The Rest of Our Report Card

Picking up where we left off... Lessons for long-term investors... The key to the 'quant winter'... How we grade our newsletters... The rest of our annual Report Card... Tell me what you think...

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Picking up where we left off...

Last Thursday, I (Brett Aitken) opened our annual Report Card... an exercise where I evaluate and critique each of our newsletters and other services.

I started by pointing out key lessons that all investors can learn from the "quant winter" that folks like AQR Capital Management's Cliff Asness endured from about 2017 to 2021.

After four brutal years where funds that followed Asness' style of investing almost uniformly underperformed... the funds are starting to profit again.

I believe the turnaround offers important lessons for long-term investors of all kinds... including individual investors. I won't regurgitate the whole story today. If you missed last week's issue, I encourage you to read it here. As I declared last week...

We're all quant investors and always have been.

The important thing to remember is that Asness' approach – called "factor" investing – uses sophisticated algorithms to examine lots of long-term data to isolate the forces (or factors) that cause some investments to beat the market over time. And he uses sophisticated computer systems to identify promising investments.

And what are the basic forces that factor investors focus on? Value, momentum, quality, volatility, and size. As I said last week, "We're betting those factors sound pretty familiar to most Stansberry Research subscribers"...

The key to the 'quant winter' story is the timeline...

The terrible stretch of underperformance by factor-focused quantitative investors coincided with a historically bad period for value investing. It was so bad that it undermined not just investments based on valuation... but it any strategy that even accounted for value.

But the thing is, these factors are long-term drivers of success. These are enduring forces... but you have to stick with them over the long term.

That's why I wanted to share the quant-winter story. I believe that as we go through our services' performance, you'll also see how focusing your investments on these big factors – value, momentum, quality, volatility, and size – eventually pays off.

On to the grades...

Here we go...

I know this part of the Report Card always attracts the most attention from our subscribers.

You see, some people misunderstand our grading criteria... or simply don't agree with it. Based on some of the feedback I've read over the years, some seem to think we "cherry pick" the results so they look better.

Nothing could be further from the truth. The very purpose of our Report Cards is to provide a fully transparent, honest look at which of our publications are performing well – and which ones are not.

So I consider it my responsibility to explain how we grade the traditional newsletters we publish... given that we evaluate them differently from the portfolio products and short-term-trading services we covered last week.

Here's the reason...

Products like our Portfolio Solutions or Gold Stock Analyst portfolios are risk adjusted and fully allocated. They're managed as a collective group of holdings, like a hedge fund or a mutual fund. So as with those professionally managed funds, it's easy and logical to consider our portfolios' short-term and long-term performances. We graded them for both one-year and five-year periods.

Meanwhile, our short-term trading services typically get in and out of each position quickly. That means that a single year covers a large number of trades... and that most of those trades were opened and closed within a single year. So here, too, we can grade one-year performance (how the service performed most recently) and five-year performance (how consistently the service performed over the long term).

Our traditional newsletters' model portfolios don't work the same way. They're names on a list... a collection of individual stocks that editors have recommended buying, based on a particular theme, philosophy, or other judgment calls.

They're not the equivalent of a risk-adjusted allocated hedge fund, like our portfolio products. And most of them choose stocks for the long term, unlike our trading services.

Most of our newsletters make a new recommendation every month, and these recommendations won't have time to play out before the next year's Report Card. It wouldn't be fair to judge only those stock picks already. And it could penalize newsletters that provide the most value to subscribers... since our goal is to help subscribers grow their wealth over the long term.

So we only grade these newsletters during a defined period of years, not months. This year, we chose a five-year window. I'll still mention how the newest recommendations are performing so far, and they factor into each publication's five-year average, but I won't issue a grade based only on 2023 performance.

The specifics of our grading are covered in the gray box below.

As I mentioned last week, this five-year window represents a period when the market climbed roughly 85%... yet experienced two sharp declines – the 35% collapse in stocks during the COVID crash of 2020... and the roughly 25% decline during the bear market of 2022. For us, that is a good test to see how well our analysts and editors can navigate both bull and bear markets.

Rest assured, our aim is to be as transparent as possible. So even if you don't agree with my grade... we provide you with the results so you can easily assess the performance of each publication and assign a different grade if you choose. As always, I appreciate your feedback.

Please remember, we want to help our subscribers become better investors. I know some people buy our products looking for hot tips. And yes, we might hit a home run or two in any given year. But our goal is to help subscribers succeed over the long term. That means years – not weeks or months. Subscribers will only benefit from our work if they are able to stay with us long enough to learn the strategies and see our investment ideas run their course.

With the details out of the way, let's get started...

Stansberry's Investment Advisory: A+

Our flagship publication has been on a roll for several years now...

With a 55% win rate and average gains of 23%... the results speak for themselves.

The Investment Advisory not only beats its benchmark, the S&P 500 Index, by a wide margin... but it should make everyone not reading this publication already want to subscribe.

I understand my bias here. And I know this Report Card only covers the past five years... But you should know that this team has been churning out outstanding results for more than a decade.

