Wrapping Up Our Yearly Review
Wrapping up our yearly review... Who earned the top grades?... An impressive debut for Advanced Options... How our Portfolio Solutions products fared...
Editor's note: If you missed the first part of our 2019 Report Card yesterday, you can catch up right here. Today, we'll wrap up the annual review by grading our trading services, specialty publications, Stansberry Portfolio Solutions products, and everything else we haven't covered yet. Let's get started...
Income Intelligence: A+
Today, the 10-year U.S. Treasury bond yields around 1.55%. And the average savings account in America pays less than 1% interest per year.
So when folks hear about income investments these days, they likely tune out immediately.
But the thing is, you don't need to settle for such lousy returns. You can still find attractive income investments yielding double-digit percentages... if you know where to look. And even better, you don't have to take on big risks in order to earn these double-digit returns.
Dr. David "Doc" Eifrig is the perfect guide for helping you find these investments. Every month in Income Intelligence, he aims to find a safe investment with an attractive yield.
Despite that, it can still be a challenge to sell a publication like this... People say it's too "boring." They would rather get "hot stock" tips that lead to triple-digit gains or more.
For those readers, I simply like to share stories to show exactly why this publication should be an essential part of your monthly reading. Doc has plenty of them. Here's a recent one...
In December 2018 – when stocks were reeling, having pulled back nearly 20% in a matter of months – Doc recommended private-equity giant Blackstone (BX) in Income Intelligence. The stock came with an annual yield just shy of 9%. Not only that, Doc believed a special situation could cause Blackstone's share price to soar 40% to 50% in the following months.
This recommendation worked out perfectly for his subscribers...
At the end of last year, the Blackstone position showed a total gain (including dividends) of nearly 110%. A triple-digit gain in about a year... on a "boring" income play.
I'll take boring gains like that every time.
Sure, I highlighted Doc's biggest winner over the past three years. They don't all work out that well. But I shared that example with you to show you what's possible in this service.
Plus, Doc lands plenty of safe, high-double-digit winners every year. For example, as of the end of last year, Income Intelligence subscribers who followed his advice were up more than 20% on an infrastructure stock... more than 20% on a water-utility company... more than 30% on a recommendation in the financial space... and more than 60% on a gold stock.
Doc's experience shines through in every issue of Income Intelligence...
For those of you who don't know, he previously worked at major institutions like Goldman Sachs (GS), Chase Manhattan, and Yamaichi – then known as the "Goldman Sachs of Japan." Doc uses all his experience from those days to show his subscribers how to consistently – and safely – earn double-digit returns, on average... year after year.
Besides the great returns, Doc provides another "intangible" benefit in Income Intelligence. In every issue, his full-service approach includes detailed data analysis and indicators...
Doc's "Income Investor Dashboard" offers all sorts of insights for subscribers. For example, in the "Inflation Monitor" section, you can stay up-to-date with commodities prices, real-world inflation metrics, and more. And the "Yield Corner" highlights the current rates on different securities – from government bonds to money market funds to high-yield bonds.
Professional investors would pay a small fortune to have these valuable tools delivered to their inboxes every month... And every Income Intelligence subscriber gets them from Doc.
Doc launched Income Intelligence in 2013. From that point through the end of last year, the average gain in his model portfolio was 15.5%. That's extraordinary. He has earned at least an "A" in five of the six years we've published this newsletter. (The other year was a "B+.")
In the three-year period used for this year's Report Card, Doc produced an average gain of 13.3% (14.3% annualized). That's slightly below the returns of his complete track record, but the performance still crushed the benchmark's 7.5% annualized return in that span.
Doc continues to show his subscribers how to earn safe, reliable returns. And the companies he recommends pay steady dividends, so they'll help protect your portfolio in the next downturn. If you're not investing for income, I urge you to start now. Let Doc guide you.
Years from now... you'll be thrilled you made that decision.
Stansberry's Credit Opportunities: B-
This product is different from anything else we publish...
If you aren't familiar with Stansberry's Credit Opportunities, it focuses on one of the most boring sectors in the markets – bonds. Specifically, it deals with high-yield corporate bonds.
The strategy is simple...
Editor Mike DiBiase and senior analyst Bill McGilton scour through thousands of bonds each month, searching for so-called "outliers" – bonds that aren't priced correctly given their level of risk. In other words, they search for bonds that are far cheaper than they should be.
With bonds, the most important thing to understand is that they're binary... The bond issuer either pays off the bond in full on its maturity date or it defaults on the debt. And as you wait for these bonds to return to par value (usually $1,000 per bond) or more – or for the issuer to pay them off – you'll collect interest payments (usually twice each year).
We launched Stansberry's Credit Opportunities in late 2015 because we believed the credit cycle would soon roll over. And we felt that would create a tremendous opportunity to buy corporate bonds at steep discounts. This hasn't happened as we expected... at least not yet.
Because of that, it has been challenging to find attractive opportunities in this space. But the good news is, Mike and Bill continue to uncover big winners in this publication...
For example, in November 2017, Mike and Bill recommended a bond issued by brand-management company Iconix that featured a miserable 1.5% interest coupon. The bond traded for around $767 – a 23% discount to par value – when they recommended it. And while holding the bond in their model portfolio, they received a $7.50 interest payment.
But after analyzing Iconix and its bond, Mike and Bill realized the market was overreacting. They believed the bond would pay off in full and on time when it was due in March 2018.
