What You Must Do to Be Successful in 2017
The last Friday Digest of 2016… A review of the crazy year that was... How Stansberry Research analysts fared in 2016... Our biggest wins... What you must do to be successful in 2017... P.J. O'Rourke's New Year's resolutions for Donald Trump...
This is our last Friday Digest of 2016...
We'll be taking next week off to spend time with family and friends.
We hope you have a wonderful holiday… and remember to take some time off from the market over the next few days to appreciate what's important in life.
We also want to take a moment to thank our new and longtime subscribers alike… especially those of you who trusted us enough to join our Alliance partnership. Thanks to your support, we're able to spend our days doing what we love. Not everyone has the privilege to do well while also serving others. And for that, we are truly grateful.
We'll close the year with a quick review... and a gentle reminder of the most important things to keep in mind in 2017...
This time last year, we predicted 2016 would be a challenging year for investors. Boy, was it ever…
It kicked off with the worst January for U.S. stocks in history… 13-year lows for crude oil… panic selling in high-yield corporate debt… and the birth of a new bull market in gold.
This was followed by a relentless rebound rally. Despite weakening earnings and tightening credit conditions, virtually everything rallied through the spring and summer… pausing only briefly for June's post-"Brexit" selloff.
And of course, the past two months have brought the "Trump Trade"… the second Federal Reserve rate hike in the past 10 years… a likely end to the 35-year bull market in bonds… and the biggest potential changes in government policy in a generation. We've seen huge rallies in stocks and the U.S., multi-year highs in interest rates, and strong selling in government bonds and precious metals.
We couldn't have predicted many of these events...
But we're pleased to report Stansberry Research analysts generally weathered the storm very well.
As always, we'll be reviewing – and grading – each of our services in detail in our annual Report Card early next year.
In the meantime, we'd like to thank our analysts for a great job in what was an incredibly challenging year… and briefly highlight some of their best work of 2016.
I (Porter) asked the editors of our three largest franchises – Dr. David "Doc" Eifrig, Steve Sjuggerud, and Brett Aitken and Bryan Beach (two of the senior analysts on my team) – to share their biggest wins by nominal and annualized return, and their best idea regardless of return.
In my franchise, we had more recommendations to choose from than ever before...
We added Stansberry's Credit Opportunities to our large stable of advisories late last year… launched Stansberry Gold & Silver Investor in the spring… and just rolled out Stansberry's Big Trade last month.
Our choice for best nominal return was Ritchie Bros. Auctioneers (RBA), our March recommendation in Stansberry's Investment Advisory. RBA has rallied from $24 to near $36 today, good for a 46% gain…
While we earned much higher total returns in some other recommendations – including our options trades in Stansberry Alpha, and some of our more speculative picks (see below) – this is a huge return in a safe, solid company in less than a year.
Our choice for best annualized return was a tossup...
Our combined position in Fannie Mae (FNMA) and Freddie Mac (FMCC) – our May Investment Advisory pick – has soared more than 130%. That's good for more than 275% on an annualized basis, but it was probably the most speculative recommendation we made all year…
Midas Gold (MAX.TO) – one of our early recommendations in Stansberry Gold & Silver Investor – also soared. Even after the recent correction in precious metals prices, Midas is up about 64% in 261 days, for an 89% annualized return…
Regardless of return, our best idea by far...
Was our Stansberry's Credit Opportunities recommendation in Natural Resource Partners (NRP). We recommended readers buy both NRP bonds and its shares. In this case, the bond was "money good" from day one… And the stock had sold off so heavily, it was very unlikely to drop further.
Today, we're up more than 50% on the bond and more than 150% on the stock, for a combined return of more than 80% in about a year. That's an amazing return.
Sadly, our NRP recommendation was published late last year... so technically this trade doesn't qualify for a 2016 contest. But we recommended essentially the same trade in Coeur Mining (CDE) in May… and then closed the position in September for a 20% gain in about four months. On an annualized basis, that's hard to beat, especially considering it's a fixed-income position.
Steve says his best nominal return and his best idea are the same recommendation...
In the March issue of True Wealth, Steve noted gold stocks were more hated than ever before in history. He recommended buying junior gold miners through the VanEck Vectors Junior Gold Miners Fund (GDXJ).
He recommended selling half the position just five months later in July for a 91% return, and is still holding the other half, for a combined 51% return in around 10 months.
Steve's best annualized return came from betting on higher interest rates (lower bond prices) in September.
This was another sentiment play… Steve noticed everyone was betting on lower rates and recommended taking the other side of the bet. He recommended buying shares of the ProShares UltraShort 20+ Year Treasury Fund (TBT)… which is designed to rise as bond prices fall.