I know some of you will be itching to know how their recommendations did last year... In 2023, they had a 67% win rate and average gains of 10%... trailing the benchmark by a mere percentage point.

But remember, these 2023 picks are still fresh. As we have seen over the years, the average gains tend to trend higher – in some cases, much higher – as the investment thesis plays out. For example, in 2012, the average recommendation was down 1.6% for the year. Today, the average gains for those same recommendations are more than 110% – about 50% better than the benchmark. I know you will get tired of hearing me say this... but patience is key.

I won't get into too many specifics on actual stock recommendations. But let me explain why I believe this publication is so unique...

Last week, I mentioned in Part I of the annual Report Card how capital efficiency has been the cornerstone strategy of this publication since our founder Porter Stansberry introduced the concept back in 2007.

The team currently holds nine stocks in the "Capital-Efficient / Global Elite" category of the open portfolio. The biggest winner among them is software giant Microsoft (MSFT) – a 13-bagger – currently up by a whopping 1,313%.

Five other positions are triple-digit winners ranging between 112% and 474%.

The position showing 112% gains is a play on the hot semiconductor market. And no... it's not Nvidia (NVDA), Intel (INTC), or any other chipmaker you might think of. The unique thing about it is... it has a monopoly within the sector that I bet few know about.

Emerging technologies like artificial intelligence ("AI") mean we will need more power and storage... and it's unlikely to happen without this company's technology. The stock has more than doubled in barely a year – with plenty more gains ahead, too.

Looking across these holdings, my bet is that some of these will also turn into 10- or 13-baggers over the next several years. In other words, investors haven't missed the boat. Some of these stocks are still buys at current prices. The one loser in this category – if you can call it that, given its minuscule 2% decline – is essentially flat. My bet is that it too will go on to produce triple-digit gains from here.

The average gain across all nine capital-efficient positions as of today is an impressive 307%.

Aside from the tremendous gains you could have booked by following these recommendations... as an Investment Advisory subscriber, you would have also received a wonderful education about capital efficiency and why buying these fabulous businesses at the right price can make you enormously rich.

Another area this team excels is property and casualty (P&C) insurance. The team has built a proprietary monitor that analyzes all P&C insurance companies in America using several different factors.

They analyze underwriting discipline, investment returns, growth (float and book value), and how well they look after shareholders. I'm not aware of anything like it in the industry. And their success rate when they pull the trigger to recommend one of these companies is impressive.

The team's biggest gains from an open P&C position belong to W.R. Berkley (WRB) – up 732%. Until last week, the team held six insurance stocks with an average gain of 208%. And on Friday they added a seventh – a company they have waited 16 years to recommend buying again.

I won't go into detail on every strategy the team covers. But just know that they also include energy stocks, crisis hedges, investments that will protect against inflation, "gatekeepers of the financial markets," and some more speculative plays.

Even beyond the incredible results... no other publication on the planet will provide a more thorough and robust education to investing.

At the helm of the flagship publication is former hedge-fund manager Whitney Tilson, who joined us last November. And he has a world-class team of senior analysts working with him – Alan Gula, Bryan Beach, Mike DiBiase, Bill McGilton, and Dave Lashmet... all of whom have been with us for years. I'm happy to see them earn an A+ on this year's Report Card.

True Wealth: C

Longtime subscribers know the mantra for this service: cheap, hated, and in an uptrend.

Over the past two decades of publishing True Wealth, Brett Eversole and his team have lived by this philosophy to find profitable, low-risk investment ideas that are ideal for retirees.

Brett and his mentor, Steve Sjuggerud, have always applied a "top down" approach to identify assets that are generally out of favor (and sometimes outright hated)... but which are already starting to recover. Plus, they often find a "one click" way for subscribers to invest in the idea... either through exchange-traded funds ("ETFs") or plays on a large-cap stock in the sector they've identified.

Since launching the publication in 2001, they have booked a 54% win rate and average gains of around 15% – practically the same as the benchmark S&P 500 Index.

Now, for this year's Report Card, we're evaluating only the past five years.

Some of True Wealth's biggest triple-digit gains came from a technology play in 2020 that yielded a 212% gain. Brett also nailed the bottom in oil prices in 2020, and he's currently up 122% on a low-risk way to play the trend...

The bear market of 2022 was tough on everyone. And Brett didn't escape the carnage. Even though the win rate dipped below the long-term average – which is expected in a brutal bear market – he managed risk well by following his stops and keeping losses to a minimum.

There's one thing to keep in mind with a top-down, trend-following approach, which I've mentioned before in these annual Report Cards... True Wealth will often hop into trades too early... and get kicked out once or twice before the trend takes hold.

The good news is that when a trend they've gotten on finds traction, the gains can compound quickly. The downside is that in a bear or choppy market like we saw in 2022, I expect their win rate to get knocked around a little.

Still, even with the volatility of 2023, Brett managed to nail plenty of winners for the year – with nine of his 14 recommendations (64%) being profitable.