And sure enough, that's what happened... They closed the trade 133 days later, booking a 31% profit on the bond. Most investors would love to see those kinds of gains in stocks.
I've said this time and again...
This is one of my favorite strategies. It's one of the best-kept secrets in the markets. And it's one of the most powerful ways to earn safe, steady, double-digit gains year after year.
It requires a little more work than just buying stocks. But the extra effort is worth it. And once you've bought a bond or two... I bet you'll wonder why you've waited so long to do it.
So with all that said, you might be wondering why I gave Mike and Bill a "B-" this year...
Our annual Report Card includes all recommendations – open and closed – for the three-year period. It's the same criteria as our stock- and options-focused publications.
Based on all positions, the win rate for Stansberry's Credit Opportunities during the three-year period equaled 73%. However, the returns on some of the open positions were down at the end of the year, dragging the average annualized gain down to just 3.7%... below the benchmark's 5.4%. Based on those statistics, this grade seems appropriate.
But remember, bonds are different than stocks...
Like I said earlier, when you buy a bond, you know you'll receive the principal payment in full at some point in the future (assuming the company doesn't default). So it doesn't really matter where the bonds trade until that point.
As a result, the track record for the publication's closed positions carries more weight...
For closed bond positions over the three-year period – including 11 winners and three losers – the win rate is a massive 79%... with an average gain of 9%. The average holding period is 281 days, which results in an average annualized gain of 12%. By comparison, the publication's benchmark returned just a third of that (around 3%). That would earn an "A+" in my book.
I know Mike and Bill will be disappointed with a "B-" grade. But I also know that the closed positions are what really matter... They put real money in our subscribers' accounts.
It doesn't matter if we're looking at the "closed only" or "open and closed" results. In the end, I appreciate the job Mike and Bill do in Stansberry's Credit Opportunities. The quality of this product... the in-depth research they provide... and the results... are all world-class.
One final note on Stansberry's Credit Opportunities...
In addition to their recommendations, Mike and Bill also offer something special every month – the "Credit Opportunities Dashboard." In this section, they share information about several bonds to watch in three different categories – Safe, Moderate, and Distressed.
These bonds aren't our official recommendations, but Mike and Bill provide all the necessary statistics for investors to consider these bonds on their own. And I've heard from numerous subscribers who have profited from many of these "Watch List" bonds listed in the past.
It's an invaluable tool for Stansberry's Credit Opportunities subscribers.
True Wealth Systems: B
We often call True Wealth Systems "the computerized version of Dr. Steve Sjuggerud"...
Several years ago, we spent millions of dollars developing a system to allow Steve and his research team to follow different markets and sectors around the world. They use various statistics and data points to identify opportunities in the markets that look ripe for takeoff.
A lot like Steve in True Wealth, the indicators are sometimes a little early...
This system works best in trending markets. And if volatility hits – or the markets trade sideways for a while – their trades can hit stop losses before they have time to play out.
Over the past three years, True Wealth Systems led subscribers to several double-digit gains in markets such as Italy, China, South Korea, tech stocks, and semiconductors. But they also got bumped out of a few positions in 2018, which hurt the overall performance.
We're pleased with the 59% win rate for the three-year period. But because the S&P 500 topped the publication's average and annualized returns, we've assigned a "B" grade.
True Wealth Opportunities – China: A+
The results of True Wealth Opportunities: China are nothing short of remarkable...
We launched this publication in 2016 after Steve insisted that a phenomenal opportunity stood right in front of us. He was convinced that China – the most populated nation and now the second-largest economy in the world – offered once-in-a-lifetime-type potential.
Once again, Steve was right...
Without giving away too many details, during the three-year period for the 2019 Report Card, Steve found ways for his subscribers to earn triple-digit gains with large-cap Chinese stocks, as well as solid double-digit gains in Chinese banks, education, and infrastructure.
With a massive 82% win rate and an 18.6% average gain (21.6% annualized) – he crushed his benchmark, the iShares China Large-Cap Fund (FXI). So he deserves an "A+" this year.
These results are even more amazing because Chinese stocks – as measured by the Shanghai Stock Exchange Composite Index – returned just 7% in total gains over the same three-year period. That translates into an annualized gain of just 2.3% in that span.
Steve's bold calls on China didn't go unnoticed in the investment world either...
Investment manager KraneShares invited him to "ring the bell" at the New York Stock Exchange in April 2019. The wonderful occasion was part of the company's celebration on the anniversary of launching their Chinese-focused exchange-traded fund ("ETF").
Most Digest readers will never buy Chinese stocks. They consider these stocks "too risky." But I encourage you to at least consider it... especially the way Steve invests in them.
Like any investment strategy, I'm not suggesting you go "all in" on China today. We would never recommend doing that for this – or any – strategy. But if you want to allocate a small part of your overall portfolio to a market with massive upside, check out this publication...
You won't find anyone better than Steve to help lead you through the investment opportunities in China. Despite his outstanding results so far, I believe the upside potential is just as large today as it was back in 2016 when we launched this publication.
And if you already subscribe to True Wealth Opportunities: China... congratulations. I'm sure you've enjoyed some of these gains, too. And I'm confident that they'll continue.
True Wealth Opportunities – Commodities: C
Yesterday, we talked about the bloodbath in commodities over the past decade...
