A short Digest...

In today's Friday Digest... a true rarity... a brief note. Yes, dear subscribers… This week, you get a reprieve from your blow-hard editor. I was called away from my writing this morning to deal with an important business matter, so I simply didn't have the time to inflict my usual ramblings on you.

But... I would like to briefly discuss an important matter. Did our promises about my new trading service, Stansberry Alpha, come true? Did we deliver what we said we would?

As longtime readers know, I write the Friday Digest personally. I do so with the intent of telling you what I'd like to know, if our roles were reversed. I take this task seriously. And I'm dedicated to it, even as it applies to our own marketing.

That's why I publish our annual Report Cards. I believe you deserve to know how our products actually perform. I believe knowing what their real, average results have been gives you some indication about who on our staff is doing a great job and what you might expect going forward.

Why would I do this? What's my incentive to tell you about the mistakes we will inevitably make? (I gave my Investment Advisory an "F" for last year's stock picking.) The answer is simple: I'm trying to build the highest-quality financial advisory business in the world. I have no hope of succeeding if we don't constantly improve our products. How can we improve our products if we don't evaluate them? Furthermore, isn't the easiest way to build a business and gain a client's trust to simply deserve it? That's our approach.

And so... I believe you have a right to know what's happening with Stansberry Alpha. This is a new trading service we launched last fall. It's designed to take advantage of a simple, but pervasive, anomaly. This anomaly – asymmetrical pricing in the options markets – shouldn't exist. And it wouldn't, if the markets were purely rational and perfectly "efficient," like the economics professors insist. As we explained in our original marketing materials (and more fully in the introductory report that each new subscriber receives)…

As you know, it's been a bull market lately. If we were right about the advantages of the Stansberry Alpha strategy, we should have done pretty well. So... have we?

We've made five recommendations so far. The first – an options trade on the energy infrastructure firm Chicago Bridge & Iron (CBI) – is up 200% on the net margin we were required to invest in the trade. The second trade – on the casino operator MGM Resorts (MGM) – is up about 60% on the net margin. The third trade was on the mortgage real estate investment trust Hatteras (HTS), what regular S&A readers recognize as a "virtual bank." On that trade, we're up 35% in only two months against net margin.

Our last two recommendations – which were based on Microsoft and Intel – are up 7% and 10%, respectively. Altogether, we're up 62% against the margin we've posted for these trades – an incredible rate of return for only five months of trading.

You might wonder how we're able to trade with such consistency – we're up on all five. The secret is, we're taking advantage of a simple, widespread anomaly that develops in the options market. These trades are structured with a long bias, so we have the opportunity to make a lot of money when the market goes up.

And we collect premiums immediately with these trades, which gives us a margin of safety, too. In short, we can make a lot more money here than we could by simply buying the stock... and this strategy is safer than just buying stocks outright.

Obviously, I can't give our secret away. If I did, the chances are pretty good you wouldn't assign much value to it anyways. Everyone is taught that markets are efficient and rational and these kinds of trading set-ups shouldn't exist. But the reality of the markets is different… The reality is, mathematically identical risks are almost always priced irrationally. This phenomenon is known as "asymmetrical risk."

Asymmetries are found throughout nature, too. In chemistry, certain molecules called "chiral" are asymmetric. They cannot be superimposed upon their mirror image. And fundamental physical asymmetries exist in particle physics (known as "parity violation"). The point is... instead of dismissing asymmetries… we should recognize nature doesn't always work symmetrically or efficiently. Complex systems don't always work exactly like theories suggest they should. In fact, they almost never do.

To use this strategy effectively, you need to have a margin account with a broker. And you need to understand how to buy and sell options and get approved by your broker to do so. Getting approval to do these kinds of trades is often a hassle. You might have to call three or four brokers before you can find one who's willing to work with you on these trades.

But I can promise you this... understanding this strategy is easy. We're only doing one type of trade. Frequent trading is not required. We'll only give you one trade per month to ensure you're not overloaded. That way, you can be sure you're only trading our best ideas.

I believe no other trading strategy offers a better combination of safety and potential upside… I believe it will continue to work, month after month, because it takes advantage of a flaw in human nature – an anomaly. In good markets, I expect this strategy will make us 100% or more relative to our margin requirements. And in bad markets, it should consistently generate income of between 10% and 30% annually. In this way, this strategy is truly unique.

