Unveiling Our Annual Report Card

Uncovering treasure buried in Canada... One investor who would love today's market... Looking for strong balance sheets and hidden value... Unveiling our annual Report Card... Who's brought the 'heavy equipment'...

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It was buried treasure...

A fortune lay hidden under the farmlands of Canada for more than 50 years, until Peter Cundill unearthed it.

In early 1973, Cundill was 35 years old and starting to make a name as an investor. He had already scored a few wins, including an investment in mining firm Bethlehem Copper. He had recognized that investors could buy the stock for around the cash on its books... meaning they could get the operating mine for free. Cundill scooped up shares, figuring that it was only a matter of time before others recognized the disconnect between the value of the assets. When that happened, money would soon start pouring into the stock. Cundill was right. The share price doubled within four months.

With that early success under his belt, Cundill went looking for his next opportunity. What he found would catapult his career and turn him into one of the most successful investors of the 20th century.

Crédit Foncier was a French banking company founded in the 19th century. The bank had expanded into the mortgage market in Canada. It soon became the lender of choice for farmers across the Canadian Prairies developing their land into grain-producing enterprises. By the early 20th century, the bank had built a significant portfolio of real estate.

When the Great Depression hit, the bank had to foreclose on farmers who couldn't make good on their payments. The bank took ownership of the land. But instead of booting farmers off the property, Crédit Foncier leased it back to them, allowing the farmers to continue working the land.

This made Crédit Foncier a significant owner of farmland. And it created what Cundill would later call "a treasure trove of wonderful assets"...

You see, Crédit Foncier didn't just own the land. It also owned the mineral rights beneath it.

Even when the bank sold the land, it would retain the mineral rights. These mineral rights would eventually be worth a fortune.

And yet, for decades, no one seemed to notice – at least not until Cundill uncovered the invisible trophy asset sitting on the bank's balance sheet.

When Cundill started studying Crédit Foncier in the 1970s, it appeared to most investors as a huge, profitable bank – a solid, dividend-paying investment, perhaps... but hardly a career maker.

However, once Cundill understood the value of the mineral rights it owned, he realized how deeply undervalued it was.

You see, commodity prices – oil, in particular – took off in the 1970s. Suddenly, the bank was sitting on a portfolio of tremendous wealth. But the bank put no reasonable value on the mineral rights. That meant its entire real estate portfolio with the underlying mineral rights was sitting on its books valued at the prices Crédit Foncier paid in the 1920s.

By Cundill's estimation, the bank's liquidation value was $150 a share, and yet he could buy the stock at just $43 a share.

In his book There's Always Something to Do: The Peter Cundill Investment Approach, author Christopher Risso-Gill quotes Cundill's daily journal...

I believe that there is probably one opportunity in every man's life which demands his knowledge, his guts, his self-esteem, and his judgement.

If he seizes it with both hands and it is successful, he joins the first rank, if not he remains a mortal with feet of clay.

Credit Foncier may well be my test.

He immediately began buying. Within months, the stock had risen to more than $65 per share. By then, he had acquired more than 2% of the equity... and was still buying.

Crédit Foncier and Bethlehem Copper became the foundations of Cundill's nascent fund. At one point, the two stocks made up more than half of the fund's allocation. And it paid off for Cundill's early investors. Starting with $600,000, Cundill's fund returned 35% after just its first two years.

That's when Cundill spotted his next big opportunity...

The All-Canadian Venture Fund had enjoyed a successful run with tech stocks in the late 1960s... At its peak, the fund's assets had risen to $50 million and its share traded for $6. But by 1975, thanks to a bust in tech stocks (and an accounting scandal), the fund's assets had fallen to $7 million. It traded for just $2 a share.

So Cundill moved to take control of the fund. In a letter to the fund's board, he wrote...

It seems to me that a new strategy has to be found.

Investment in emerging companies whose activities are orientated towards new technologies is better suited to corporations who themselves specialize in that area.

