This Is the Most Important Thing You Can Do to Improve Your Actual Investing Results
Editor's note: Today's classic Digest – originally published in May – is a little different.
In it, Porter shares the details on an unusual speculation offering 1,000% potential upside... and explains the simple, foolproof way even the most conservative investors can safely take advantage of it and other similar opportunities...
This Is the Most Important Thing You Can Do to Improve Your Actual Investing Results
In today's Digest, a short but important note about investment risk. First, though, something else... something I have never done before...
I recently learned about an ongoing financial crime – by far the largest in history. According to sources that I trust (and based on my own team's research to verify these claims), something around $100 billion in dividends has already been stolen. Up to $1 billion a month continues to be taken, in what must be the most brazen corporate crime in history. To give you some idea about the scope of this crime (and how big this story will become), the fraud at Enron resulted in the collapse of a $40 billion corporation.
What has been stolen in this case is already almost twice that much, in cash.
The most shocking aspect of this case, however, isn't its enormous size – and it's the largest corporate fraud of all time. What's truly shocking is that the people behind this fraud were working for the government when the plan was implemented. They've been using "executive privilege" as an excuse to cover their tracks, insisting that 11,000 documents that detail how this happened may be vital to national security.
I had heard rumors about this situation for years. Several hedge-fund friends of mine had asked me to look into this, because I'm something of an expert on the companies at the center of this scandal.
But honestly, it all sounded too incredible for me to believe.
It's a story that reads like a Bourne novel... and probably involves the president of the United States. Meanwhile, there's a growing group of incredibly powerful people (such as Senator Charles Grassley, chairman of the Judiciary Committee) who believe that something sinister and illegal has transpired and is now being covered up.
Grassley's involvement caught my attention – he isn't a tinfoil-hat conspiracy theorist. But what really changed my mind about the situation happened last month when a federal judge insisted on releasing some of the 11,000 documents.
I couldn't believe what I was reading.
Right there in black and white is proof that a senior U.S. Treasury official (Tim Bowler) – someone who regularly meets with President Obama about these same matters – was conspiring to steal tens of billions of dollars from two privately owned U.S. corporations. And it's not just that. These documents also included the names of several journalists on the staff of a prominent financial publication, who seem to be implicated in this scheme.
As this story unfolds, I believe it will come to rival Watergate as the best-known example of graft and corruption at the highest levels of government.
Why should you care?
Well, I believe the documents I saw this spring prove the existence of a conspiracy among dozens of Treasury officials, journalists, senior administration officials, and even the president that is designed to defraud tens of billions of dollars from these two companies. And this is an ongoing fraud... with so-far-unknown beneficiaries.
Meanwhile, investors in these two firms have seen their share prices wiped out. Eviscerated. Their balance sheets have been ransacked. Their earnings have been stolen. Their dividends have been confiscated. And I believe there is now clear and undeniable evidence that the government stole this money in an illegal conspiracy. When all of the details are finally discovered, I'm almost certain that investors will recoup $75 billion or more. It's a large enough potential lawsuit to drive these shares up by 10 times.
In my mind, this case represents the best opportunity investors have to make a killing in an investment vehicle that isn't tied to our economy. In short, the outcome of this investigation and these lawsuits will drive the value of these companies higher, regardless of what's happening in the broader market. It's these kinds of "uncorrelated" opportunities that we're looking for now, given our fears about a looming, massive bear market.
All of what we know so far was detailed in the May issue of my newsletter, Stansberry's Investment Advisory. We had our team – including a lawyer and two auditors – study the documents that have been made public so far and combine this new information with our long history of studying these businesses.
We think this is one of the best, most "asymmetric" risk-versus-reward situations we've ever found for investors. This should be the greatest investment story we've ever reported on – by a wide margin. So even if you don't normally read my newsletter, I would urge you not to miss this issue.
OK... that's a pretty dramatic story. But it's all true. And when you learn what has happened, I promise you will be shocked and outraged... even if you're already as cynical as I am about politics and the leaders of our country. (Trust me, Russia isn't the only country led by kleptocrats.)
But... what should you do with this information? How should you manage the risks involved? How should you allocate this investment idea into your portfolio? These questions will be just as important, or more so, than understanding the facts of the case and the investment implications. How you use our investment ideas is at least as important as the investments we recommend.
Our friend and colleague Dr. Richard Smith has built his TradeStops software to give you the most sophisticated tools available anywhere to help you manage the information we provide. In fact, you can plug our entire recommended portfolio directly into his system. Doing so will immediately give you a huge advantage over other investors.
Using TradeStops can give you three advantages that you probably can't get without it:
First (and most important), TradeStops will automatically keep your trailing stops up to date. You can even build "volatility adjusted" trailing stops that are optimized for each individual position. This will allow you to stay in your best positions longer, while still getting out before any catastrophic loss.
Second, TradeStops can show you in real time exactly how volatile your current portfolio is. Nothing is more important for you to understand, and yet, not a single individual investor I know could tell me the volatility of his entire portfolio compared with the S&P 500. In my experience, investors typically take on way too much risk without knowing it.
With one click, Richard's software can tell you exactly how much risk you're taking and immediately show you how to rebalance your portfolio to eliminate excessive risk-taking in any individual position. This is the most important thing you can do to improve your actual investing results. Nothing else comes close.
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Third, TradeStops will show you at a glance how volatile our new recommendations really are. This allows you to do a much better job at "comparison shopping" as you read our newsletters and decide which investments to make and how much money to allocate to each one.
I've said many times over the years that nobody should be reading newsletters or investing on their own without using TradeStops.
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By the way, I met Richard more than 15 years ago. He was an Alliance subscriber with a lucrative data-analysis business he built after studying math at UC Berkeley and going on to get his PhD.
He is, without a doubt, one of the smartest and most successful subscribers we've ever had. He gave up his other career to spend his life building this set of tools for investors because he realized – as he read our newsletters and made his own investments – that he wasn't good at figuring out which trailing stop loss to use or how much capital to put in each investment. He knew there had to be a logical way to build an asset-allocating "machine" – and that's what he has done.
We were so impressed with what Richard built that we invested in his business and have been partners with him for the last several years. Trust me when I tell you that we've tried every other kind of analytical tool out there, from the most expensive (like Bloomberg terminals) to the cheapest. And none of them come close to the utility and the ease of use of Richard's software. We endorse it fully because we know it's great – we use it ourselves.
I urge you to simply sign up and try it for yourself. I wouldn't invest without it.
Regards,
Porter Stansberry
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