Another popular stock plummets...

Another popular stock plummets... Trouble for Etsy... More bad news for Brazil... 100,000 taxpayers at risk... Doc's advice... These 'supermaterials' will change our lives... And make investors a fortune...
 

Editor's note: Today, we're continuing our special series from Paul Mampilly, editor of our newest trading service, the Professional Speculator. Paul is a former money manager with more than 20 years of investment experience. He also won the prestigious Templeton Foundation investment competition during one of the most volatile markets in history (2008-2009).
 

Paul is an exceptional long-term investor, but his true passion is speculation... He's a master at discovering small, innovative companies that can soar 200%... 500%... even 1,000%-plus.
 

This week, Paul is highlighting some of the biggest technology trends he'll be following in his service. Today, he explains why "supermaterials" need to be on your radar now. (If you missed Paul's earlier commentaries, you can find them here and here.)
 

 

 Is the market finally coming to the realization that fast-food joint Shake Shack (SHAK) might not be worth its lofty valuation after all?
 

Shake Shack is one of the trendiest fast-food restaurants in the U.S. today. The company prides itself on using natural ingredients and no hormones or antibiotics. Its burgers and milkshakes draw rave reviews. And its stock has soared...
 

Since going public on January 30, shares of the popular burger chain have risen an astronomical 251%, and now trade at a price-to-earnings ratio of close to 1,000.
 

But yesterday, shares closed down 14% on no news.
 

 At the end of 2014, Shake Shack had 68 locations across the U.S. (compared with McDonald's, which has more than 35,000 locations in 119 different countries).
 

Yet Shake Shack's current market cap ($2.66 billion) values each of its locations at a little more than $39 million each. McDonald's – which is one of Porter's highest-conviction buys today – has a market cap of $94.6 billion, making each of its locations worth around $2.7 million.
 

So tell us... is the company that was founded just 11 years ago and earned $38 million in the first quarter somehow worth almost 15 times more than McDonald's, which earned nearly $6 billion over the same period?
 

We don't think so. But as Porter says, Mr. Market is often irrational...
 

When you see people doing stupid things with their money, don't follow them. Don't jump off that bridge. Mr. Market is a lunatic, not a leader.

 Speaking of recent initial public offerings, online marketplace Etsy (ETSY) might be in trouble.
 

We recently discussed how Etsy shares were down more than 50% since going public in mid-April. And now, the company is facing more competition from Amazon (AMZN), the whale in the online-marketplace industry.
 

According to a recent article in the Wall Street Journal, Amazon is "prepping a marketplace for artisan goods it is calling Handmade." Amazon hasn't said when Handmade will debut or what fees it will charge to sellers, but the news should make Etsy (and its shareholders) nervous.
 

While Etsy currently charges lower fees to its sellers than Amazon, there are many reasons why an individual seller could jump ship. The biggest: Amazon has nearly 280 million active users, versus Etsy's relatively minuscule 21 million users.
 

The Journal interviewed a pair of Etsy sellers – Dar Garfield and Monica Estrada – for their take on Amazon's new project. Garfield explained, "Amazon has such huge traffic numbers on their website already, it's pretty appealing. I am probably going to do it." And Estrada voiced similar concerns: "It's a good idea not to put all your eggs in one basket, and joining another handmade marketplace would make me feel like I'm not so dependent on Etsy for income."
 

 Last June, we shared similar concerns about mobile-camera maker GoPro...
 

GoPro is selling small cameras that would be easy to replicate. There's no barrier to entry. Any large technology company with billions of dollars in the bank could easily build a similar product.

Of course, it's not a direct "apples to apples" comparison. But it's a good reminder to beware of investing in a company whose product or service is easily imitable.
 

 The news is also getting worse for Brazil...
 

The emerging-market economy announced it was contracting at its worst rate in 25 years. Brazil is experiencing a weakening currency (the real) and a worsening recession, in large part due to President Dilma Rousseff's massive stimulus plan. The country also relies heavily on commodities like iron ore and oil, which continue to struggle.
 

As a result, the Financial Times reports that Brazilian gross domestic product (GDP) is expected to fall 23%, from $2.4 trillion in 2014 to $1.8 trillion this year.
 

 That's bad news for Brazil, but possibly even worse news for state-run oil giant Petrobras (PBR). Regular Digest readers know the company is one of our favorite short candidates.
 

We've laid out the bearish case multiple times, so we won't spend too much space on it today. Instead, we'll let Editor in Chief Brian Hunt sum things up. From his classic essay in our free e-letter Growth Stock Wire titled "A Timeless Lesson on Investing With the Government"...
 

