Jeez. It was just a lousy advertisement for a currency-trading course! I thought skanky would be reserved for something a lot more interesting, like pimping transsexual prostitutes...

Look: We label our advertising. We only advertise quality products from publishers who are willing to stand behind their products. We tell you honestly how we feel about the product being offered. That's the best we can do...

"Does your beaver need a subprime loan? He could get one and live free from the fear of losing his nest even if he did flood you out. I'll bet you might even get Government flood insurance to cover such a possibility. I think you have no recourse to what is going on on your property as the beaver is probably on the endangered species list and will create a wetlands area, if your pond isn't one already. Once he is settled, sell him a FOREX subscription, so he can become wealthy, upgrade his dam and increase the value of your neighborhood. Why he could even build a small power plant on the dam, increasing the % of renewable energy used, provided you and the neighbors are not NIMBY's. Everybody wins." – Paid-up subscriber Richard Webster

Regards,

Porter Stansberry

Baltimore, Maryland

December 17, 2007

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