In addition it is my view that it may take twenty or thirty years, a new set of analysts, and a new generation of market players before stock markets react to these types of security as they did in the mid to late 60s.

I would like to suggest a new concept that will offer shareholders an opportunity to realize significant and steady capital appreciation. It is not a new idea in that it is essentially a "return to value" philosophy pioneered by the dean of analysts, Professor Benjamin Graham, and his successor Warren Buffett.

Cundill was a disciple of the Graham-Buffett school of value investing. He explained to the fund's board that his current investment criteria included buying profitable dividend-paying businesses that managed their balance sheets conservatively. And he would only buy if they traded for less than book value.

To clinch the deal, he noted that his fund had made investors 35% over just the preceding two years, during which time the Dow Jones Industrial Average had fallen 26%... and the All-Canadian Venture Fund had lost 49%.

He secured control of the fund and changed the name to the Cundill Value Fund soon after.

In 1975, under his management, the fund made 32% for investors. It earned another 32% in 1976... and 21% in 1977.

Over the next 32 years, Cundill racked up one of the best track records in investment history with more than 15% annualized gains, turning every $10,000 invested in 1975 into more than $1 million – a more than 100-bagger. Naturally, that success attracted more investors every year. The Cundill Fund grew from $8 million in 1974 to almost $20 billion when he sold the firm in 2006.

Peter Cundill went on to become one of the world's leading value investors. He helped popularize the concept of buying a dollar for 40 cents. And in 2001, he won the Analysts' Choice Career Achievement Award as the greatest mutual-fund manager of all time.

It's a shame that more investors today don't know Peter Cundill's story. Beyond his personal success, he was a fascinating man. He lived in various parts of the world – Hong Kong, Paris, London, and New York – and traveled widely. He enjoyed hang gliding and deep-sea diving among sharks. He was even linked to Miss Canada 1967...

But we share his story today because we believe Cundill, who died in 2011, would have loved investing in today's market.

We're opening our annual Report Card with his story because the market conditions unfolding right now are perfect for his opportunistic style of investing.

The environment today is just like the one that existed when he launched his career. Like the 1970s, we have inflation... higher interest rates... recessionary fears... tech stocks being obliterated... a volatile stock market... and a potential boom in commodities on the horizon.

Also like the 1970s... opportunities abound. But you need to know where to look...

You need to do the deep research to understand the stocks you buy... You need to look for great businesses generating plenty of cash – companies with strong balance sheets and hidden value – like Peter Cundill did...

You can't buy just anything and expect it to ride a lively market higher...

Our Report Card naturally focuses on past results... but it's about more than just keeping score. It's about understanding what has unfolded over the past year and how the market has changed, so we can successfully navigate the investment landscape that will confront us in the coming months and years.

There is much to learn from Peter Cundill. You will be glad you know his story... and how he made a fortune across different markets... and did so for more than three decades.

With that said...

Let's start our Report Card with our Portfolio Solutions...

The core portfolios are...

• Defensive – This portfolio is designed to hold up in volatile conditions. It normally includes income-generating stocks and bonds, blue-chip "forever" stocks, a few uncorrelated positions, and what we call "antifragile" stocks.

• Capital ‒ This is our most aggressive portfolio. For our 2022 portfolio, we used ideas from Stansberry's Investment Advisory, True Wealth, Retirement Millionaire, Stansberry Innovations Report, Commodity Supercycles, The McCall Report, DailyWealth Trader, and Extreme Value. The portfolio normally contains around 20 positions.

• Income ‒ As the name suggests, this portfolio is designed to generate income. The product pulls ideas from the same services as The Capital Portfolio and adds Income Intelligence and Stansberry's Credit Opportunities. The portfolio generally holds a mix of dividend-paying stocks, high-yield bonds, and hybrid stock-bond securities. This portfolio will hold anywhere between 20 to 30 positions.