Brutal doesn't even begin to explain what commodity investors have endured... Except for a few flashes of life here and there (like gold and silver, recently)... it has been incredibly tough to find winners in the commodities sector for most of the past decade.
The entire market is stuck in a long-term downtrend. As I said, commodities – as measured by the Bloomberg Commodity Index – are down nearly 70% from their 2008 peak. Even gold – which is up more than 30% since mid-2018 – remains well below its 2011 highs.
Like many of us, Steve believes the commodities sector offers tremendous potential at its current lows. This looming opportunity is a big reason why he launched True Wealth Opportunities: Commodities during the summer of 2018. He expects a big bull run higher...
In this publication, Steve focuses on the best ways to profit as this big macro shift plays out. He recommends mostly "Masters of the Universe" in True Wealth Opportunities: Commodities. These companies own the absolute best assets in the world. They're the businesses that own the best gold mines... best lithium deposit... and best iron-ore assets.
Since Steve didn't start this publication until 2018, we don't yet have a full three-year grading period. But we've included it in this year's Report Card to see how it's going so far...
While the commodities sector has mostly languished in recent years, Steve led subscribers to solid double-digit gains in three gold stocks. His model portfolio also showed double-digit gains in two other Masters of the Universe at the end of last year. That's a great start.
Still, as we've discussed, we haven't gotten to the biggest returns yet – the opportunities that we'll see when commodities begin their next bull run. As Steve said in December...
Multi-year runs of quadruple digits are possible when you buy the right commodities businesses at the right times. The upside is truly life-changing.
When comparing the results for True Wealth Opportunities: Commodities with the performances from some of our other publications, you might think a 46% win rate and an average annualized return of 2.3% should receive a lower grade than we've given this year.
I agree we want to see higher annualized returns for our subscribers. But keep in mind... Steve's recommendations made money in a period when the benchmark – the Bloomberg Commodity Index – fell 7.4%. That's an annualized loss of nearly 9%. Given that he outperformed the benchmark – by a wide margin – Steve earns a "C" for this publication.
Stansberry's Big Trade: F
In Stansberry's Big Trade, editor Bill McGilton employs a simple strategy...
Find companies with broken business models or mounds of debt... sometimes both. Then, make small, asymmetrical bets – using long-dated put options – that could soar hundreds of percent as these companies struggle to find willing lenders and their share prices decline.
These tiny bets serve as "portfolio insurance" when the credit market rolls over as we expect it to. When a sell-off occurs, these positions will likely move much higher... offsetting any losses you suffer with the regular stock positions in your portfolio.
Unfortunately, as we noted earlier, the credit cycle hasn't turned over yet...
The historic bull market keeps marching. The S&P 500 is up more than 50% since we launched this publication in 2016. Cheap money continues to flow into the markets.
The wall of debt we saw coming due has been pushed out. Companies we expected to struggle with refinancing their loans have managed to do so – at least for the time being.
These conditions make it extremely difficult to execute a bearish strategy like this one. But as I said in the 2017 Report Card, when I gave Stansberry's Big Trade an "F" grade...
We hate losses as much as anyone. But as with all cycles, we continue to believe that a downturn is coming. So we keep the bigger picture in mind... When the market drops, these stocks will fall much harder. And when they do, the put options will soar.
Last year, in the 2018 Report Card, I gave a "B" to the publication. Bill amassed an incredible 90% win rate... thanks in part to the two periods of surging volatility that year. That shows you how fast a simple, bearish strategy like this one can turn around.
Still, Bill has one of the most difficult jobs of any of our editors right now... If this bull market continues, it could make the short term tough for Stansberry's Big Trade.
But I hope you don't lose sight of the long term... A bearish strategy like this is essential for every investor's toolbox. It will help you protect your capital when the next storm arrives.
And as far as I know, no other product in the industry is like Stansberry's Big Trade...
Even if you don't buy every recommendation, Bill's in-depth research is a valuable resource about which landmines are buried in various industries. If nothing else, these are areas you should avoid. It's also a great source for "short" ideas... If you don't want to trade options like Bill does in Stansberry's Big Trade, you could simply short the stocks.
Remember, this strategy is for a tiny part of your portfolio...
They're bets of just a few hundred dollars at a time. Small amounts that you'll hardly notice in your brokerage account. Amounts that don't hurt you if the options expire worthless.
You never know when volatility will hit. Having a few small positions that can soar hundreds of percent can help offset any losses you experience on the long portion of your portfolio. In December 2018, I know plenty of people were glad that they had some positions like this.
But we're grading the performance over a three-year period for this year's Report Card...
With Stansberry's Big Trade, it's hard to look beyond the 38% win rate and an average annualized loss of 21.9%. However, it did outperform its benchmark – the ProShares UltraPro Short S&P500 Fund (SPXU), a triple-leveraged inverse ETF. And it did so by a wide margin... SPXU produced an average annualized loss of about 36% over the same span.
We expect this Big Trade strategy to excel when volatility strikes again. And trust me, it will happen. We just don't know when... how hard it will hit... and for how long it will last.
Bill will continue to keep his eye on the big picture. Despite this year's grade, he'll continue to make these small bets against low-quality businesses and stocks with heavy debt loads.
When the next tidal wave hits, you'll be glad you have some insurance.
Crypto Capital: B
When it comes to cryptos, we realize two types of people exist...
