Another big hedge fund is giving back money...

 One of the greatest hedge-fund managers in history is returning cash to investors...

Seth Klarman, founder of Baupost Group, announced his fund will return some of its roughly $27 billion to investors at the end of the year.

In an April 29 letter to investors, obtained by the financial publisher Institutional Investor's Alpha, Klarman said the goal was "to better match our assets under management with the opportunity set we see for new investments."

 In other words, Klarman – a deep-value investor – doesn't see ample opportunities in today's market. Markets around the world are trading at new highs. And interest rates are rising...

 As we've written several times in these pages, True Wealth editor Steve Sjuggerud says we're in the final act of his investment "script"... He predicted stocks would rise in three phases, thanks to the Bernanke Asset Bubble (rising asset prices as a result of the Federal Reserve's money printing)... And in the final Act III, individual mom-and-pop investors start putting their money into riskier sectors like emerging markets and mining stocks.

Steve says we're just at the beginning of Act III... And triple-digit gains are still possible.

Steve acknowledges the Bernanke Asset Bubble is likely to end badly. But he believes the "end game" is much farther away than most people think. Also consider, when you manage almost $30 billion, like Klarman, you're less agile than the individual investor.

 Mind you, this isn't the first time Klarman has returned money to investors... He also gave back some cash in 2010. But he raised new funds in the midst of the European crisis in 2011.

One final point... Klarman, like many of his hedge-fund contemporaries, started his fund at the outset of one of the largest credit expansions/inflations in history (the 30-year bond bull market starting in 1980). Many are finding it harder to make money now that the credit spigot is tightening.

 While no one can time precisely when a crisis will hit… Klarman's decision is just one more caution sign. As we've advised you, many of the smartest investors out there are reducing their exposure and unloading riskier, less-liquid positions.

There's still money to be made, but be cautious.

 The great inflation of the past 30 years has had another consequence... The concentration of wealth in the highest echelons of society is increasing. In fact, the wealth disparity between the top 1% and the other 99% is at its widest point in 100 years, according to statistics from the IRS.

It's a result of inflation. Those with the assets and capital reap the greatest rewards. They have access to credit. And they understand how to buy real estate and great businesses.

Meanwhile, folks who depend on a paycheck are destroyed. Their wages fail to keep up with their rising cost of living.

A look at the latest Forbes 400 – a list of the wealthiest 400 people in America – suggests the richest Americans have gained most of the wealth generated by the economic recovery since 2008...

 According to Forbes, the wealthiest 400 Americans are worth a record $2.02 trillion – up $300 billion from a year ago and more than double where it was a decade ago.

This growing disparity is exacerbated by our government's monetary policy. As we wrote in the August 21 Digest Premium:

 All that aside, we're still in a bull market. We've discussed how many of our favorite indicators show the economy is steadily grinding higher. And today, another sign of that labored growth...

Global shipping giant FedEx, a bellwether of the world economy, hit a new high. The thinking goes, if FedEx is shipping more parcels around the world, commerce must be growing.

The company announced second-quarter earnings rose 7%. Sales rose 2%.

FedEx maintained its forecast of earnings growth between 7% and 13% for the year, but said it sees "tepid" economic growth.

 S&A Short Report editor Jeff Clark is actively trading the gold sector today...

On August 9, he told readers it was time to go long gold... He said the setup was looking similar to 2008, a "once in a century" opportunity, when he produced huge gains for readers...

As he wrote in that issue:

 S&A Short Report readers made 60% in two months by selling Newmont Mining puts, 70% in three months on Goldcorp puts, 47% in one month on Kinross Gold puts, and 63% in two months on Agnico Eagle Mines puts.

 And only two weeks after telling readers to buy gold stocks, Jeff closed out winning positions in Kinross Gold and Seabridge Gold for 65% and 61%, respectively.