• Total ‒ This is our "all weather" portfolio. It draws on the same set of advisories as the Capital and Income portfolios, as well as several hedged and short positions from our elite research to protect on the downside. This portfolio is larger, with up to 40 positions at any given time.

These Portfolio Solutions products are fully invested and managed in the same way that we would manage a fund. This is a key characteristic, and it influences how we grade them compared with how we grade our traditional newsletters. (We'll delve into this issue more next week when we review the traditional subscriptions.)

For now, just know that because we built these services to act like an index or managed fund, we can evaluate based on their average annual returns and their total returns over the period we're reviewing. And we can hold that performance up against how a standard index did over the same period. (We've noted in the write-ups below which index we're using as each portfolio's benchmark.)

With 2022 being a difficult year for everyone, it's natural many subscribers will want to see how these products fared last year. But I (Brett Aitken) also believe that one year is too short to judge a strategy. Some of these portfolios could be down in any given year... but that doesn't mean the investment thesis is wrong. So it's important to look at a longer time period.

As you can see in the following chart, the market soared from the beginning of 2018 through the end of 2021. Yet, investors had to navigate a couple big corrections in 2018, the sharp and severe decline in early 2020, and of course... the bear market of 2022.

While a number of people thought they had "cracked the code" to financial success in the markets as stocks soared in 2019, 2020, and 2021... those hefty pullbacks that followed can destroy a portfolio – and your confidence – if you're not properly protected.

That's why I'm also grading their performance over the past five years, which captures both significant rallies and falls.

Our goal with these products is to make your investing decisions easier. We review all the recommendations in the corresponding publications to find the best stocks for the current market conditions. Then, we give you all the names and ticker symbols we recommend with the exact number of shares to buy based on your portfolio size. We'll update you monthly or as needed on each position. You can still read each publication that generated the original recommendation. At that point, you can sit back and enjoy watching the profits roll in.

Our investment committee overseeing these products includes Dr. David "Doc" Eifrig, Dr. Steve Sjuggerud, Matt Weinschenk, Brett Eversole, Alan Gula, and C. Scott Garliss.

The Defensive Portfolio: B+ (1-year), A+ (5-year)

Most investors would be thrilled if they broke even last year.

Well, that's effectively what happened to those who followed our advice in The Defensive Portfolio. The service posted a 1.2% loss – essentially flat – compared with an 8.4% loss in its benchmark, the SPDR Portfolio Short Term Treasury Fund (SPTS).

As for the five-year results... we launched this portfolio in May 2019. So it doesn't have the full five-year period. But since its inception... the investment committee has absolutely crushed it – almost doubling the benchmark returns with total returns of 43% compared with just 22% for the benchmark.

So how did they do it?

Out of respect for paying subscribers, I can't give away too many secrets... just know that it starts with building a portfolio full of "war chest" investments.

That includes securities with cashlike safety and steady yields. It also includes a few blue-chip stocks that you can hold forever – names like the capital-efficient, chocolate manufacturer Hershey (HSY). We also incorporate some "antifragile" stocks, including property and casualty ("P&C") insurance companies (which we call the "best business in the world"). Finally, we mix in a few uncorrelated gems – like pharmaceutical giant AbbVie (ABBV), which has unique blockbuster drugs that don't care about the market conditions.

Of course... picking the right stocks is just part of the equation. Buying them at the right price and getting the allocations right is the real key to financial success in the markets.

Last year, The Defensive Portfolio experienced very little turnover. Yes, it hit some stops and trimmed a few positions. But the conservative nature of this portfolio meant that nothing was ever going to really hurt them.

The portfolio includes several huge winners: Hershey up 92%, AbbVie up 113%, and one of our favorite gold-royalty plays – Franco-Nevada (FNV) – up 86%.

This portfolio has proven to be a huge success, having received an A or A+ in every report since inception.