You either believe in the potential for bitcoin and other cryptos to transform our everyday lives... and you love them. Or you're a complete skeptic... and you hate them.
In fact, within our own offices, both types of people exist. And I'm OK with that. After all, we aim to provide independent investment research for our subscribers.
Some folks accuse us of talking out of both sides of our mouths when we publish conflicting opinions. But they're missing the entire point... We want to provide all different types of viewpoints. As Porter always says, it's what we would want if our roles were reversed.
Analysts don't agree on many different securities and strategies used in the world. Longtime subscribers know Porter and Steve even have different views on the market from time to time.
We don't make anyone write anything that they don't believe in. Period. We simply want to publish the best research possible. You can then decide which opinion you agree with, and act accordingly.
The world of cryptos is no exception...
With Crypto Capital editor Eric Wade and research analyst Fred Marion leading the way, I believe we have the best crypto-focused research on the planet. And if you're a user of our Stansberry Terminal product, you can access news, market data, and our own proprietary "Stansberry Ratings" (developed by Eric and Fred) on more than 500 cryptos.
Eric and Fred are passionate about the underlying blockchain technology. Before they recommend any crypto to their subscribers, they dive deep into the business model... the people behind it... and potential application in the world. And the results are incredible...
For example, in November 2018, Eric recommended the Basic Attention Token. This crypto rides along with the Brave Internet browser. It allows you to protect your online privacy, while also paying web content creators and allowing advertisers to reach you.
You can set it up in a couple of minutes and then forget about it. Plus, you get paid BAT tokens for your web browsing.
By May 2019, BAT had doubled since Eric's initial recommendation. He recommended taking the original capital off the table... and letting the rest ride for future gains. In other words, subscribers who followed his advice were playing with house money at that point.
The combined position is up 61%. Subscribers who followed his advice got all their initial investment back... and still have skin in the game to enjoy further upside with this crypto.
His biggest winner so far is Chainlink – "an easy way to connect off-chain data to the Ethereum blockchain" – which sat on gains of about 790% at the end of 2019. That includes recommending that subscribers take a third of their capital off the table when it tripled.
These are outstanding results. But of course, I must remind you...
Cryptos are much more volatile than stocks. They can soar hundreds – or thousands – of percent... But they can also drop to zero. Do not invest in cryptos if you can't handle volatility. If you invest in cryptos, only use small amounts that you can afford to lose.
Crypto Capital moved under the Stansberry Research banner last June. But the original product launched in 2017, under one of our former affiliates – Stansberry Pacific Research. And then, Eric became the editor of the Crypto Capital publication in October 2018.
In the three-year period for this year's Report Card, Crypto Capital's win rate equaled 47%. That's a little lower than we like to see, but the average return came in at an impressive 43.2%... easily beating its benchmark (bitcoin). The gains are great, but the win rate is less than half. So in its initial Report Card appearance, I'm giving the publication a "B" grade.
But here's an interesting tidbit...
If we only look at the recommendations since Eric took over the publication, the results improve dramatically. Since October 2018, he has made 44 recommendations with an impressive 61% win rate. His average gains clock in at 53% (an annualized gain of 96%).
It's tough to trade in such a volatile environment, but Eric crushed it. So far, his individual performance deserves a resounding "A+" grade. We're delighted with those returns and the quality of his research. I'm looking forward to plenty more successes moving forward.
DailyWealth Trader: C
DailyWealth Trader is different from most of our trading services...
As the name suggests, editors Ben Morris and Drew McConnell publish every day the markets are open. They share their insights, commentary on the markets, and investment strategies. Most important, they provide a stack of educational material for subscribers.
It's a must-read publication for experienced and aspiring traders alike...
I believe the educational aspect alone is worth the subscription price for this publication. But of course, Ben and Drew also provide actionable ideas with trades on stocks and options. They don't make recommendations each day, but it's usually at least once or twice a week.
Over the past three years, Ben and Drew recommended 223 trades. And 64% of the time, those trades resulted in gains. That's a solid win rate for a trading service – especially one that recommends so many trades. That metric on its own would earn a "B" grade or higher.
But the average annualized gain for their trades was tiny... just 4.9%. And more important, it lagged the benchmark's annualized return of 10.5% in that span. For me, this is a lot of activity for low average annualized returns. Because of that, they've earned a "C" this year.
As I've said in the past, I would like to see Ben and Drew make fewer trades and focus on earning higher average gains. A lot of folks who trade on a part-time basis – or as a hobby – think they want more trading... not less. But I believe most traders do too much trading. They think they can generate profits with volume. But for most folks, that doesn't end well.
My bet is if Ben and Drew traded less – and only on their highest-conviction ideas – they would see higher average gains. They've proven they can find winners. Just a thought.
Ten Stock Trader: C
We launched the beta version of Ten Stock Trader in April 2018 to serve subscribers looking for technical analysis.
Editor Greg Diamond, a Chartered Market Technician, has 15 years of experience trading across various asset classes. Prior to joining us at Stansberry Research, he traded for a $3 billion hedge fund and a $35 billion pension fund. Greg has also spoken about trading and technical analysis at several business schools.
In his service, Greg monitors the macro environment and trades stocks, ETFs, and options. He publishes his weekly outlook every Monday morning. Then, throughout the week, Greg posts intraday commentary and analysis via his live feed on the Ten Stock Trader section of our website.
