Back into the desert of the stock market...

Back into the desert of the stock market... How to find happiness with your investments... Why perma-bears will cost you far more money than investment losses... A lesson from the great uranium bubble of 2007... "It's hard to be a contrarian when you're popular"... Update on our customer-service snafu... How to join Ron Paul in Las Vegas...

Today, we're heading back into the desert – the Rub' al Khali.

That's the "Empty Quarter," the vast sand desert that lies in the heart of the Arabian Peninsula. Lose your way here, and you're dead within hours. It's the perfect metaphor for the world's financial markets. There are very few trustworthy landmarks. There's no easy way to cross the desert. And the "sands" are constantly shifting; making what was true or profitable last year a dead-end this year.

As you may recall, I was inspired by the story of three men who were struggling with addiction and decided the way for them to overcome it was to do the hardest thing they could imagine – walk unassisted across the Rub' al Khali. No one had ever done it before. The biggest problem with trying to walk across this desert wasn't only carrying enough water, it was the giant sand dunes, some 800 feet tall. These enormous obstacles were constantly shifting, making maps almost instantly worthless.

As I see things... three main "sand dunes" catch most investors unaware.

First and foremost, most investors simply don't understand what kinds of businesses make for good, long-term investments. They don't know how to recognize these businesses. They don't know how to quantify their advantages, and they don't know how to value them. These skills are the primary tools that made Warren Buffett the wealthiest investor in history. You might think of him as the greatest "desert walker" of all time.

I introduced a four-part test to help you identify great businesses. I'd urge you to always know these four metrics for every stock you buy. If you will do this, then I know over time you will learn to only buy great businesses. And, if you learn that discipline, it's nearly inevitable that you will die rich.

(By the way, I'd love to hear from subscribers about their journey down this path of learning to only make high-quality investments. If you've seen your investment decisions improve at least in part because of our newsletters, please let me know about your journey. Your feedback inspires us and helps us design content to further your growth as investors. Send your story here: feedback@stansberryresearch.com.)

One more thing about becoming a "business-first" investor. As you go from being a speculator (or a gambler) to an investor who knows what he's buying, why he's buying it, and how it will generate large amounts of wealth... I'm confident you will make a lot of money... far more money than you can probably imagine right now. When you start cashing dividend checks for amounts that are 20% or 30% of your initial investment, year after year, you'll discover making a lot of money isn't nearly as hard as you thought. But that's not the best part...

Sure, money makes life easier and more convenient. But that's not the same thing as happiness.

What will make you happy is the knowledge that you didn't just get lucky. You earned your wealth by understanding what makes some businesses worth so much more than others. You got the money from having the wisdom and the patience to earn it. That's where the happiness comes from – from the successful application of knowledge. After you've done this a few times, you won't ever want to speculate again. You'll understand Buffett's maxim "never lose money" in a whole new way.

The next most important "desert crossing" skill to learn is how to make money even when you're dead wrong about the market overall.

I built my reputation by making a few really well-timed calls about the general direction of the stock market and a few major corporations. Some of my forecasts even became pretty famous – like my headline from the June 2008 issue of my Investment Advisory, "Freddie Mac and Fannie Mae Are Going to Zero." That got my work and my name featured in Alan Abelson's legendary column in Barron's magazine – one of the true highlights of my career.

But I'd bet almost none of my subscribers know about that or would care if they did. My subscribers don't care about Alan Abelson... or whether I'm famous. They don't care about my big market calls, either. They only care about one thing: They care about making money, year after year, in stocks.

I've been personally bearish since June 2013. I believe we're going to see a massive and historic collapse in sovereign bond markets around the developed world. This will be catastrophic for stock prices, as much higher interest rates will attract capital away from expensive stocks and into more attractive and higher-yielding bonds. Obviously, my timing (this time) has been way off. But that hasn't hurt the results of our model portfolio, which continues to far outpace the stock market on average. How's that possible? How have we continued to beat the market, even though we're bearish?

First and foremost, whatever our view on the market as a whole, we're never completely out of the stock market. If we're bearish, then we lean toward more short positions and more conservative recommendations. We've learned to always temper our market view with a dose of reality: Most of the time, stocks go up.