If you're not following this service and not getting the same or better results on your own... I urge you to consider it. There is no easier way to use our work. We'll provide you with clear instructions (including a portfolio calculator tool) that will tell you which shares to buy... right down to the exact number of shares depending on your portfolio size. It really is a paint-by-numbers approach.

We were aiming for these kinds of results when we launched this product. And I'm thrilled to see our investment committee make good on that promise. I hope you're enjoying the results as much as we are.

I know I will receive criticism from both our investment committee and our subscribers for this grade. But hear me out...

Yes, it outperformed its benchmark by a wide margin... and it did what we expect it to do in a bear market... which is keep investors safe. And even though a 1% loss is effectively breakeven – given it could move more than that in a single day – the official result for the year shows a loss. And for that reason, it gets a B+ for the year instead of an A.

However, The Defensive Portfolio gets a well-deserved A+ for its performance since inception (May 2019).

Now on to...

The Capital Portfolio: F (1-year), A (5-year)

Over the long term – five years – The Capital Portfolio has performed exactly as we expected.

With a total return of 50.1% over the five-year run, it outperformed the S&P 500 Index, which returned 45.8% over the same period.

I'll get to 2022 in a minute...

But given the massive drawdowns – nearly 20% in 2018 and more than 30% in the COVID-19 crash of 2020 – that is an impressive feat. I know I said this last year... but almost every investor I know suffered losses during the March 2020 sell-off. Not surprisingly... it sent most investors hiding for cover. I was thrilled to see our investment committee maximizing the opportunity to buy great businesses at once-in-a-decade prices.

Stocks rebounded far quicker than most people expected... and soared far higher than most people expected. The 18 months or so that followed the COVID-19 crash turned into one of the most profitable times to be invested, with the S&P 500 doubling over that period.

But last year was brutal.

The Capital Portfolio suffered a 20.9% decline last year, compared with a 13.6% drop in the S&P 500.

So why the swing?

Well, this portfolio is filled with stocks and leveraged exchange-traded funds ("ETFs") that typically outperform in a bull market. But the flip side of that is the more speculative nature of these stocks is that the portfolio will likely underperform in a bear market... which is what we saw in 2022.

For example, investments in the more speculative plays like Chinese online-retailer Alibaba (BABA) and crypto exchange Coinbase (COIN) hurt returns.

Having said that... The investment committee made a great call in January last year by underweighting the mega-cap tech companies like Alphabet (GOOGL), Apple (AAPL), Amazon (AMZN), Meta Platforms (META), and Tesla (TSLA). These names all plunged far more than the market.

Elon Musk's electric-car company Tesla, which had traded for more than $1 trillion in 2021, plummeted by more than 60%. Retailing giant Amazon – which topped out with a $1.9 trillion market cap in 2021 – plunged 50%. And social media giant Meta Platforms – at one point a $1.1 trillion company – fell more than 70% before bouncing back slightly.

It's tough to recover from pullbacks like those – especially if they made up a large percentage of your portfolio. So kudos to the investment committee for identifying those risks early and reducing allocations... or staying clear of them altogether.

Another important move they made was finding low-volatility stocks early on. Names like P&C insurance giant Travelers (TRV) have performed well, as has low-cost retailing giant Dollar General (DG).

While I know the investment committee was disappointed with 2022, the long-term performance is outstanding. I know the committee members will put the lessons learned from last year into improving performance for this year and beyond.

The Capital Portfolio earns an F for the one-year 2022 results... and an A for the five-year results.

The Income Portfolio: C (1-year), A+ (5-year)

Income investing has been out of vogue for more than a decade.

That's not surprising given the zero or near-zero interest rates we've endured during that period. Banks paid almost nothing in interest. The yield on U.S. 10-year Treasury bonds fluctuated anywhere between 3% and 0.5%.

Naturally, most investors chased growth instead of yield.