Steve recommended selling TBT just two months later in November for a 20% gain, or 183% annualized…
Dr. David Eifrig's best nominal return came in his Retirement Millionaire advisory…
In February, "Doc" recommended shares of real estate services provider CBRE Group (CBG), a dominant "asset light" business trading at its cheapest valuation in years. Shares are up 33% since Doc's recommendation…
Doc's CBG recommendation also earned his highest annualized returns at a little more than 40%.
He also recommended the PowerShares High Yield Equity Dividend Achievers Fund (PEY) in April. Readers who took his advice are up 18% in eight months, good for a 27% annualized return...
Now, some readers may not be impressed with those returns. But remember, Doc's strategy in Retirement Millionaire is to earn safe, consistent returns year after year… not to "swing for the fences." Annual returns of nearly 30% or more are huge for these types of safe, cheap dividend-paying stocks.
Doc says one of his favorite ideas (regardless of return) came from his Retirement Trader advisory…
While Retirement Trader's options-selling strategy caps how much investors can earn on these short-term trades, Doc made some great calls this year…
For example, back in October, analysts at Moody's and other Wall Street firms were warning of a "restaurant recession," causing shares of publicly traded restaurants to sell off. But Doc noticed Darden Restaurants (DRI) looked like a good value and recommended a trade.
DRI shares moved higher almost immediately, and Doc's subscribers earned a 23% annualized gain in less than two months.
Again, these are just a handful of our best trades from 2016. We look forward to sharing the full Stansberry Research Report Card with you soon.
We hope many of you benefited from these ideas and others...
But if your investment results were less than stellar – or you simply wish to become an even better investor in 2017 – year-end is a great time to recommit to the basics of sound investing.
If you've been with us for long, these ideas should sound familiar... but it never hurts to review them.
First, you must remember investing starts with saving...
The simple reason most people will never become financially independent is because most people lack the discipline to save money. It's really that simple.
Think about how much money you earned this year after taxes. Think about how much you saved. Was it enough for you to meet your financial goals?
As we've often said, until you've mastered the discipline of saving money, you have no realistic chance of developing the discipline to invest well.
But saving alone is not enough...
Studies of actual investor results show most folks hopelessly underperform the market.
One of the most famous studies from investment-management firm BlackRock showed the average investor earned just 2.1% before taxes over a 20-year period... compared with the market's 7.8% return over the same time.
Why do most individual investors earn dismal returns?
In our experience, it's almost entirely because they fail to properly manage risk.
It's not sexy, but the reality is most of your success or failure as an investor will have nothing to do with the individual investments you buy. Instead, it will be decided by asset allocation (how you spread your portfolio around to different asset classes like stocks, bonds, cash, commodities, etc.)... position sizing (how much you put into any particular position)... and your exit strategy (when you sell).
Until you begin to manage risk properly, it will be nearly impossible for you to be successful. Consider your results for the last year and ask yourself how much better off you'd be today if you hadn't gone "all in" on that one idea or investment... if you had kept your individual positions to a reasonable size... and if you had religiously cut your losers with trailing stops.
If you haven't yet, we urge you to try using TradeStops, the software developed by our friend (and former Stansberry Research subscriber) Dr. Richard Smith.
There is simply no easier way to take all the guesswork out of managing the risk in your portfolio and instantly improve your results. (If you haven't seen it yet, be sure to watch Richard's demonstration with several actual Stansberry Research subscribers right here.)
But whether or not you decide to try TradeStops, we urge you to commit – right now – to not making these same mistakes in the new year.
Of course, we've heard from many folks over the years who say they lack the time and discipline to do this...
They know exactly what they need to do to become better investors, but year after year, they've failed to put it all together.
In the past, we couldn't do much to help these folks... besides suggesting they'd be far better off putting their money in index funds. But soon, we will have a much better answer...
As we mentioned last week, we're rolling out Stansberry Portfolio Solutions early next year. And it will be unlike anything we've ever offered before...
Stansberry Portfolio Solutions is designed to make following our advice completely foolproof... and to allow even investors who have never been successful to finally "put it all together" in 2017.
We can't wait to tell you more about it soon.
That's it for 2016...
Next week, we're running a special holiday Digest series in lieu of our regular issues... We hope you enjoy what we've put together.
We'll resume our normal publishing schedule in January. In the meantime, have a wonderful holiday.
New 52-week highs (as of 12/22/16): Automatic Data Processing (ADP), Axis Capital (AXS), CONE Midstream Partners (CNNX), Cedar Fair (FUN), short position in Hertz Global (HTZ), ProShares Ultra Telecommunications Fund (LTL), and W.R. Berkley (WRB).