Among them was a very profitable way to invest in the AI trend. But rather than follow the crowd into Nvidia – the poster child of AI – Brett found a cheaper way to profit from the AI boom. Subscribers who followed his advice are sitting on 64% gains in less than six months.

He's also up more than 50% on another tech play... and is sitting on a couple other high-double-digit winners that he believes could hit 1,000% gains over the next decade. The early signs certainly look promising.

While those recommendations will no doubt play out over the coming years, this year's Report Card is about the last five years' performance. With the market downturns in 2020 and 2022, True Wealth saw fewer winners and its average gains trailed the benchmark S&P 500. That earns it a C for this year's Report Card.

I know Brett will be disappointed with the grade. But as we have seen in 2023, he and his team have already put the losses of 2022 behind them. And if the bullish momentum continues as he and many of our analysts expect (albeit with some volatility), the True Wealth team will continue to find profitable, low-risk, undervalued assets that no one else is covering.

Retirement Millionaire: B

Nobody has a better long-term batting average than Dr. David "Doc" Eifrig.

And true to form... he does it without taking any big risks. In Retirement Millionaire, Doc routinely recommends stocks with sound financials and strong balance sheets that are trading at reasonable prices.

Since 2008, when Doc launched this publication, he has racked up a 72% win rate with average annualized gains of 17%. Few investors on the planet can boast such impressive results over a 16-year period.

Still, as I want to keep reminding everyone, this year's Report Card is about the past five years.

And unfortunately for Doc and his team, Retirement Millionaire still feels the pain of the 2022 bear market.

Most of the losses came from their 2021 picks. Still, they took advantage of rising oil prices in 2021 by booking a double (a 103% gain) on Continental Resources. Plus, a 2020 recommendation was sitting on a double at year-end (it has since climbed up to 139% as we go to press). They also saw a 150% gain on a telecommunications company... as well as several double-digit gains throughout the period.

But several of their picks from 2021 took double-digit beatings that dragged down the performance for this year's Report Card.

The good news is that several of their 2022 picks have performed well... with plenty more runway ahead of them. The capital-efficient software company Adobe (ADBE) has more than doubled, and several smaller winners still show great promise.

With a 59% win rate and average gains of almost 12%, most investors would be more than satisfied with the results. However, because these results lagged the benchmark S&P 500 for the period, it earns Doc a B for this year's Report Card.

I know this grade will sting for Doc and his team. But like I have said before in these pages... Doc is super competitive. I have found anything less than an A is normally a huge motivating factor for Doc. So I wouldn't bet against him.

After the challenges of 2022, Doc has already started racking up the gains. In 2023, 83% of his picks were winners. You can bet those average gains will start compounding from here.

And in line with my constant reminder that investing is a long-term endeavor... Retirement Millionaire is like a compounding profit machine.

Stansberry Innovations Report: A+

As the name suggests, this publication covers all things (investment-wise) relating to innovations.

John Engel is the lead editor on equities (stocks)... and Eric Wade leads all things blockchain and cryptocurrencies that we cover in the Crypto Corner.

First, I'll cover John's stock picks...

And last year deserves special mention. With a 90% win rate and average gains of 25.3% in 2023, it was a mammoth year for John... more than doubling his benchmark, the S&P 500.

Without giving too much away... his biggest winner was a cybersecurity play he recommended in March that soared with the year-end rally, logging an 80% gain through year-end. With a 90% win rate, it's tough to find many faults for the year.

The one blemish on 2023 is an AI play that unfortunately dropped out of the gate. John has held on so far with a strong conviction in the business moving forward. It's capital efficient, has strong financials, is trading cheap (with a solid Stansberry Score), and has a partnership with social media giant Meta Platforms that should propel sales moving forward.

Still, this year's Report Card is about the five-year track record.

Once again, we've seen excellent performance for the period... although it didn't come without stress.

As you know, 2022 was a challenging year for even the greatest investors. And this publication faced its own challenges. With the sharp decline in the overall market, the win rate for John's 2022 picks dropped dramatically.

While a couple of those may bounce back, John has mostly cut his losses and moved on. Fortunately, he was able to offset some of these losses with big gains on music streamer Spotify Technology (SPOT), which was up 95% at year-end... and has since climbed to a 150% gain as we go to press.

John has seen big triple-digit winners across a diversified range of industries, from gene-editing companies like Intellia Therapeutics (NTLA) to advertising platform The Trade Desk (TTD), among others. If you are looking for a way to successfully invest in a wide array of technology stocks... this service is it.

With a 63% win rate and 29% average gains, John edged out the benchmark's 27% average gains for the period and earns an A+ for this year's Report Card.

Now for Crypto Corner...

Here, Eric – who's also the editor of the Crypto Capital newsletter I'll discuss later today – mostly covers high-level industry activity and trends in the cryptocurrency sector. However, he has recommended a handful of crypto positions since 2020... starting with the blue chip of cryptos: bitcoin (BTC).

Since Eric recommended bitcoin to Innovations Report subscribers in 2020, the position is up more than 370% as of the end of 2023. And if you're following Eric in Crypto Capital... you will know he believes huge gains are ahead as he remains super bullish on the sector – including bitcoin specifically.