 He continued in his August 9 update:

 New 52-week highs (as of 9/17/13): American Financial Group (AFG), ProShares Ultra Biotechnology Fund (BIB), Chesapeake Energy (CHK), Dominion Resources (D), Emerson Electric (EMR), EnerSys (ENS), Ericsson (ERIC), iShares Germany Fund (EWG), SPDR Euro Stoxx 50 Fund (FEZ), Fluidigm (FLDM), Fidelity Select Medical Equipment & Systems Fund (FSMEX), iShares Biotechnology Fund (IBB), KLA-Tencor (KLAC), Longleaf Partners Fund (LLPFX), Laredo Petroleum (LPI), 3M (MMM), PowerShares Buyback Achievers Fund (PKW), ProShares Ultra Health Care Fund (RXL), Sequoia Fund (SEQUX), Steel Dynamics (STLD), Constellation Brands (STZ), Cambria Shareholder Yield Fund (SYLD), Triangle Petroleum (TPLM), and Walgreens (WAG).

 More e-mail in today's mailbag from a subscriber upset about us recommending excellent companies that allow you to compound your wealth over time... Send your thoughts to feedback@stansberryresearch.com.

 "Your reporting over meetings and all the scuttle surrounding the business gossip is really annoying and time consuming to follow. For 95% of your readers the information is boring and pretty much worthless. Many of us do not buy expensive stocks (if we could we probably wouldn't have subscribed to your information as we were hoping for more pertinent information).

"Sure, buying a blue chip like Microsoft and keeping it for a long time might be profitable for millionaires. But it sounds like the time-worn theory of William O'Neil of the Investor's Business Daily which consisted of buying good stocks and keeping them. Wow. Let me write that down.

"The majority of money today is obviously in position trading and holding stocks for a short duration. At least it is for non-millionaire traders. Sure, MS going up a point is profitable if you have enough shares, but a much cheaper stock going up 35 points is generally much nicer for those willing to do the work to find it. That's where we need help. Reading about board meetings and the business rumors du jour are pretty much a waste of time for many of us. Just sayin'..." – Paid-up subscriber John Cochran

 "I would like to congratulate Dan Ferris on his highly persuasive letter to the Microsoft board of directors, that was featured in the November, 2012, edition of your Extreme Value newsletter. He has stated and restated the best possible actions to create shareholder value for MSFT shareholders. Although I am not financially able to subscribe, I recognize the quality of his work and applaud it. And I follow the 12% Letter faithfully." – Paid-up subscriber Steve C.

Regards,

Sean Goldsmith
Miami Beach, Florida
September 18, 2013

 A friend of ours in the renewable-energy sector recently told me (Porter) that he's bullish on the sector because the U.S. government is mandating that states produce a certain percentage of their energy with renewables. And it's true... The government's will is difficult to ignore. After all, it prints the money...

 But the fact that the government has to mandate that companies build these technologies and utilities use them proves beyond any reasonable doubt that these technologies are totally inefficient and destroy capital. The sad thing is that people want to believe that we can run the power grid from the sun or that they can drive their cars by plugging them into a wall socket. It's completely naïve...

 So all these things are just what used to be called "cap-and-trade" in new clothes. For some reason, the lobbyists for these alternative energy schemes are extremely powerful. Every politician in America gets votes by saying we're going to turn away from nuclear power, coal, and hydrocarbons and have a bright new future in America. It's all bull.

 They're totally wasteful investments. They will result in a lower-quality power grid and vastly higher prices for electricity. And it's a shame that none of the politicians will talk about the realities of how much alternative energy costs. Instead, they just throw out fables that this is what's good for America.

Stansberry & Associates Top 10 Open Recommendations
(Top 10 highest-returning open positions across all S&A portfolios)

As of 09/18/2013

Please note: Securities appearing in the Top 10 are not necessarily recommended buys at current prices. The list reflects the best-performing positions currently in the model portfolio of any S&A publication. The buy date reflects when the editor recommended the investment in the listed publication, and the return shows its performance since that date. To learn if a security is still a recommended buy today, you must be a subscriber to that publication and refer to the most recent portfolio.