Despite the difficulty in finding yield, the investment committee was able to produce average annual returns of around 9% over the past five years. It did so by focusing on quality stocks with safe and steady dividends – like CVS Health (CVS) and pharmaceuticals giant Pfizer (PFE) – blended with strategic bonds, real estate securities, and some attractive yields in the energy sector over the past year.

Still, 2022 was a difficult year as the market punished everything from stocks to bonds. Our Income Portfolio didn't escape unscathed. While the conservative allocations are designed to keep investors safe from disaster... the portfolio suffered losses on a handful of well-known income stocks like virtual bank Annaly Capital Management (NLY) and telecom giant Verizon Communications (VZ).

Despite the loss in 2022, the portfolio outperformed its benchmark – the Vanguard Balanced Index Fund (VBIAX) – by a considerable margin. And for that reason, we are giving The Income Portfolio a C for 2022. The five-year grade is a proud A+.

While this report is focused on past results, it's worth noting that the investing landscape has changed. That's great news for income investors looking for yield.

With the market bashing everything from stocks to bonds in 2022, it has beaten down great businesses that generate steady streams of cash flow and pay out healthy dividends. You can bet Peter Cundill would be looking to lock in yields not seen in more than a decade or two. And that is exactly what our investment committee is doing.

The portfolio currently holds several positions yielding north of 7%. I expect we'll see this portfolio outperform over the coming years as these great businesses attract more investors to the fold and drive prices higher.

If you've been sitting on the sidelines wishing for steady streams of income for retirement... now is the time. Don't wait. The window of opportunity for these investments may not be around for long.

The Total Portfolio: C (1-year), A+ (5-year) 

This is our "all weather" portfolio.

With anywhere between 30 and 40 stocks, The Total Portfolio is larger in size than our other portfolios.

The portfolio has its core holdings full of great businesses like Johnson & Johnson (JNJ), Coca-Cola (KO), and P&C insurance superstar Travelers. It also offset losses in its long positions with shorts, crisis hedges, special-situation stocks, and positions that aren't correlated to the market.

These hedges can cause a drag on the portfolio in a bull market. And investors often ask why you would want to do it. Well, the short answer is... for times like 2022.

I know some subscribers will say... "But Brett, The Total Portfolio still lost money in 2022." That's true. But it lost less. And don't forget, almost every asset class got hit in 2022... So investors had few places to hide.

Granted, no one likes losing money. The winners last year were those who lost the least. And The Total Portfolio was among them – down 10.5% compared with the benchmark, which was down nearly 14%. And over the longer five-year period, the gains are considerable – up a total of 58% compared with 46% for the benchmark S&P 500.

For that reason, I'm giving The Total Portfolio a C for the one year and an A+ for the five-year result.

Before I move on, one final note around our Portfolio Solutions products...

As mentioned earlier, the investment landscape has changed dramatically over the past 12 months. What worked during the past decade is unlikely to work moving forward. You need to know where to look. The good news is incredible opportunities are popping up across several sectors of the market right now.

It's an exciting time to be an investor. We live for moments like these. I know our analysts and investment committee are scouring the globe to identify the best opportunities for our subscribers. I can't wait to see how these portfolios perform over the next five years. Embrace it. We are.

Stansberry's Forever Portfolio: C- (1-year), B- (5-year)

You've heard us say before that finding great businesses is just one part of the investing equation. Buying them at the right price is what determines your returns.

Take American Express (AXP), for example. I won't get into the details here, but just know it consistently generates billions of dollars in cash earnings every year... and the business has qualities that makes it worthy of being a "Forever" stock. Our flagship publication – Stansberry's Investment Advisory – explained this in detail when recommending the credit-card giant back in August 2016.

Now remember, when we say, "Buy at the right price," we don't mean the nominal share price. We mean buy at the right valuation.

For American Express, we studied its cash earnings. At that point in time, the stock traded for around 7 times its earnings before interest, taxes, depreciation, and amortization ("EBITDA"). By that measure, the stock had never been cheaper – including during the global financial crisis of 2008 to 2009.