We don't have a full three-year track record for this publication. And we only recently released it out of "beta" status. But we have more than 18 months of trading data from the product's beta phase, so we wanted to share the results so far...
Last year, Greg booked several triple-digit winners – including a massive 329% gain on a gold recommendation back in June. He followed up just a couple of weeks later with another 345% gain on a similar play. Both gains happened in just 16 and 19 days, respectively.
These are the type of gains possible in the options market. However, as with any trading service that involves the type of strategy that Greg employs, it comes with some losses...
From the publication's launch through the end of last year, Greg made 77 trades with a win rate of about 46%. His average gains were tiny at 0.3% for the entire period, but the average holding period was just 34 days... which results in an annualized return of 3.4%.
With these results, Ten Stock Trader earns a "C" for this year's Report Card.
Like I mentioned with DailyWealth Trader, for me... this seems like a lot of activity for very low gains. So I would rather see Greg trade less... and only on his highest-conviction ideas.
Retirement Trader: A
As I mentioned earlier, Doc enjoyed a long, successful career on Wall Street before retiring – for the first time. The time he spent developing his options-trading strategy has paid off in Retirement Trader... He has put together an outrageous performance over the past decade.
Doc helps investors earn income by safely trading options. But instead of buying options, he looks to sell them... which reduces the investor's risk. The key is knowing which options to sell to generate safe income for a profit on a consistent basis.
No one does this better than Doc...
He deserves immense credit for sticking with this strategy and educating thousands of subscribers along the way. Doc places small, safe bets on a regular basis. Over the course of the year, these small gains add up to an overall return that you won't earn elsewhere.
I won't get into all the details about Doc's strategy here. However, I'll note that he recommends these low-risk trades with companies we all know and love... like Disney (DIS), Intel (INTC), Walmart (WMT), and Coca-Cola (KO), just to name a few.
You can see by his 99% win rate over the past three years that he knows what he's doing. Since Retirement Trader's inception, Doc has made 474 winning trades... with just 24 losers (96% win rate). At one point, Doc made 136 trades without a single loser. (His current run is up to 78.) This kind of success is unheard of using any strategy... much less with options.
Over the past three years, his average gain was 2.1%. I know that sounds small, but remember... Doc only holds these trades for around 111 days. That means his annualized gains came in at about 7%. However, it trailed the benchmark over that span. That's why – even though Doc has an incredible win rate – Retirement Trader earns an "A" this year.
If you're on the fence about trading options for income, consider giving Doc's Retirement Trader service a try. With little risk, he delivers steady profits... year after year.
Advanced Options: A+
Almost two years ago, Doc and his research team started experimenting with an idea...
They would take stock recommendations from our editors and look for a way to "juice" the returns through the options market. For several months, they sent their trades around to an internal list of our most senior personnel to see what we thought about this strategy.
The results were so impressive that we created Advanced Options in December 2018... with the goal of using this strategy to help subscribers realize these gains. Since it had just launched at the end of the year, we didn't include the publication in the 2018 Report Card.
Even now, Advanced Options is only a year old. It doesn't have a full, three-year track record like most of the other publications in this year's Report Card. But since Advanced Options involves mostly short-term trades, I want to share its results through one year.
Let me give you an example...
Last June, Steve recommended Chinese online retailer Alibaba (BABA) in True Wealth. In August, with Alibaba trading around $159 per share, Doc and his team opened a "bull spread" – an options strategy to profit if the stock moves higher – with the stock.
With a bull spread, you buy a call option at one strike price and sell another call at a higher strike price – both with the same expiration date. The price you receive for selling the option with the higher strike price helps reduce the cost on the option with the lower strike price. That difference is the risk.
Your potential loss is limited to this amount – the price you paid for the call you bought minus the price you receive for the call you sold. For this trade, you would have only had to pay as little as $230 to open a position. So no matter what happened – even if Alibaba dropped to $0, the most you could lose was the net premium you paid – or $230.
Of course, your goal is for the opposite to happen...
You want Alibaba to rise above the price of the call with the higher strike price at expiration. The profit increases as the share price rises from the lower strike price... up to the higher strike price. If it exceeds the higher strike price, you earn the maximum profit on the trade.
In this case, Doc targeted the $160/$165 October 2019 options for his Alibaba bull spread...
About a month after opening the trade, Alibaba shares traded for more than $170. So Doc recommended closing the position... They locked in a 96% gain in a little more than a month. Meanwhile, if you had just bought the stock, you would've been up around 5%.
Now, don't let the technical jargon scare you...
Doc and his team walk their subscribers through every step of the trade. They've created an entire series of educational videos that are easy to understand, so you can follow along.
In addition to the bull spread, Doc and his team use other options strategies, too. And they're helping their subscribers make a small fortune... In just 12 months, they made 29 trades. As of the end of last year, 20 were winners – a 69% win rate. Meanwhile, their average gain came in at 22.8%, compared with the benchmark's minuscule 3% gain.
We applaud these results...
Congrats to Doc and his team for showing subscribers another way to find unique – and safe – ways to generate steady streams of income... month after month, year after year.
The Capital Portfolio: A
The Income Portfolio: A
The Total Portfolio: A+
Austin Root has done a phenomenal job with our Stansberry Portfolio Solutions products...
If you don't know Austin, he has one of the most impressive resumes in finance and brings a wealth of expertise and experience to our firm.