Since the Crypto Corner portfolio holds just a few positions, I won't name the rest of its holdings in fairness to paying subscribers. One position is showing large gain while a couple of the others are still underwater... although Eric remains bullish on their long-term potential.

The Crypto Corner portfolio is showing average gains of 140% versus 28% for the S&P 500. While it won't have its own line in our Report Card table, this is another A+ performance.

The Ferris Report: B-

Navigating the turbulence of global trends is no easy task.

And it has become even more difficult over the last couple of years with the bursting of the "everything" bubble in 2022... higher inflation... and higher interest rates. While the market has plowed higher in recent weeks, some believe we may see a sideways market for several years.

In this publication, editor Dan Ferris' job is to take a top-down approach to navigating the biggest trends in the economy and make conservative recommendations that will both preserve and grow your wealth throughout these volatile times. For the most part, Dan will recommend large-cap stocks or ETFs that hold a basket of stocks to invest in his theses.

We launched this publication in December 2022. So it doesn't have a full five-year period to evaluate. For this year's Report Card, we will use the track record since inception.

While it's early for this service, Dan got off to a great start with seven of his eight 2022 recommendations showing gains through the end of 2023. And last year he made several recommendations that are showing high double-digit gains in just a few short months.

Out of respect for paying subscribers, I won't give away too much... But for example, he saw upside in uranium and recommended a uranium stock that's up more than 70%... He also has a couple of housing plays that are up 58% and 44%.

Importantly, Dan has managed risk. At year-end, he had only closed out two positions, each for minor single-digit losses. And trailing stops will protect him from facing oversized losses in other open positions.

Given that the portfolio is barely a year old, many positions will need more time to play out. The win rate and average gains of 8% are a solid start. But due to average gains lagging the benchmark, we are awarding Dan a B- for this year's Report Card.

Before we move on, you should know that Dan provides some additional invaluable insights in this monthly publication.

Aside from actionable stock recommendations, each Ferris Report issue covers at least one important market development plus a "chart of the month." That could be a macro or micro trend he is looking at for opportunities to invest in... or places to avoid.

Enjoy... we're excited for subscribers to see what Dan can do with this service. But based only on performance to date, the grade is a B-.

Commodity Supercycles: B

It has been a brutal ride for commodities investors.

Aside from a couple of relatively short-lived bull runs... the last 17 years have tested even the most patient of investors. The Invesco DB Commodity Index Tracking Fund (DBC) – which includes exposure to a variety of commodities – is about flat with where it sat in March 2006.

Still, as any seasoned commodity investor will tell you... when you hop on one of these bull runs, the gains can be extraordinary. Consider the stretch between March 2020 and May 2022. Oil soared sixfold from less than $20 to more than $120 per barrel. Copper more than doubled – going from barely $2 per pound in March 2020 to almost $5 two years later. The DBC fund went from $11 to $30 by June 2022. You get the picture.

Commodity Supercycles took advantage... Not surprisingly, some of the bigger gains have come from the energy space.

Natural gas exporter Cheniere Energy (LNG) has done well – showing 151% gains at year-end. And owning mineral rights has proved profitable for shareholders of Black Stone Minerals (BSM) as it closed the year at a near double. In addition, the portfolio benefited from a double in a uranium play.

Other stretches were challenging... notably in 2019 and 2022. As commodities prices declined across the board, it was difficult to find winners. Last year's recommendations were sitting about flat at year-end – with a 55% win rate showing a small 2.5% average loss for the year. As with many of our newsletters, these new recommendations will need time to play out their potential.

For the purposes of this year's Report Card, fortunately, 2020 and 2021 in particular was a boom time that made up the lost ground of the prior two years.

With a win rate just shy of 50% and average gains of 6%, edging out the benchmark – the Bloomberg Commodity Index – by a couple percentage points, Commodity Supercycles earns a B for this year's track record.

By the way... we've just welcomed Whitney Tilson as lead editor of Commodity Supercycles. He will work closely with analysts Bill McGilton and Brian Tycangco to share market insights and investment opportunities in the commodities sector.

Extreme Value: A+

Prepare... don't predict. And never pay too much for a stock – even if it's a great business.

That is Dan Ferris' mantra.

And it has served his Extreme Value subscribers well over the past five years.

When looking through the dozens of recommendations for the period... one word that sums up Dan's performance over the five-year period is consistency.

Except for 2022 – which we can all agree was a tough year – his yearly win rates are all 50% or better. He outperformed in 2020 when 75% of his picks were winners with average gains of 70%. There is no other way to describe it... It's outstanding stuff.

Among his big winners that year was bitcoin, which he closed out two years later for a 190% gain. He has done even better with trucking company TFI International (TFII)... up 266% at year-end and still open.

The only real outliers on the downside are a couple of larger-than-normal losses (for Dan) for the period. He booked a 69% loss on PayPal, which Dan recommended after the stock had already declined by a third from its 2021 highs... only to see it continue to plummet from there. And he took a 57% loss on a cannabis play in 2022.