Then it fell to a similar valuation in March 2020, when we launched this portfolio – near the exact bottom of the COVID-19 crash. (Sorry, we missed the bottom by three days.)

Since then, the stock is up almost 100% – roughly a double. The S&P 500, by comparison, is up 62%. I'm sure I don't need to explain the huge boost that kind of outperformance over five, 10, or 20 years or more gives your wealth. But it only happens if you buy it at the right time.

That sounds logical enough. But you'd be surprised how many people – including professional investors – ignore that simple rule of investing.

The Stansberry's Forever Portfolio is less than three years old. As the name suggests, we intend to hold these stocks forever. Looking at the one-year result is meaningless to me. I'm more interested in seeing how this portfolio does over a minimum of five years. It simply needs more time to play out.

But for the purposes of this Report Card... it was flat with the market in 2022. So I'm giving The Forever Portfolio a C- for its one-year performance.

For the period since inception (March 2020), it is showing annual gains of 17% – which is phenomenal. But the benchmark showed 22% annual gains. So for now... it is underperforming the benchmark, and therefore earns a B-.

Gold Stock Analyst: F (1-year), B (5-year)

I'm sure that editor John Doody would agree that 2022 proved to be more than challenging for this publication...

It was downright brutal on the GSA Top 10 portfolio.

Longtime subscribers know that John and senior analyst Garrett Goggin monitor gold and silver miners all over the world. John has developed his own proprietary system to evaluate every mining company on the planet... tell you how much it's worth... and the right time to buy it.

John has a tremendous 20-plus-year track record to back it up. He has racked up total gains of 848%... beating the S&P 500 over the same period. Likewise, since the inception of the VanEck Gold Miners Fund (GDX), John has trounced the benchmark gold stock fund, posting a total return of 154% compared with an 8% loss by the fund.

He has an incredible network across the industry, including the miners, C-suite officers, analysts, and bankers across the entire industry. I doubt any gold mining CEO would refuse to take his call. No one is better equipped to put together a portfolio of the Top 10 gold stocks on the planet.

John joined the Stansberry family back in 2019... and we have continued to publish the Top 10 portfolio in the same tradition that John has done for more than two decades.

And like I said, the long-term track record is great.

But 2022 will go down among GSA's worst four years on record since 2001. The others were 2008 when the portfolio lost 52%... a 55% drop in 2013... and a 30% decline in 2015.

Gold didn't soar like everyone thought it should in an inflationary environment... but it held up better than most. The metal soared by more than 10% in the first few months of the year – only to give up those gains and more heading into fall. A year-end rally boosted the spot price to levels similar to where it started. And GDX followed a similar path.

Here's the thing... Because mining stocks give you leverage on the price of gold, these ups and downs were more dramatic. The GSA Top 10 portfolio unfortunately did far worse – showing a 28.8% loss for the year... and for that reason earned an F for the one-year part of the Report Card.

Despite the difficult year, we remain bullish on John's ability to navigate the gold and silver markets to earn big profits for his subscribers over the longer term. After all, it's the longer-term results we're most interested in... as I believe his subscribers are, too. As you can see from the five-year period, John has shown average gains of 7.5%, outperforming his benchmark index and earning a B for this year's five-year Report Card performance.

We're also going to review our short-term trading services this week...

Because these services don't reflect a fully invested portfolio, but represent an ongoing series of recommendations, we'll use our traditional Report Card metrics to evaluate them. We'll consider the average return for their recommendations, the annualized average return, and the win rate.

We'll explain our system in more detail when we address the traditional services next week. But just know, we believe these numbers not only highlight whose recommendations help subscribers make money... but whose do so most consistently.

Finally, the "benchmark" figures measure how each individual recommendation performed against the benchmark. In other words, for every recommendation, we look at how the benchmark performed over the same period, and we average that performance. That's why, even though all four of these trading services use the S&P 500 as a benchmark, you see different benchmark scores for each service.