After earning an MBA from Stanford University, he began working in investment banking at Blackstone. He worked with Steve Cohen at his former hedge fund SAC Capital, as well as at Soros Fund Management. Austin also co-founded a New York-based hedge fund with a strategic investment from the legendary Julian Robertson's Tiger Management.
Naturally, we're thrilled to have Austin bringing that expertise to our Portfolio Solutions offerings in his role as portfolio manager.
We launched Portfolio Solutions three years ago to provide subscribers with a world-class product that would allow them to use our research in a better, more comprehensive way... and at the same time allow them to put in less work on their investments each month.
They're a one-stop-shop for understanding how to use our research.
The investment committee includes Austin, Porter, Steve, and Doc. Together, they draw on the research from across all of our publications. Each Portfolio Solutions product has its own subset of publications... and subscribers get access to these products as well. That way, they can read the full reports for every company. Every month, Austin provides details on each recommendation – including exact position sizes, allocations, and exit strategies.
Austin has been with us for a little more than two years. And last year, he crushed the benchmarks in all three of our core portfolios.
As you know, the S&P 500 climbed 31% in 2019 – a huge gain by almost any metric. But Austin made those gains look ordinary when compared with The Capital Portfolio, which soared an incredible 42%.
Think about that... Your entire portfolio in one single 12-month period rose 42%. Most people think they've hit the jackpot if one of their stocks climbs that much in a year.
And he didn't stop there...
The Income Portfolio brought in a massive 27.3% gains – also beating its benchmark, the Vanguard Balanced Index Fund, which returned 21.5%. Just to be clear... these are returns on a portfolio focused on income. And as I explained earlier, the 10-year Treasury will earn you a measly 1.55% today. The Income Portfolio last year produced a 4.85% yield.
Let's face it... it's not a fair competition when it comes to where you should park your money for income – the U.S. government or the strategy of The Income Portfolio.
In The Total Portfolio – essentially our version of a hedge-fund portfolio – Austin racked up an impressive 32.6% gain. Remember, this "all weather" portfolio includes short positions and crisis hedges that can drag down the overall performance in a bull market.
But even holding shorts, crisis hedges, and cash... he still beat the S&P 500 index, which is long only. And Austin's performance more than doubled its actual benchmark – the Bloomberg Equity Hedge Fund Index. That's extraordinary.
The Report Card, of course, covers the full three years – which coincides with almost the same period for our core Portfolio Solutions products. (We launched February 1, 2017.)
That's what we are grading the results on today...
Since inception, The Capital Portfolio's average gains come in at 16.5% per year. That exceeds its benchmark... which showed average gains of 15.8% in the same span.
Because these are fully allocated portfolios, we focus less on the win rate.
That's because if you're using them the way they're designed... you're buying all of the positions in the proportions we describe. But even so, The Capital Portfolio's win rate over the three-year period was just shy of 60%. That's great for an aggressive portfolio that can suffer more volatility than our other two portfolios. For this year's grade, it earns an "A."
The Income Portfolio racked up a huge 67% win rate. But again, most important for us here is the average gain, which came in at 11.1% for the three-year period – also edging out its benchmark. The steady gains and low volatility also earn The Income Portfolio an "A."
Finally, The Total Portfolio had a solid 54% win rate over the three years, but its average gains of 13.1% impress me most. As I mentioned earlier, this portfolio holds short positions, crisis hedges, and cash as insurance against a market correction. Essentially, these hedges allow subscribers to sleep easy at night... but still participate in the raging bull market.
And yet... despite carrying these drags on overall performance... The Total Portfolio obliterated its benchmark – the Bloomberg Equity Hedge Fund Index – by more than double. That performance earned The Total Portfolio an "A+" for this year's Report Card.
Congrats to Austin, the investment committee, and all our Portfolio Solutions subscribers who have also enjoyed these gains. It's a solid performance. I'm more convinced than ever that these products are simply the best way for subscribers to maximize the quality of our research, while spending less time each month managing their investments.
You can sit back, relax, read each publication that corresponds to the Portfolio Solutions product you choose... at your leisure... and enjoy the opportunities to profit even more.
Now, on to our other portfolio-style products, starting with...
American Moonshots: A
We launched American Moonshots with one goal... to find stocks with "moonshot" potential.
Austin worked with our team of more than 30 analysts to uncover stocks that fit the bill. With their input, he built an allocated portfolio of 12 stocks. Over the following year, the Moonshots portfolio ultimately included technology, health care, industrial, and consumer products stocks (among others).
As with any speculative portfolio, a couple of positions didn't work out. But remember, this was a full portfolio approach. While we strive for perfection, we knew a couple positions wouldn't work out as we expected. However, we also expected the big winners would make up for any losers. And Austin quickly replaced any losers with other moonshot opportunities.
The biggest winner – a health care moonshot – almost tripled in value... returning 276% for subscribers in a single year. Another health care technology recommendation almost doubled (up 92%). Several others booked solid double-digit gains for the 12-month period.
Overall, the portfolio produced average gains of 26% in 12 months and edged out its benchmark – the S&P SmallCap 600 Index. That's worthy of an "A" for its first year.
True Wealth Systems' 'Melt Up' Portfolio: A+
You've heard it all before... but I will still say it again.
Steve has an incredible knack for getting the big themes right. As I mentioned yesterday, he has been bullish stocks for more than a decade. His message has never wavered.