Overall, Dan's portfolio has remained solid and steady for the past five years, earning him an A+ for this year's Report Card.

While we have not graded it separately... it would be remiss of me not to highlight the outstanding performance of the Ultimate Commodity Hypercycle Portfolio that is available to Extreme Value premier subscribers.

Dan released this portfolio last March. He recommended seven positions. Five are showing gains so far. One has nearly doubled, while another is up 80%. The two losing positions are down 16% on average, and the average gain across all seven positions is 29%. I hope subscribers took advantage of this portfolio and are enjoying these gains.

Select Value Opportunities: A

We rolled out this service to Alliance members in August 2022...

Select Value Opportunities is a proprietary value monitor developed by analyst Mike Barrett – who also works with Dan Ferris on Extreme Value.

The monitor evaluates 100 of America's leading companies and places a price relative to value for each. It considers several factors such as cash flow and growth risk (among others)... then places a grade on each stock. It could be undervalued, overvalued, or fairly valued. Many of the stocks covered are familiar names... like Apple (AAPL)... Hershey (HSY)... or Microsoft.

Alliance members have direct access to Select Value Opportunities on our website. The top five undervalued and top five overvalued stocks appear right on the publications page. And below that you will see the portfolio of stocks Mike has recommended.

Mike sends an update each week with his findings. Sometimes he makes a recommendation... Other times, it's market commentary or a portfolio update.

Given we only launched this service in 2022, it doesn't have the full five-year period to evaluate. So we will use the track record since inception.

Mike has made 32 recommendations. At the end of 2023, 18 were winners for a 56% win rate and average gains of 11.3% – almost doubling the benchmark S&P 500's 6.6% average gains.

Select Value Opportunities is off to a great start... and earns an A for this year's Report Card.

True Wealth Systems: A

Identifying strategies with market-beating returns while taking less risk is our primary goal in this service.

Longtime subscribers know that more than a decade ago, we took the "top down" strategies of True Wealth... and applied a lot of computer power to systemize their strategies.

By applying quantitative analysis to more than 120 years of data, we developed a system that would not only spot emerging trends in the markets... but also identify the best ways to invest in them with amplified returns.

Since launching in 2011, True Wealth Systems has generated average annualized gains of more than 20% compared with 15% for the benchmark S&P 500.

Naturally, every year brings new challenges. And last year, the service's returns were about flat – with a small 1% loss.

As you know, many analysts are calling for another year of volatility like 2022 and 2023. But even if that's how the year plays out... editor Brett Eversole remains optimistic and is betting on America for the longer term. And that is where True Wealth Systems is most effective.

When the TWS computers catch a trend... our system will keep Brett and his team in the trade for the long haul – like the 161% gain they booked on semiconductors when they closed the position in 2022 or the 249% gain they grabbed from a leveraged tech fund.

They took a hit in a couple of emerging market plays as well as a couple of energy bets that went against them for double-digit losses. And the choppiness of the recent markets has knocked down their win rate a little.

You see, sometimes the system will get them in early, but then kick them out of the trade before the big trend hits. As always, managing risk is key. And they cut their losses short. The big gains more than make up for the small losses along the way. You just need to be patient.

I'm not too worried about a flat year in 2023. A number of those positions remain open and have plenty of runway ahead should the trends stay in place.

Even with a couple of negative or flat years... True Wealth Systems has proven to outperform over longer periods.

With a 51% win rate and 13% average gains, it beat the S&P 500's average gain of 10% and earns Brett and his team an A for this year's Report Card.

Stansberry's Credit Opportunities: A+

It's one of the most comprehensive... yet safest research services we publish.

I know I'm biased. But this is among my favorite investment strategies.

There are no sure things in the financial markets. But paying 80 cents for a dollar... with the confidence you'll be made whole at a specified date in the future... and getting paid while you wait... seems like a pretty good deal to me.

That's the potential in corporate bonds... where the market's worries about a company can leave its debt trading at a discount.

When the market is wrong, buying bonds at a discount can produce equity-like gains from the safety of fixed income... Of course, if companies go out of business, bondholders, like stockholders, can face steep losses.

So as with any investment endeavor... you must do the research.

And Stansberry's Credit Opportunities editors Mike DiBiase and Bill McGilton are a formidable research team.

The starting point for our team is at around 40,000 bonds. They then apply their quantitative metrics to whittle the list down to just a handful... then dive deep into the financials of each company... and legal documents to understand all the legal jargon before they decide if the bond looks "money good" – meaning the company will pay 100% of the principal at maturity or sooner.

Their methodology has proved successful.

Year after year, this service produces a high win rate... with steady double-digit annualized gains. That's likely more than most investors make on stocks – at least consistently.

Yet only about 2% of our subscribers take advantage of it. Maybe they find it too boring... or they don't realize you can buy bonds online these days. (True, it's still a little extra work compared with buying stocks, but you should know that buying bonds has become much easier in recent years.)

It's worth the effort... Investing in boring bonds can make safe double-digit annualized gains. Now, if you want the excitement of options or cryptos making you quick triple-digit gains or more, this is not for you. But it also doesn't come with the stress.