You might cynically think I wrote about Stansberry Alpha just because I'd like you to buy a subscription. And I certainly admit, that's part of my motivation. But far more than my desire to sell, I want you to know that our new strategy is working.

I believe the unique ability of this product to both produce superior returns and lower risk is its primary benefit. And I think every subscriber to our newsletters ought to know how and why it works, so they can judge for themselves if this kind of trading should be part of their financial plan.

If you've never considered Stansberry Alpha – or if you don't even know anything about options trading at all – please... spend some time this weekend and learn a little about it. If you're interested, try a subscription. Whether you keep it or ask for your money back, I'm sure you'll learn a lot from our materials. I know it will be worth your time. To learn more, click here.

New 52-week highs (as of 3/21/2013): Wisdom Tree Japan SmallCap Dividend Fund (DFJ), Fission Energy (FIS.V), Prestige Brands (PBH), Consolidated Tomako (CTO), Calpine (CPN), Texas Pacific Land Trust (TPL), Enterprise Products Partners (EPD), and Cheniere Energy (LNG).

In the mailbag... one subscriber writes in to describe how he's preparing his portfolio... Send your comments to feedback@stansberryresearch.com.

"I've never been accused of being a genius, but it doesn't take a genius to know that there's a minefield today in the investment business. Since I'm not privy to the internal gatherings of the international banksters, I must assume that whatever they tell us we should do publicly should be a perfect recipe for doing the opposite.

"That said, I have put a 10% trailing stop on all my market issues except for a select few – a few 'penny' stocks that not much is invested in anyway, and a regional bank stock that is more solid than 99% of banks worldwide, and in which I have so much capital invested that a 'forced sell' on a stop would kill me on taxes in a given year. I realize I have to do something to diminish my exposure in this bank at some point. Most of my current issues are in energy, agricultural commodities, and some metals UITs. I'm looking at timber resources, also. I will follow closely my stop orders and adjust them up as long as this market continues to explode, then hope my stops prevent a coming implosion from wasting me. My biggest question mark and concern; what to do with my fiat currency if/when the sell orders get processed – buy real estate as long as someone accepts it?

"I expect a massive correction, if not collapse, in the market as well as in the global currency and financial system sometime in the not-too-distant future. I have some [precious metals] stored offshore, but only about 15% of assets – probably should increase that as soon as central banks begin to sell again and depress the price. I've also made an offer on a real estate purchase in a Central American nation for the purpose of establishing residency, soon, and perhaps dual citizenship and a second passport. I am presently researching an offshore trust. Am I worried? Better believe it. These are interesting times... strange and scary." – Paid-up subscriber Don

Regards,

Porter Stansberry
Baltimore, Maryland
March 22, 2013

As I (Porter) explained yesterday… a lot of factors have me bullish on Miami real estate. One factor I didn't mention is the lack of a state income tax. That's a big reason Florida is a great place to live and do business if you're wealthy...

People say Punta del Este, Uruguay is like Miami. But believe me, it's not. I've been there. It's a small beach town. It's not a city like Miami... Not even close.

Today, you can buy a good property – not a true high-end "trophy" property – on South Beach for around $500 a square foot. That's expensive. Especially considering how low rental prices are... People who live in Miami full-time are not typically wealthy. It's the people who own properties in Miami and visit who are wealthy. For that reason, I don't expect your average condo to go up much in price – maybe 10% a year.

And right now, developers are adding lots of supply in the luxury condo market. For example, Ian Schrager (a famous developer behind Mondrian Hotel Group and the Gramercy Park Hotel in Manhattan) is constructing a building on Miami Beach called Edition. Prices start at $3,500 per square foot. It's the most expensive new construction in Miami Beach history.

The minimum you can pay for a trophy property in Miami Beach (to experience the kind of upside I'm talking about) is around $800 per square foot for a teardown. I've had unsolicited offers for my property, which I'm in the process of tearing down and rebuilding. Just for the land, I've had people offer me twice what I paid for it. And that's just the start...

Why Miami Beach will become the priciest housing market in the U.S… And the best way to invest there (or anywhere else)…