We complement this conservative approach to asset allocation by selecting the stocks of companies that can usually prosper no matter what happens to the economy or to the stock market. We stress companies like insurance firms, royalty companies, and capital-efficient stocks.

Out of all of the things I've learned as an investor and an analyst over 20 years, I'm most proud of my ability to make money even when I'm wrong about the market. And so, it always makes me chuckle a little bit when my critics point out that a particular prediction hasn't come true (yet) or that my model portfolio doesn't match our market outlook (at least in their eyes). Once a competitor of mine even made a tirade-filled video (which was filled with outright lies) complaining that I didn't deserve any credit for my accurate warnings about the 2008 crash because my portfolio wasn't 100% short at the time.

Meanwhile, our track record in 2008 blew his out of the water. Keep in mind, stocks fell roughly 50% peak to trough during that correction. Our portfolio broke even that year, on average. But what really matters is that we made huge gains in 2009 and 2010 because – unlike this competitor – we weren't afraid to continuing buying great businesses when they were trading at good prices.

The "perma bears" are missing one of most valuable "desert crossing" skills of all: They don't know how to make money when their market outlook is wrong. And they scare a lot of our subscribers out of stocks completely. It makes me sad when I come across subscribers who say things like: I got out of stocks back in 2008 when you told me to... but I never got back in. I was too afraid to buy after that big crash.

These folks have never learned to temper their fears or adopt realistic expectations about their own ability to forecast the market. And that will cost them huge amounts of money, far more money than they needed to put at risk as investors. My advice: If you're afraid to make a high-quality investment at a good price, you're almost always making a mistake. Learn to temper your fears by buying a small position and seeing what happens. Or by using tight trailing stop losses. And never take all of your money out of the market for good. That's going to be the wrong thing to do more than 90% of the time.

The last, critical "desert crossing" skill I hope you'll develop as you read our newsletters is to learn how to avoid "the herd" like the plague.

Most of the time, this is easy. I don't think many subscribers are tempted to invest in the kind of stocks you'll find on our "Black List" – companies whose shares are valued for more than $10 billion and trade at more than 10 times their annual revenues.

There are only a handful of businesses created every decade that are worth this kind of valuation. And even if they're worth it, it's almost dead certain that, sooner or later, you'll have the opportunity to buy in at a much more reasonable price.

As a current example of what usually happens to these kinds of stocks, I'd point to the social-media service Twitter (TWTR) and online review site Yelp (YELP). Twitter is currently on our list, trading at $24 billion in market cap and 14 times sales. Yelp is a former Black Lister and currently trades at $3 billion in market cap and eight times sales.

Both of these companies have serious business problems, but have been hyped by promoters and have caught the public's eye. Meanwhile, they're both down big over the past two years, and both suffered falls of more than 50% from their peaks. Out of the two companies, I think Twitter has a much better future ahead of it, but at current prices, I wouldn't touch either stock.

At other times, though, the passions of the crowd aren't as easy to see. Take our recent recommendation of Coach (COH), the legendary handbag maker. The main reason we bought the stock is that this is a great business, with a great brand. We believe it's almost inevitable that in five, 10, and 30 years Coach will be selling many more handbags and earning far higher profits than it does today.

Many subscribers, though, criticized our recommendation. They argued that new brands, like Michael Kors, were going to wipe out Coach. Fashion is an area of the market where you should always "fade" the crowd. There are few permanent fashion brands. We doubted Michael Kors would become one. So to us, buying a well-proven, 50-plus-year leader in handbags made a lot more sense, especially considering the stock's low price (relative to cash earnings). Here's what's happened over the last year between Coach and Michael Kors...

One final point about avoiding the crowd... If you plan to invest in commodities or commodity-type businesses, you must avoid the crowd at all costs. Commodity-type businesses have no way to protect their profit margins from competition, which means it's only a matter of time before these companies suffer a serious collapse in profits. It may take years for enough competitors to go out of business, allowing the cycle to repeat.

Buying a commodity or a commodity-type business after a 100% or 200% rally is likely to be financial suicide. It takes a long time for cycles to turn – usually about twice as long as anyone expects.