Here's why bond investing is different from stock investing... At a given date, a company is legally required to pay full par value to redeem its bonds – whether you bought that bond at a discount or not.

It's binary... Unless a company defaults on its debt, you'll collect all of the promised interest payments each year plus the full amount of the principal ($1,000) on each bond at maturity. And even if a company goes bankrupt, bondholders often recover some of their principal, while stockholders normally get nothing.

Sometimes the discount they get on the bond means Mike and Bill can boost their total returns to high double digits... like the 38% gain they booked with postage-meter maker Pitney Bowes.

They'll also often sell bonds as soon as market sentiment recovers, helping them collect their profits faster than waiting for a bond to mature – with Pitney Bowes, they made this profit in a single month rather than holding another three and a half years for the bond's maturity.

Other times, when the opportunity exists, Mike and Bill will recommend allocating some money toward a company's stock to boost returns. They have done this successfully with a 34% gain on Forum Energy... and a 23% gain on company Coeur Mining.

This is high-quality research at its best. Period.

Now, because of the binary nature of bonds, we only grade Credit Opportunities' closed positions in the Report Card. That includes winning and losing positions (yes, we do close losing positions). But even factoring in open positions, the newsletter beats the benchmark with a 77% win rate and average annualized gains of 5.8% versus 5.3% for their benchmark, the iShares iBoxx High Yield Corporate Bond Fund (HYG).

For the closed positions alone, Mike and Bill have an 84% win rate over the past five years and average annualized gains of 13.8%... more than double their benchmark. Stansberry's Credit Opportunities earns an A+ for this year's Report Card.

Stansberry Venture Value: C

Small-cap stocks will test your nerve... and patience.

Consider the Russell 2000 Index of small-cap stocks. It's up roughly 27% over the past five years. But along the way, it suffered a 40% decline before soaring nearly 150%... then dropping by a third again and entering a sideways market for more than 18 months.

And that's the index. Individual stocks can suffer way more volatility. Amazon, for example, has fallen more than 50% four different times since it went public in 1996... including in 2022, when it was already an established trillion-dollar company. Most people can't stomach it.

Amid the volatility is tremendous upside...

I've spoken before in these pages about the opportunities to make huge life-changing gains in small stocks. Among them is the obvious... that large, successful companies started small. Another is that small-cap stocks tend to fly under the radar. Few institutional funds are investing in such tiny companies, so they're covered less by the Wall Street pros. That creates opportunity... and it's great for retail investors like us.

Editor Bryan Beach knows this better than most.

In Venture Value, Bryan is generally looking for value in what we call "regular" businesses. And they can come from various industries. For example, he has recommended a landscaping business... an operator of concrete-pumping equipment... software companies... health care operations... and insurers, just to name a few.

While Bryan sometimes recommends tech-related companies, these aren't speculative tech or biotech investments (like we make in Stansberry Venture Technology). These are small, steady businesses that can scale.

Over the past five years, Bryan has enjoyed large double-digit gains in regular businesses like The Joint (JYNT) – a chiropractic franchise enterprise – and specialty retailer Tile Shop (TTSH).

But when the bear market of 2022 started to gain momentum... it clobbered small caps. And some of Bryan's recommendations took severe beatings.

I know Bryan is disappointed with the five-year results. But things are already turning around. Despite the sideways market for small caps in 2023, the Venture Value portfolio saw an improved 57% win rate for the year and average gains of around 3%.

While that lagged his benchmark, the Vanguard Small Cap Index Fund, these recommendations are obviously still new and have not yet had time to play out. I'm sure we will see those average gains climb over time.

And from what I'm hearing from a number of analysts at Stansberry Research and beyond, market conditions look promising for small caps. Bryan, too, is confident in the potential for larger double- and triple-digit gains across the portfolio.

Again, patience will be key.

Still, with a 52% win rate and average gains of just 1.4% over the past five years, Venture Value earns a C for this year's Report Card.

Stansberry Venture Technology: B

As the saying goes... "You can make enough to retire if you can get just one bull market right in biotech."

The gains can be astronomical. But boy, it's super tough to navigate.

I know this year's Report Card covers five years. But humor me for a moment... Look at the SPDR S&P Biotech Fund (XBI) over the past decade. It's full of booms and busts.

I won't get into every move... But it regularly doubles only to collapse by 50% or more. It is arguably the most difficult space in the equities market to navigate.

And that's the index with hundreds of different companies. Individual stocks can skyrocket hundreds and thousands of percent... making investors rich along the way. Others can plummet and wipe out every penny you poured into the stock.

To find the huge winners in this sector, you need an expert in your corner. And you must manage risk to survive the inevitable collapses.

As I've mentioned before in these pages, editor Dave Lashmet is the only research analyst I know who consistently found triple-digit winners in this roller-coaster market of biotech and tech stocks.

Since 2014, he has recommended 97 stocks. At the end of 2023, 55 of them have been winners – for a 57% win rate. That's good. Even more impressive, Dave recommended 31 stocks that rose by triple digits or more.