When he walked out on the stage at our annual Stansberry Conference in Las Vegas back in 2015 and said, "Welcome to the Melt Up"... I'm quite sure a large portion of the audience thought he had been smoking something and was living in the clouds.
Steve backed up his claims in the True Wealth Systems issue that published within days of his presentation. And over the past several years, he has continued urging subscribers to take advantage of the opportunity in his flagship newsletter, True Wealth...
Soon, the mainstream media started using the term "Melt Up" everywhere... TV, websites, newspapers, you name it. The Melt Up was on, and everyone was claiming ownership to it.
Steve is far too modest to claim that he coined the phrase. But no one I know of came out as early as Steve with this huge call. And of course, as you know... the S&P 500 is up more than 50% since his initial presentation in Las Vegas. He has shared endless ideas with subscribers on how to take advantage of the final innings of the current bull market.
In October 2018, he launched an entire portfolio of stocks that he called the "Melt Up Portfolio" – a full portfolio of stocks he believed were the best ways to play this situation.
But then, the markets sold off in late 2018... leading to increased fear and volatility. Many investors started to question Steve's thesis. He even hit a couple of stops. However, Steve continued to believe this bull market still had some life... When he hit stops, he would get subscribers back in when he felt the fear was overblown. Again, this is where Steve excels.
Since launching the portfolio, Steve has earned average gains of 25% – with total returns of 50%. That's about double the S&P 500. I can't give away too many details today, but Steve has racked up huge gains in the software, telecom, tech, and biotech spaces.
This is truly an extraordinary performance. And it deserves an "A+" for this year's Report Card. Congrats to Steve and all his True Wealth Systems subscribers for their big returns.
Before I move on, you should know that Steve is adamant about the Melt Up. Despite the huge run-up in stocks over the past year, Steve recently told me there's more to come...
In fact, he believes there's a lot more to come. He's so excited that he asked us to put together a special presentation to explain why he's so certain the Melt Up is still in play.
Steve and his team have been working furiously over the past few weeks writing a special report to share with their subscribers. He's putting the final touches on it right now.
And on Wednesday, February 12 at 8 p.m. Eastern time, Steve will share his story on camera. He tells me he's going to give away one of his favorite ideas on the Melt Up... and he even invited a special guest to attend, too. You won't want to miss it.
Reserve your spot right here. I recommend you check it out.
Gold Stock Analyst: A+
The numbers say it all...
While we only began publishing Gold Stock Analyst in 2019, the publication has been around for decades. And therefore, we wanted to share the results in this year's Report Card.
John Doody – the publication's legendary founder and editor – and his analyst Garrett Goggin joined the Stansberry Research family last year. And we're delighted they did...
John has the best long-term track record of any gold analyst I know. From 2001 through 2018, his gold publication's gains totaled 530% – an average of 21.6% a year for 18 years.
That crushed gold, which climbed 363% over that period. The Philadelphia Gold & Silver Index (XAU) – which tracks a large group of mining stocks – is up 37% over that span. And as John often reminds me... even the S&P 500 is up just 171% over that 18-year stretch.
Last year, his GSA Top 10 model portfolio returned 62%. Gold was up roughly 19%, and the VanEck Vectors Gold Miners Fund (GDX) was up by 39%. These results are truly outstanding – especially in a volatile sector like mining. And over such a long period, too.
So how does he do it?
Well, John has built a massive database on all companies and mines around the world that goes back decades. He studied all the data and developed a proprietary strategy to select his GSA Top 10. He only holds 10 stocks at any given time – the ones he calls the "best of the best." John's stock-selection strategy includes a unique way of evaluating the business and determining what is a fair price to pay... and when subscribers should buy the stock.
It's clearly working. And like I said, we're thrilled that he decided to join us.
Over the three-year period, the GSA Top 10 generated average returns of 21.9% – beating the benchmark by almost 60%. GSA earns an "A+" in its first Report Card appearance.
Many of our analysts believe we're in the beginning of the next leg up in the long-term bull run in gold. We got a glimpse of that last year, with the price of gold rising nearly 20%.
Combine another run higher in the price of gold with John's incredible long-term track record, and I'm sure we'll be seeing more results like these for many years to come.
Silver Stock Analyst: A+
If you thought GSA was good, take a look at its sister publication Silver Stock Analyst.
For 2019, John and Garrett had an absolute bumper year. The Silver Stock Analyst Fave 5 portfolio made a massive 104% total return last year. By comparison, its benchmark climbed by half that percentage. Meanwhile, the price of silver rose about 15% for the year.
Similar to GSA, John and Garrett apply their strategy and only select five of the best silver companies on the planet. As with GSA, John and Garrett fill their monthly issues with loads of valuable data on the companies they're following. And when they find a new candidate for the portfolio, they bump one out so you only have to hold five stocks at any given time.
It has proven to be an incredibly successful strategy. Investors who have followed along with John and Garrett have booked mammoth triple-digit gains over the years.
For the three-year track record for this year's Report Card, the Silver Stock Analyst portfolio returned an incredible 31% average gain – more than double its benchmark. And like GSA, it earns an "A+" for its inaugural year in the Stansberry Research stable of products.
Congrats to John and Garrett on these incredible results over so many years. We look forward to publishing their work for many years to come.
Stansberry Gold & Silver Investor: B-
As you know, we launched our own gold and silver newsletter back in 2016...
