Auditing our newsletters...

We've been working on a big project behind the scenes here at Stansberry Research... We've been conducting an internal audit of our track records – since inception – across all of our newsletters.

As longtime readers know, we've always insisted on a high level of transparency and accountability from our analysts. We conduct thorough reviews annually – our "Report Card." We assign grades based on the nominal results achieved, factoring the risks taken and the analyst's winning percentage.

But we've long wondered what the multiyear results look like. I bet you're curious about how we've done. And I'll share some of our results below. I'll also show you something very surprising about our investing over the years... something that could make you a lot richer in the years ahead.

First, though, a word about our methodology. We hired two certified public accountants with audit experience at the "Big Four" accounting firms. We asked them to produce a detailed track record accompanied by the requisite backup information. We have copies of the newsletters we've published over the years and we were able to get third-party data from Bloomberg and other data providers to verify the prices of equities as we published them over the years.

None of our writers (including me) were involved in auditing our own work. We have completed the audits of both my newsletter (Stansberry's Investment Advisory) and Steve Sjuggerud's letter (True Wealth). We started with these because they're our oldest newsletters and had the longest track records.

True Wealth launched in the fall of 2001. The average gain from all of its recommendations through 2013 was 21.9%. The average holding period was 476 days. That produces annualized gains over nearly 12 years of 16.8%. That is an extraordinary performance, almost double what the stock market earned as a whole over the same period.

Just as importantly, Steve has only had one year (2008) where his average return from each recommendation made was negative (-2.53%). In every other year, True Wealth earned substantially positive results. Its three best years for annualized gains were 2003 (31%), 2009 (29%), and 2012 (26%).

My Investment Advisory launched in the summer of 1999. The average gain from all recommendations through 2013 was 9.6% with an average holding period of 286 days, for annualized gains over roughly 15 years of 12.3%. This beats the market as a whole by around three percentage points annually. Over 14 years, that would make a huge difference in total returns. Still, my results were not nearly as good as Steve's... or were they?

We've both done very well for our subscribers, but Steve definitely got a big advantage in long-term results because of timing. We launched his newsletter the week of September 11, 2001. The resulting crisis sent stock prices way down. He was able to recommend a lot of high-quality investments at low prices. I'm not taking anything away from Steve – he had the foresight and the wisdom to make those recommendations. However, he wasn't writing a newsletter during the terrible bear markets of 2000 and 2001, when my average returns were negative. Those two bad years – the only two bad years of my career – weighed down my overall results significantly.

If you look at our results over matching time periods, they are almost identical. Over the past 10 years, I've produced annualized gains of 14% for my subscribers. Steve's returns for the same period are 15.7%. Yes, Steve is still beating me, but the comparison is much closer. And if you measure over the past five years, I beat Steve by a fraction. Steve has produced annualized returns of 18.3% and I've done 19.2%.

The point is, even though we made completely different recommendations – and even though we follow very different strategies – we've produced very similar, excellent results. Why? I think I know the reason. But first, let me show you something else...

Here's the interesting part of what we've found. Just like True Wealth, my newsletter's best results came in 2003, with annualized returns of 62%. And just like True Wealth, my second-best results came in 2009, with annualized returns of 25.7%. And, like True Wealth, my third-best results came in 2012, with annualized results of 22.1%.

Here's my hypothesis. Despite our very different investment styles, both Steve and I are fundamentally conservative investors. We care a lot about buying good values and we almost never overpay for stocks of any kind, no matter how good the story sounds. That's why our results are so similar. And that's why we both have done the best during periods (2002, 2009, and 2012) when the stock market was bouncing back from a period of low valuations.

Earning the kind of money Steve and I have made for our subscribers over the past decade will make you very rich, even assuming a moderate level of savings. Earning 16% a year in stocks while saving $10,000 per year will create a $1.1 million portfolio in 20 years. And if you want to do even better than our average result, focus on the outstanding values we write about. More importantly... wait for the market as a whole to offer you outstanding value, as it did in 2003, 2009, and 2012. It won't be long before the market offers us another period of outstanding value.

Now... as hard as it is for investors to hold onto cash and wait for great values... I'd also like to urge you to do something even more difficult: take the time and spend the money to join us in Nashville, Tennessee on October 18.

It's our last Stansberry Conference event of the year. I'm going to give a speech unlike any other presentation I've ever given... or will ever give again. You'll want to say you were there. Even if you don't care about the stunt I'm going to pull, you should come and meet former presidential candidate Dr. Ron Paul. In my view, there isn't a more clear-thinking voice in American politics.

Likewise, my friend and mentor Bill Bonner will be speaking in Nashville. Bill is the founder of Agora Inc., one of the largest and most successful publishing companies in the world. More importantly for our purposes, Bill has been writing about the global economy on a daily basis since 1999. He's going to share his thoughts on the efficient market hypothesis, a topic he has been noodling about for 40 years.

Financial expert Jim Rickards is also going to join us. Perhaps you've seen his new book, The Death of Money. It has become an international bestseller – one of the bestselling books ever written about global economics. Jim is convinced (as am I) that the dollar-based global monetary system is on the way out. He'll explain what's coming next...

But not all of our presentations are "macro" in nature. As we do here in the Friday Digest, our mission at these Stansberry Conference events is to educate first and foremost. Extreme Value editor Dan Ferris is hosting a workshop on Friday (for our VIP members) with legendary hedge-fund manager Carlo Cannell.

Both focus on value investing in small-cap stocks, an approach that has long proven to be the safest and most profitable sector in the stock market. And on Saturday, Dan will address the entire conference, sharing the strategies he has learned writing the world's leading value-oriented financial newsletter since 2002. Sitting down with Dan for an hour could easily prove to be the most valuable hour of your life. I'm not kidding. That's why I'll be sitting in the crowd with you, taking notes.