We'd love to hear how you fared with our 2016 recommendations. Please send us a note to feedback@stansberryresearch.com. Be sure to read on for what Digest contributing editor P.J. O'Rourke has to say about President-elect Donald Trump's New Year's resolutions. And happy holidays!
Regards,
Porter Stansberry and Justin Brill
Baltimore, Maryland
December 23, 2016
New Year's Resolutions for President-Elect Donald Trump
Dear President-elect Trump...
No offense, Mr. Trump, but you do seem to have a rather high opinion of yourself. And because you think you're already the best, you may not have bothered with a list of New Year's Resolutions to make yourself better in 2017.
Therefore, I've taken the liberty of writing a list for you...
Lay off the Social Media
Take a tip from Teddy Roosevelt. You're about to get a "bully pulpit." (The pulpit being possibly too well-named in your case.) Twitter's for kids.
Did Teddy Roosevelt step down from his bully pulpit and communicate with the American public through a pair of tin cans with a string stretched between them?
Quit Holding Presidential News Conferences
The mainstream media hates you. You hate them. We need more love.
And presidential news conferences are boring. Hold "Presidential Booze Conferences" instead. Reporters love to drink, especially free drinks. They'll all be on your side before you know it.
This means that you should...
Start Drinking
It's always been a little worrisome that you're a complete teetotaler. If you never take a drink, people suspect you're an alcoholic, or worse.
"In vino veritas." A lot of Americans are wondering what kind of person you really are deep down inside. Knock back a few and let them see.
Play Even More Golf
Ever since William H. Taft – the first U.S. president to swing a niblick – golf has been a great way for Americans to get our chief executives out of the White House and keep them busy and occupied so that they don't get into mischief.
During the past 102 years, the only presidents who never played golf were Hoover, Carter, and Truman. Two of them didn't get reelected and the third dropped A-bombs on Japan before the Trans-Pacific Partnership trade treaty had even been thought of.
Don't let this happen to you. Keep your head down and follow through.
Work on Your Stand-Up Delivery
You can be funny, but liberal elites and various other solemn and serious types seem to have trouble figuring out when you're kidding.
Take Ronald Reagan for your model (in this and all other things).
Here's a joke that – I have it on good authority from someone who worked in the Reagan White House – Ron used to tell in private. Vladimir Putin might enjoy it...
An American and a Russian are talking about how much they hate the presidents of their countries.
The American says, "I hate the president of the United States so much that I pissed on his limousine."
The Russian says, "I hate the president of Russia so much that I crapped on his limousine."
The American says, "Well, to tell the truth, the president wasn't in his limousine at the time."
The Russian says, "Well, to tell the truth, my pants weren't down."
Don't Redecorate the White House
I've seen pictures of the Green Room, the Red Room, the Blue Room. I've seen pictures of your penthouse in Trump Towers. No offense to Melania or Louis XVI or whoever you had as your interior designer, but...
Jackie Kennedy did a perfectly good job redecorating the White House in 1961. You should preserve it the way it is. And you should save yourself from having Jackie's ghost stalk you into the Lincoln bedroom and rip your head off.
Spend More Time With Your Family
You did not score very well in the "likability" polls during the presidential campaign. But everybody likes your kids. They're well-spoken, good-mannered, and polite.
Maybe you should have your family spend more time with you – and let Ivanka run the country.
Give More to Charity
It will make people feel better about you. It will make you feel better about yourself (if that's possible).
Spending money on charitable contributions is a good thing to do. However, we know you have a tendency to spend your money in a big, flashy ways so...
No! No! Not the Clinton Foundation!
Get a Dog
While we're on the subject of likability, nothing makes a fellow more likable than a love for dogs.
To gain extra Brownie points, rescue a big, friendly mutt from the D.C. Humane Society and take it with you everywhere you go.
The half of the country who voted against you will like you more if you have a dog. And the half of the country who voted for you will like you even better if you name the dog "Hillary."
Have Some Fun With Your Diplomatic Appointments
Members of America's diplomatic corps are supposed to be international representatives. America at its best. What's America best at? Kicking butt.
Here's a short list of "Ambassadors of Butt-Kicking" that the American people would truly enjoy seeing appointed to head the American embassies in various foreign countries, starting with France: Clint Eastwood, Arnold Schwarzenegger, Chuck Norris, Sylvester Stallone, Bruce Willis, and "Stone Cold" Steve Austin.
And while you're at it...
Appoint Judge Judy to the Supreme Court
It's a nonpartisan pick with built-in popularity.
I have no idea whether Judge Judy is a Republican or a Democrat, but she certainly is a "strict constructionist."
And she has the perfect reply to every kind of nonsensical left-wing argument that gets heard in the nation's highest court: "Don't pee on my leg and tell me it's raining."
Regards,
P.J. O'Rourke