We believed gold had bottomed in late 2015, and it was time for us to get into the sector. Our timing was spot-on. Gold stocks soared more than 150% between January and August. We caught a good portion of that trend by building out what we call the Hard Rock Portfolio. It's a diversified allocation of physical gold, large-cap miners, midsized miners, and what we call "gold in the ground" plays. We also sprinkled in a few juniors and exploration firms.
We designed the portfolio to give investors exposure across all parts of the gold market...
We wanted physical gold to lower the volatility we knew would experience with gold stocks. We also wanted exposure to some of the best mining companies for their "Trophy Asset" mines, experienced management teams, and steadier operations.
Meanwhile, we believed the midsized firms would either grow or be bought up by the gold majors. Finally, we wanted a few junior miners and exploration companies because if they land on something big, their share prices can shoot to the moon in no time at all.
It was the right choice... The Hard Rock Portfolio did everything we expected it to do – producing better-than-average returns in the volatile gold-mining sector, while lowering volatility compared with gold stocks.
To lead these efforts, we turned to editor Bill Shaw...
As I mentioned yesterday, Bill travels thousands of miles every year. He visits mines, interviews mining executives, and attends some of the world's best mining conferences.
Bill's "boots on the ground" research has proved invaluable in determining what's happening in the market and what it means for the Hard Rock Portfolio. Bill's efforts have helped him to identify some of the best investment opportunities in the sector. He also tracks several key macro indicators that helps subscribers stay updated on the outlook in the space.
Gold and silver stocks entered a choppy market in 2017, then suddenly fell by more than 20% at the beginning of 2018. You might recall from last year's Report Card that the sector decline dragged down some of our results for this publication, too. The portfolio's win rate dropped to 48%... and its returns trailed the benchmark. So we gave it a "gentleman's C."
Since then, Stansberry Gold & Silver Investor's win rate has improved to 58%. We love seeing solid improvement like that. And the total return for the three-year period is up to 29.6%. Unfortunately, that performance once again lagged the publication's benchmark.
As a result, Stansberry Gold & Silver Investor receives a "B-" grade this year.
Finally, in case you're wondering about grades for Cannabis Capitalist and The Defensive Portfolio... Because we launched these publications less than 12 months ago, we wanted to let you know that we consider them too young to have any meaningful track records.
But don't worry... we'll add them into the mix next year.
New 52-week highs (as of 1/30/20): Blackstone Mortgage Trust (BXMT), CBRE Group (CBRE), Quest Diagnostics (DGX), DocuSign (DOCU), Franco-Nevada (FNV), Invesco Value Municipal Income Trust (IIM), Ingersoll Rand (IR), Coca-Cola (KO), Lundin Gold (LUG.TO), Lonza (LZAGY), Microsoft (MSFT), Nuveen Municipal Value Fund (NUV), PepsiCo (PEP), Sea Limited (SE), ProShares Ultra Utilities Fund (UPW), W.R. Berkley (WRB), and Aqua America (WTR).
In today's mailbag, feedback on the first half of our Report Card and general thoughts about our annual grading exercise... Do you agree or disagree with our grades? Have a question or comment? As always, send us an e-mail at feedback@stansberryresearch.com.
"Brett, I think it is great that there is a self-assessment of Stansberry editors. After all, since the first grade we have all been provided progress reports. As we log years of experience, both an assessment by your boss, peers and audience contributes to the learning experience. Hopefully, the most critical and far reaching assessment is when you look in the mirror." – Paid-up subscriber Carey S.
"Fantastic. I still applaud your willingness to pull back the curtain and say, 'uh, there is a man behind that curtain.' Porter has not only done the unimaginable but he has honestly told his subscribers, me included, that many of us should not buy stocks and we may not do as well as we think or hope.
"I am an Alliance member and have been for years. The information and advice I glean from the various publications is 'priceless.' I do pick and choose and have positions in many of the newsletter recommendations. I have noticed that Porter's investing style has evolved over time and I see the improved grades. I think he is spot-on to tell us that investing may not be as easy as it appears.
"Kudos to Stansberry Research and EVERYONE who contributes and helps get the information out to us. Thank you. Yes, I am a better investor with all of the publications from Stansberry Research. One last thing, Dan Ferris got a not so great grade but he and I have many of the same concerns. His light will shine in its own time." – Stansberry Alliance member Mitchell F.
"This is such a great endeavor each year. It's unique and informative. You provide excellent detail on your process. Exactly what time frame you're analyzing, exactly what you are analyzing and what it is being compared to. All number-driven.
"What I don't see is the explanation of how it translates to a letter grade. For example, in school there would be a numeric scale. Anyway, it doesn't matter or detract from the presentation. It would just add to your 'method of your madness'! Great job. Look forward to [yesterday's] issue." – Paid-up subscriber John H.
"Seems a bit tough on Steve whom I have been following for several years. Despite selling a couple of his Melt Up picks too early, I am showing 1-year gains of 55.29% and annualized since purchase gains of 38%, which I track on Morningstar." – Paid-up subscriber Walter C.
Good investing,
Brett Aitken
Baltimore, Maryland
January 31, 2020
P.S. At midnight tonight, we're closing the doors to our 2020 Stansberry Portfolio Solutions "open enrollment" period. Until then, you can still join to get instant access to a fully allocated, ready-to-use model portfolio based on all the research we publish... and claim our never-before-offered performance guarantee. Get started right here.