DailyWealth Trader editor Amber Lee Mason will be leading another one of our "hands on" presentations. DailyWealth Trader is one of our company's best trading services. Amber is going to tell you about one of the few real secrets to making consistent, dependable returns in the stock market. It's a way to make 12% a year with your savings without even trying. Here's a hint: it has nothing to do with trading.

And there's more... a lot more that I don't want to give away, like one of the most respected global value managers in the world who is flying in from London... and the most experienced resource financier I know telling us which commodities are buys right now.

I already know why you won't come. Plane tickets are expensive. It's not fun to sleep in a strange hotel. Sitting in a crowd of 500 strangers is terrifying. But here's the thing... your life is going to be exactly the same a year from now. You'll still be making all of the same mistakes. Your investing results aren't going to magically change.

You'll still be in the exact same rut you're in now... unless something changes you in a dramatic way. The best ways I've found to grow are by meeting new people (with new ideas)... traveling to new places... and reading new books.

Our Stansberry Conference events have introduced around 400 people to each other at every meeting. It has taken people to some of the most beautiful and interesting cities in the country: Miami, Dallas, Los Angeles, and up next, Nashville. And it has introduced our audience to a huge array of fascinating ideas – everything from the ethos of big-wave surfing (surfing legend Laird Hamilton) to the real value of freedom (WikiLeaks founder Julian Assange) and the physics of better batteries (Tesla cofounder J.B. Straubel).

So... do it. Do it for yourself. Come meet your peers and your friends at Stansberry Research. Come learn with us. Experience a new place. Meet several hundred new friends. It will change your life. Sign up here.

One final note for today's Digest... Last week, I typed a short letter to send to a select few subscribers... and I asked my assistant to FedEx these notes on my behalf.

New 52-week highs (as of 9/25/14): none.

In the mailbag... lots of comments about my rant on the NFL in Stansberry Radio. If you haven't listened to one of my Stansberry Radio podcasts in a while (or maybe never before), don't miss episode 183, where I interviewed Ron Paul... and talked about why I hate the NFL. I bet my reason will surprise you. You can get listen for free right here. Send your thoughts on all things Stansberry Research to feedback@stansberryresearch.com.

"Hi Porter, just listened to episode 183 w/ Ron Paul and your rant on the NFL... In regards to your rant about the NFL – I couldn't agree more. I am not a sports enthusiast, and don't care to support individuals who are paid millions to play a game, especially when they act like animals, and their owners rob tax payers to build billion dollar cathedrals. My question to you is that you mentioned that you would not employ someone at S&A who had been arrested for a felony i.e. indicted for child abuse charges, but would you use the same level of scrutiny towards the management teams of the companies you recommend to invest in?" – Paid-up subscriber Peter

Porter comment: Absolutely. I am a firm believer in the idea that "character is destiny." I've hired people who I knew were smart and who I knew had outstanding character... but didn't have much experience in finance. And I've avoided (like the plague) hiring anyone – no matter their pedigree or résumé – who gave me any kind of "red flag" about character issues.

From the time I was a little boy, I've built my life by always and only surrounding myself with people that I want to be more like... people who inspire me with their talents and their character. Warren Buffett talks about this same thing a lot, too... Life is too short to do business with folks you don't like and admire.

"Porter, your argument on Devon Energy makes tons of sense. If I were to play Devil's Advocate, how would you respond to the argument that Devon's Oil Sands operations give their asset portfolio diversity? You and your team constantly remind us to not over-allocate to any one investment and to maintain some balance between market sectors. Could Devon's Jackfish operation be the company's way to balance their portfolio? Certainly there are political risks to fracking, and (while impossible to imagine) there's always a chance that some research study or political opponent comes along and gives significant momentum to the anti-fracking movement. Could over-investment in Eagle Ford and the Permian Basin expose Devon to greater risk, which would justify keeping the Oils Sands operation alive?" – Paid-up subscriber Corey Simonpietri

Porter comment: I appreciate the question, and you have a great point. But the funny thing is, Devon owns more assets in Canada today than it does in the U.S. It's more accurate to call Devon a Canadian oil sands company with some assets in Texas. Over the last five years, it has invested more in oil sands than it did in oil shale. How is that diversification? It's not. It's more like betting the farm. And as you know, I think that's a huge mistake.

If something like 10% of Devon's capital budget was going into the oil sands (instead of something like 50%), you could make a reasonable argument about diversifying the portfolio. But even then, diversifying into low-quality assets isn't likely to help your portfolio over the long run. There's a difference between diversification and "de-worsification." When you were single, did you diversify into ugly girls? Then why own ugly assets?

"Porter makes a good argument about Devon shedding off its Canadian bitumen assets, but I think his argument is weak at least in one point. Let's say Porter is right about Canadian bitumen: only $30/barrel gross profit as opposed to $70/barrel in the U.S. drilling for actual liquid oil. Why would someone pay the $10 billion Porter claims Devon could get by selling the Canadian assets if the $10 billion is based on Devon's estimates from these assets, which Porter seriously questions? In other words, if this revenue is not good for Devon why would it be good for anyone else...? – Paid-up subscriber Luis Anderson

Porter comment: Investment bankers specialize in finding people with more money than brains. They will find someone to take the oil sands assets off Devon's hands. My $10 billion price represents a significant "haircut" from the current value of the forecasted cash flows over the next 20 years. But (almost) no matter what price Devon could get for the oil sands projects, it ought to sell. Better to sell now with the project producing cash than try to sell later, at lower crude prices, with the project producing nothing.

Regards,

Porter Stansberry

Baltimore, Maryland

September 26, 2014