In other words, roughly 1 in every 3 of his recommendations goes on to double or better in value. That is extraordinary stuff... especially for this sector.

He has two Stansberry Hall of Famers (which you can see at the bottom of every Digest mailing). His biggest winners were tech giant Nvidia (NVDA) – which sits at the No. 1 spot with 1,466% gains – and biotech innovator Inovio Pharmaceuticals (INO) with a 1,139% gain.

Now, as with most editors, the bear market of 2022 left its mark on Dave's recommendations – for the most part, his picks from 2021. Several of these stocks took heavy double-digit losses in 2022 and dropped his win rate below 50%. Average returns fell negative for the year, and these results weighed on the overall performance for the five-year period.

For the past couple years, the biotech market has moved sideways... and some analysts believe we're about to see another boom. If that's true, it bodes well for Venture Technology subscribers.

Dave's recommendations for 2022 and 2023 are already showing promise that they'll match his historical track record of finding double- and triple-digit winners.

For the purposes of this year's Report Card... Venture Tech produced a 53% win rate and average gains of 20% for the five-year period we're evaluating. Most investors would be thrilled with those results. However, because it lagged the S&P 500, Stansberry Venture Technology earns a B for this year's Report Card.

Income Intelligence: A

It is the least stressful of all investing.

I know people won't touch income investing because they think it's too boring. But I wouldn't be doing my job unless I highlighted just how good this service is. Year in, year out... Doc Eifrig and his team produce solid gains with very little risk.

I'm not suggesting you will find the Income Intelligence portfolio full of triple-digit winners. But you will find it full of big, safe companies with healthy yields generally ranging between 2% and 7%... that will produce high double-digit gains over the years. And most important... you won't find any portfolio-wrecking losers.

It's the perfect "sleep well at night" approach to investing. Everyone should allocate at least a portion of their capital to this strategy.

Plus, Income Intelligence also has its share of big wins... Doc booked a 76% gain on the Swiss luxury-goods company Richemont (CFRUY). And he and his team were sitting on an 88% gain at year-end on the retailer Home Depot (HD).

By now, you've heard repeatedly that 2022 was challenging for all investors. And Doc and his team struggled, too. But even though Income Intelligence's win rate declined that year, by the end of 2023, they had contained losses to a mere 8% for the picks. Again, risk management is key to their success.

And in 2023, they had a bumper year with 81% of their new recommendations already showing gains, and an average 9% gain across these new positions (including the ones that were down). Those are impressive results for such a short period. And it bodes well for subscribers to the service.

A 61% five-year win rate and average gains of 7.1% edged out the benchmark (the Vanguard Wellington Income Fund) and earns Income Intelligence an A for this year's Report Card.

Before we move on...

Aside from the safe and steady gains Doc and his team produce in these portfolio recommendations... they also provide invaluable economic insights through their Income Investor Dashboard. They track various prices and statistics in the Inflation Monitor... highlight where the best yields can be found... and share which groups of income securities are overvalued or undervalued.

Every retiree should be reading this publication.

Prosperity Investor: D

I know this one will sting for Doc and his team.

Fortunately, 2023 saw an improved performance... which I'll get to in a moment.

If you're not already familiar with Prosperity Investor, it's a publication that we launched in July 2022. It combines Doc's experience from his careers in finance and medicine, and applies them to a sector that he says is poised for an unstoppable boom... health care stocks.

But first, let's address this year's Report Card... And Doc and his team got off to a rough start.

First, many of their early recommendations declined... Then they added to the problem by failing to cut their losses short. That's poor risk management. Too many big double-digit hits will weigh on any portfolio.

The encouraging thing is that despite the bumpy start... the portfolio is starting to turn around. Some of the initial positions have recovered, and some newer recommendations are already up double digits... and look like they have the potential to continue climbing.

Because the portfolio is still relatively new and small, I don't want to give away too much here out of respect for paying subscribers. But as I write, one company in the open portfolio has more than doubled... while another is up 68%.

Last year, 83% of Prosperity Investor's recommendations were up – showing average gains of almost 10%. That's a great win rate, and the average gains are just 1.5 percentage points off the benchmark... the Health Care Select Sector SPDR Fund (XLV).

Of course, these stocks are recent additions to the portfolio, so it's too early to expect big gains yet. But early indications look promising and a good sign that they're getting the portfolio on track toward making profits for subscribers.

Still, the Report Card is based off what we know for the full period at year-end. And unfortunately, Prosperity Investor underperformed compared with its benchmark. The much better 2023 stock selection improved the win rate dramatically. Even though the average position's 3% loss is not catastrophic... it did lag its benchmark... and therefore earns a D for this year's Report Card.

I know Doc is fired up about this poor performance.

As I've mentioned, I've seen this competitiveness in Doc before. And believe me, I wouldn't bet against him. The past several months of 2023 are a promising start. I expect we will see much better results – and grades for this publication – moving forward.

Crypto Capital: A+

Editor Eric Wade continues to knock it out of the park.