The bureaucrats running government agencies are not incentivized to produce profits. They are not incentivized to improve the long-term value of a business. Bureaucrats are incentivized to spend their entire budgets and grow larger. This allows them to acquire more power... and bigger budgets for next year... which allows them to acquire more power and bigger budgets for the year after that. Compare this with an entrepreneur who has his own money on the line. He's going to do his best to keep costs down, instead of intentionally blowing his budget. He's going to do his best to hire only employees he needs... rather than hire as many people as possible. He's going to keep a close eye on his cash flow or he'll go broke.

Though Petrobras shares are up more than 70% since March, the stock is still down more than 55% since September.
 

 This week, the Internal Revenue Service (IRS) admitted 100,000 taxpayers could be at risk...
 

According to an IRS statement, criminals used stolen taxpayer-specific information – including Social Security numbers, dates of birth, and home addresses – acquired from "non-IRS sources" to gain access to the IRS' online "Get Transcript" service.
 

Get Transcript allows taxpayers to access prior-year tax returns and other information. It's believed the hackers intended to use this information to file fraudulent tax returns and collect taxpayer refunds next year.
 

 The IRS says the hackers made 200,000 total attempts to gain access to the service, successfully accessing the accounts of approximately 100,000 taxpayers. The agency said it has temporarily shut down online access to the Get Transcript service until it "makes modifications and further strengthens security for it." Taxpayers who need copies of prior-year tax returns can still request them by mail.
 

 The IRS says it will be sending out letters this week to notify all 200,000 taxpayers whose accounts had attempted unauthorized access. It will also be offering free credit monitoring to the 100,000 individuals whose accounts were hacked. As IRS Commissioner John Koskinen told the New York Times...
 

We're confident that these are not amateurs. These actually are organized crime syndicates that not only we, but everybody in the financial industry, are dealing with.

 Our colleague Dr. David "Doc" Eifrig has been warning his readers about these new "digital" risks to your privacy for years. Doc shared his thoughts with us in a private e-mail this morning...
 

This is just the latest example of how technology has made it easier for crooks to steal your personal information. In this case, it appears thieves were able to use stolen Social Security numbers and other information to take advantage of taxpayers who did not already have an account set up with the IRS' online "Get Transcript" system. The "Get Transcript" service has been temporarily shut down, but once it reopens, I recommend folks sign up and get a password and code from the IRS. I have one myself. This should protect you from a similar scam in the future. But there's much more you can do... Taking a few simple steps to secure your personal information ahead of time can not only help protect you from these types of crimes, but can also help keep corporations and even the government from tracking and monitoring you. At Retirement Millionaire, our mantra is not to trust the institutions with your health and financial wellbeing.

Doc and his team have prepared a detailed report titled "The Easy Way to Maintain Your Privacy in America" that walks readers through simple, easy-to-follow steps anyone can take to dramatically reduce the risks to their personal information and privacy.
 

Retirement Millionaire subscribers can already access this report for free right here. If you're not yet a subscriber, click here to get immediate access to Doc's report with a risk-free subscription to Retirement Millionaire.
 

 New 52-week highs (as of 5/27/2015): CDK Global (CDK), WisdomTree Japan Hedged Equity Fund (DXJ), PowerShares QQQ Fund (QQQ), and ProShares Ultra Technology Fund (ROM).
 

 In today's mailbag, we answer a reader's question about Paul Mampilly's new Professional Speculator service. Send us your questions and comments to feedback@stansberryresearch.com. And be sure to check out Paul's latest essay below...
 

 "What is the difference between Stansberry Venture and Professional Speculator? Aren't Lashmet and Mampilly essentially doing the same thing?" – Paid-up subscriber Ryan M.
 

Brian Hunt comment: Dave and Paul are taking similar approaches to investment. And speaking as an investor, I can say that it's a very, very, very good thing. Here's why...
 

I like to keep the bulk of my wealth in safe, conservative assets, like elite dividend-paying businesses, real estate, and municipal bonds. But I also like to allocate a small portion of my wealth to investing in small businesses that could one day become huge businesses. Like most any investor, I'd like to buy into the next Starbucks, the next Facebook, the next Amazon before they become household names. This is where 1,000%-plus returns come from.
 

Both Dave and Paul are looking for very promising, very innovative small companies to recommend to their readers. Typically, they're looking at the universe of stocks that are below $2 billion market cap. (For comparison, ExxonMobil, at a market cap of $355 billion, is 177.5 times larger.)
 