The following trading services, in general, offer shorter-term trades... so we can see how they performed in the year. But like the portfolio products... judging a service or strategy on a single year is not that meaningful. Sure, you can say it did well or poorly in any given year... But the strategies can take time to play out. Some will outperform in certain environments yet underperform in others.

So for that reason, we're also looking at both 2022 and five-year results for these products.

DailyWealth Trader: A (1-year), C (5-year)

Editor Chris Igou took over the reins as editor for DailyWealth Trader in April 2022 – one of the most difficult times in the market.

You most likely recognize Chris' name from the True Wealth family of publications. Chris has worked with two of the best editors in the industry – Dr. Steve Sjuggerud and Brett Eversole – over the past six years.

As you can see from his 2022 results, he has embraced the new role... and did so successfully. That was no easy task given the volatility we saw last year.

DailyWealth Trader made 37 trades last year with 24 of them winners, coming to a 65% win rate.

That's fewer trades than we have historically made in this publication. Now, given the strategies we use for this publication, and the volatility experienced last year, that is to be expected.

What's more, it's my view that most people trade far too often anyway. Most people think that they need to be "doing something all the time" to make money in the markets. I believe the opposite is true... You're far better off researching your ideas more thoroughly so you only bet when the odds of success are stacked heavily in your favor... planning your trades and managing risk – like using appropriate position sizing and honoring stops.

While the average gain for the year might seem small at 2.3%... the important point is that's a positive number. By comparison, the benchmark saw almost 5% in losses. That's a great result, and it earns Chris an A for the one-year track record.

The five-year track record has a solid win rate of 66%. However, with average annualized gains of around 7% compared with the benchmark of 13%, it earns the DailyWealth Trader publication a C.

Retirement Trader: A- (1-year), B (5-year) 

This service from Doc Eifrig has the best win rate I've ever seen in the markets – especially when it comes to trading options.

A 93% win rate in a year like 2022 seems preposterous. Yet, if you've been with us for a while, you will know that Doc clocks up these absurd percentages year after year.

Doc's strategy here is to provide his subscribers with a safe, steady stream of income. Rather than swing for the fences... he is hitting lots of singles by making small bets on the bluest of blue-chip companies.

I understand that most people run for the hills when they hear the word "options." I hear things like, "They are too risky." And with the way most people trade them, that can be true... because they buy puts and calls. They generally invest far too much money into each trade as they let the allure of pocketing huge gains overtake any instincts of caution.

Doc, on the other hand, sells options the same way insurance companies sell insurance premiums. And he does it on companies like Disney (DIS), CVS, and JPMorgan Chase (JPM) – stocks he would love to own anyway.

It is a wonderful strategy. But you need people like Doc and his team to scour the markets, to analyze all the stocks, understand the valuation metrics, and identify the best strike prices and expiration on the options.

Again, Doc has an incredible win rate – better than anything else in the market that I am aware of. For that reason – especially given the year we just had – Retirement Trader earns an A- for the one-year performance. And I'm thrilled he made money – albeit a small average gain – for his readers in a bear market.

And the win rate for the longer five-year performance is also outstanding. However, I'd like to see a higher average annualized gain over the longer period before awarding an A. For that reason, this service earns a B for the five-year period.

Advanced Options: F (1-year), A (5-year) 

This service offers a more aggressive strategy using options.

In this service, Doc and his team take investment ideas from some of our flagship publications – like Stansberry's Investment Advisory, True Wealth, and Retirement Millionaire – and structure a trade to leverage the ideas and earn higher gains than what you would make if you just bought the stock outright. If they can't find a trade from these ideas with an acceptable margin of safety, they will look for alternative trades. They are generally trading bull spreads, which involve two legs to the trade.

We launched Advanced Options in late 2018, so it hasn't had the benefit of the full five-years. But since inception, the service has clocked up a win rate of 61% and average gains of 6.2% – more than double the benchmark.