His track record at finding promising, little-known cryptocurrencies speaks for itself. Crypto Capital saw a 57% win rate and average gains of 157% over the past five years – beating the benchmark (bitcoin) by 3,600 basis points, or 36 percentage points.

The crypto field is known for wild speculations and guesswork... Eric's sustained performance proves the value of his research and analysis.

And if you're interested in how he did last year in particular...

In 2023, he made 12 recommendations, and 11 of them were winners as the year came to a close – a 92% win rate. The average gains were 103%... more than double the benchmark (bitcoin) that gained 45%.

To recap what happened in 2022... you might recall I mentioned in last year's Report Card that his picks for that year (2022 only) were down 14.6% on average. We have seen that average deficit return to essentially flat (down 0.4%) at the end of 2023. It's another reminder of why we must do our research... and exercise patience.

There is no doubt that when it comes to blockchain and crypto... there is no one I would rather have on our team.

Eric has four Stansberry Research Hall of Fame positions (remember, you can find these at the bottom of every Digest mailing). His top position – Band Protocol – closed for a 1,169% gain. And because he has so many open positions that are 10-baggers or more, we opened a separate table of top five open recommendations just for his crypto picks. His top open position is showing more than 2,050% gains so far.

I'm convinced the main reason for Eric's success is his profound knowledge and understanding of the industry. Eric is an entrepreneur at heart and has a background in finance. That serves him (and his subscribers) well in understanding the business case for the cryptos he is recommending. And it shows in his track record.

There are still plenty of skeptics of blockchain technology and its applications. But it's gaining more and more acceptance each year. Naturally, Eric is excited and incredibly bullish on the sector. And with bitcoin currently up by more than 20% off the January 2024 lows... I expect Eric is heading for another bumper year.

Crypto Capital earns an A+ for this year's Report Card.

This concludes our 2023 Report Card...

Like every year, I wanted to share my take on the services we provide you, our subscribers... and to provide you with the numbers so you can decide for yourself if my critiques were fair.

As I said last week, I welcome your thoughts as well. Whether you think I'm spot on... too lenient... or too harsh... I'll read every e-mail.

Finally, thank you for being a Stansberry Research subscriber.

You allow us to do exactly what we love doing... which is provide high-quality investment research.

We are passionate about the work we do... and always strive to add value to your membership.

We appreciate the trust you place in us to help protect and grow your wealth.

New 52-week highs (as of 2/7/24): AbbVie (ABBV), Autodesk (ADSK), ASML (ASML), Grupo Aeroportuario del Sureste (ASR), Broadcom (AVGO), American Express (AXP), AutoZone (AZO), Berkshire Hathaway (BRK-B), Brown & Brown (BRO), Ciena (CIEN), Canadian National Railway (CNI), Cencora (COR), Costco Wholesale (COST), Salesforce (CRM), Cintas (CTAS), CyberArk Software (CYBR), iShares MSCI Emerging Markets ex China Fund (EMXC), Comfort Systems USA (FIX), Home Depot (HD), Intuitive Surgical (ISRG), Eli Lilly (LLY), Microsoft (MSFT), Neuberger Berman Next Generation Connectivity Fund (NBXG), Novo Nordisk (NVO), NVR (NVR), O'Reilly Automotive (ORLY), Palo Alto Networks (PANW), Parker-Hannifin (PH), ProShares Ultra QQQ (QLD), Repligen (RGEN), RenaissanceRe (RNR), Construction Partners (ROAD), SentinelOne (S), VanEck Semiconductor Fund (SMH), S&P Global (SPGI), Spotify Technology (SPOT), ProShares Ultra S&P 500 (SSO), TFI International (TFII), Textron (TXT), ProShares Ultra Semiconductors (USD), Visa (V), Vanguard S&P 500 Fund (VOO), Verisk Analytics (VRSK), Waste Management (WM), West Pharmaceutical Services (WST), and Health Care Select Sector SPDR Fund (XLV).

Tell us what you think of our annual review: feedback@stansberryresearch.com... And in today's mailbag, more thoughts on inflation, the Fed, and feedback on yesterday's Digest...

"Am I in the minority not continuing to spend, spend, spend like it was 2019? I used to eat out every single day at least one meal, now maybe once every 2-3 weeks. That's how inflation 'coming down' has affected me.

"When I hear on a daily basis that 'It's Working', I'm convinced Candid Camera is back and we're the stars." – Subscriber Kathy D.

"My idea for a business is to have central bankers buy groceries ala Instacart for people on Social Security. Then we would know where they [the central bankers] get their prices." – Subscriber David Z.

"Corey, Thank you again for the great lessons. Now, like Yellen I am old. And since I am I can say this. I can't get off of a chair as fast as I used to. But, I bet there was a vacuum in the air when she got up and left the room after Mr. Sessions' questions.

"Even at this age I still make sure my budget is balanced every month. She just doesn't care about the next generations or anyone else for that matter. But I bet her personal budget is balanced... Thanks for probing another mishap." – Subscriber Jeff B.

Good investing,

Brett Aitken
Publisher
Baltimore, Maryland
February 8, 2024