Because of the amazing developments taking place right now in personalized medicine, cancer vaccines, robotics, Big Data, medical implants, artificial intelligence, nanotechnology, drones, self-driving cars, and virtual reality, there are hundreds of potential investments that investors like me need to consider.
 

The future is going to be amazing. I want to be there. And I want to invest in it. But "investing in the future" is a subject so large that even a dozen great analysts couldn't keep up with it all.
 

As for who to follow... if you have the means, I recommend following both. But keep in mind, I'm a voracious reader. I'm an information junkie. I like more insight rather than less insight.
 

The choice is similar to enjoying two different television programs. Am I going to just watch Breaking Bad or just Game of Thrones? It's not an either/or question for me. I'm going to watch them both. Likewise, I'm going to read as many great investment services as I can get my hands on. You may want to consider doing the same.
 

Regards,
 

Justin Brill
Baltimore, Maryland
May 28, 2015

These 'Supermaterials' Will Change Our Lives... And Make Investors a Fortune

By Paul Mampilly, editor, Professional Speculator

Have you heard of "supermaterials" – the manmade, engineered material that is stronger, tougher, lighter, and more durable than plastic, rubber, metals, and other existing materials? If you haven't heard of them yet, you will soon...

There are three supermaterials I expect to become as widely used as glass or plastics within the next five years. That offers investors the chance to get in at the bottom floor and make a lot of money from this trend.

Right now, the supermaterial getting people excited is graphene. This is the thinnest material on Earth that we've been able to create. A single layer of graphene has the thickness of one atom. But it's also the strongest material (by weight) ever measured. Depending on its purity, graphene is 40 to 100 times stronger than steel... and obviously weighs much less.

Last July, tech giant IBM announced it would invest $3 billion over the next five years to figure out how to use graphene to make semiconductors. IBM wants to use graphene to make transistors that will make computer chips 1,000 times faster and more energy-efficient than the current silicon-based ones.

So... why isn't everything made of graphene yet? Well, for one, nobody has figured out how to make large sheets of it yet. Right now, it costs $500 to produce a single gram. Meanwhile, a kilogram of aerospace aluminum costs $10. (That's $500,000 worth of graphene.)

Of course, getting the cost down was an issue for plastic in its early days, too. Research firm Allied Market Research estimates that the graphene market will reach nearly $150 million by 2020. That would reflect a growth rate of 44% within the next five years. But those estimates are based on the current cost of making graphene. When the cost goes down, the use of graphene will explode and make it a market worth billions of dollars.

Another category of supermaterials that will become a household name in the next few years are biomaterials, which seamlessly work with our bodies' natural biological cells and membranes. Biomaterials can mimic cells, tissue, and muscle, effectively replacing them in our bodies. Plus, they aren't foreign substances to our bodies like metal and plastic are. The global market for biomaterials should reach $115 billion by 2020, with a growth rate of more than 13%, according to biomaterials research firm Mordor Intelligence.

The third supermaterial I'm following closely is carbon fiber – a super plastic. Carbon fiber is made of long, thin strands of carbon atoms. It's 10 times stronger than steel and five times lighter. The Boeing 787 Dreamliner airplane is made of 50% carbon fiber. This frame is what makes the Dreamliner plane 20% more energy-efficient than similarly sized planes. You're going to see carbon-fiber composites used in cars and appliances as a replacement for metal to make them lighter and more energy-efficient. The Carbon Fiber report estimates that the market for carbon-fiber-reinforced plastics will reach nearly $50 billion by 2020, with a growth rate of 73%.

These supermaterials will generate huge winners in the stock market over the next five years. Some of the big winners will be the companies who make the materials. Others will be the companies who use it to make incredible new products. I'm keeping my eye on a whole group of stocks that I believe will benefit from supermaterials... and I'll be telling my Professional Speculator subscribers when to buy them soon.
 

 

Editor's note: Since 2008, Paul has more than quadrupled his net worth... enough to retire at age 45... all through a simple secret he has developed. And now, for the first time ever, he has joined Stansberry Research to show subscribers how it works... and why it could make his readers multiple times their money on a single speculation right now.
 

Paul says this is one of the best speculations he has come across in 25 years of investing. This company has developed what could be the biggest medical breakthrough of the decade. He believes this stock could double over the next year... and turn every $5,000 invested into $135,000 over the next decade and beyond.
 

Plus, right now, we're offering a special charter offer... You can receive the Professional Speculator for life – all for the cost of a normal one-year subscription – just by buying today. Plus, you can try this service RISK-FREE for the next SIX months. Learn more about this opportunity here.