Those are impressive results for a trading service.

Unfortunately in 2022, less than half of AOS's trades generated a win, and the average return was -10.5%, compared with -0.2% for the benchmark. That simply falls short of expectations.

And for that reason, AOS earns an F for the one-year Report Card.

I know Doc and his team will be disappointed with these results. But knowing Doc... he won't back down from a challenge. I'm quite sure he and his team will learn from the mistakes of 2022 and tweak their strategy to ensure more winning trades in 2023 and beyond.

However, its performance over the longer term – since its 2018 inception – is impressive, and worthy of an A.

Ten Stock Trader: A++ (1-year), A+ (5-year)

I've said it before...

You need to do something special to earn an A++ in our annual Report Cards.

And no doubt, Ten Stock Trader editor Greg Diamond is doing something special. Greg earned that achievement in 2022.

Greg made an incredible 48 trades last year, and 40 of them were winners (for an 83% win rate)... with average gains of 24.8%. Those are extraordinary results in any year... let alone a bear market year like 2022.

Greg uses technical analysis to make short-term trades in the market.

He aims for nominal gains each year rather than focus on beating a benchmark. But to remain consistent across all our publications we track his trades against a benchmark. And I'm thrilled to confirm that he obliterated it. His benchmark showed an annual loss of 15.4%. You read that right... his benchmark was down 15.4%, while Greg was up 24.8%.

For those of you not following Greg's service, here are a couple of highlights. He racked up five triple-digit winners... including a 105% gain in semiconductor play Advance Micro Devices (AMD)... and gains of 115.9% and 111.3% in two trades on VanEck Vectors Semiconductor Fund (SMH). He recorded 29 double-digit winners including an 87% gain on Taiwan Semiconductors Manufacturing (TSM)...

I've been thrilled to hear from so many of his subscribers who have been booking serious gains along the way. Here is just one example of what his subscribers are saying...

I have been using this service for a few years and I don't think you will find any better trading advice... Seriously, if you are building a home, you do not show up with a hammer and nails. You need an arsenal of tools, and Greg is the heavy equipment. – Carmine S.

I can't say it any better than that.

Greg earns a well-deserved A++ for his 2022 one-year track record.

We first launched the beta version of Ten Stock Trader in 2018, so we are using the results since inception for the long-term grade. He earns an A+ for his "since inception" grade.

Congratulations, Greg... excellent work. Keep up the great work.

For those of you not following Greg... I encourage you to consider it. You won't be disappointed.

And there you have our first part of the 2022 annual Report Card.

So how did we do? Please drop me a note. Tell me what you liked... and what you didn't. As you know, I can't provide individual advice, and I can't promise that I will respond to every e-mail personally... but believe me... I will read them all.

And finally, thank you for your business. Because of you, we get to do what we love... which is provide high-quality investment research for individual investors just like you. It's an honor, privilege, and responsibility we take seriously.

Look for our review of our traditional products next week. Until then...

New 52-week highs (as of 2/2/23): Aehr Test Systems (AEHR), Copart (CPRT), Expeditors International of Washington (EXPD), W.W. Grainger (GWW), Hologic (HOLX), MasTec (MTZ), Nucor (NUE), NVR (NVR), Flutter Entertainment (PDYPY), Parker-Hannifin (PH), Ryder System (R), Revance Therapeutics (RVNC), SPDR S&P 600 Small Cap Value Fund (SLYV), SPDR Portfolio S&P 500 Value Fund (SPYV), Stryker (SYK), TFI International (TFII), and Trane Technologies (TT).

The Report Card always makes for a long Digest. So we'll dispense with the mailbag today. But drop us a note and tell us what you think of our review at feedback@stansberryresearch.com. And stay tuned next week for the rest of our grades.

Good investing,

Brett Aitken
Publisher
Baltimore, Maryland
February 3, 2023