Take uranium, for example. Back in the mid-2000s, uranium was the hottest commodity around. My friend Rick Rule organized several large investment funds to buy uranium back in the late 1990s as he correctly judged a severe mismatch between current supplies, current prices, and the known demand of the global market. He was right, and investors in his funds did incredibly well. They made more money than I can imagine.

At the investment conferences I attended as a speaker in 2006 and 2007, everyone wanted to know my opinion about uranium. That was odd because I'm not a commodity or a resource expert, and don't claim to be one.

Rick Rule, a bona fide resource expert, couldn't even hold off the crowd in the bathroom. I'm not kidding. At the New Orleans Investment Conference in 2006, I saw attendees crowding around Rick while he was in the men's room. They all wanted to know what uranium stock to buy. I looked at Rick (who, at 6'4," I could easily see above the crowd) and quietly reminded him that it's awfully hard to be a contrarian when you're popular. He knew exactly what I meant.

In my presentation that year, I showed a chart of uranium and called it a bubble. I was roundly booed. I responded to the boos by making an observation. I told the crowd how ironic it was that this group of supposedly sophisticated and "contrarian" investors could have looked at the 2000-era bubble in Nasdaq stocks and seen the obvious bubble... But looking at a nearly identical bubble in uranium, they saw nothing.

It is particularly ironic because at least some of the Nasdaq stocks were high-margin, high-growth companies destined to be very successful, while the uranium bubble was made up of nothing but low-margin, highly leveraged commodity producers – none of which were destined for success. The uranium bubble burst, of course. And I wasn't invited back the next year... of course.

If you've read all four of my most recent Friday Digests, I hope you've learned something valuable and helpful. There is a golden thread you'll find running through all of these messages. If you can learn to stick with investing in good businesses trading at reasonable prices, you will greatly increase your investment results. That's true whether it's a bear market or a bull market. Learning this discipline requires as much emotional control as it does mental prowess. And that's the hard part. That's the part I can't teach. That's the part you'll have to learn on your own. And sadly, you will almost surely learn it the hard way. I wish you luck. And I pray your tuition doesn't cost too much.

One more thing... I'd like to invite you to join me and a few dozen of the world's most interesting entrepreneurs, writers, thinkers, and investors... plus several hundred additional delegates... for a wonderful experience this fall in Las Vegas (October 12-13).

This is our first ever Stansberry Conference Series (SCS) event.

You'll meet our good friend, former presidential candidate and Congressman Dr. Ron Paul. He's the only honest man to ever serve in the U.S. Congress (at least in my lifetime) and there's no more right-thinking man in American politics. Come learn why he's convinced a major, global stock market debacle is on the way.

You'll also meet the man who led the Fed's 2008 Wall Street bailout – Andrew Huszar. Today, he's a senior fellow at Rutgers Business School, which means he's free to tell us what really happened in D.C. back in the fall of 2008. You won't believe how much money was wasted and who actually got rich on these bailouts.

Our Conference Series meetings aren't the typical financial meetings you might have been to before...

Last year, our Stansberry Society meetings introduced an average of 400 attendees to an array of fascinating ideas. Our goal with our meetings is to introduce you to not only big ideas, but the incredible people behind the events that shape our world. Last year, that included people like WikiLeaks founder Julian Assange, Tesla cofounder J.B. Straubel, and even big wave surfing legend Laird Hamilton.

We don't want to give all of this year's surprises away. You'll have to show up to see what we have in store.

Of course, a handful of investment legends will be there too... world-renown experts in small-cap and value stocks... fine art and vintage watches... music royalties and intellectual property investing... real estate... activist investing... natural resources... short-selling... and much, much more.

You'll also have the chance to meet me and our top analysts, like Dr. Steve Sjuggerud, Dan Ferris, Doc Eifrig, David Lashmet, and more...

As with everything we do, it will all be top-notch: the best location, the best guest speakers, the best food, etc. We value your time and your participation and we won't let you down.

So... do it.

Come join us in Las Vegas and make several hundred new friends. It might change your life; it will certainly change your thinking.

You can get the full Las Vegas conference details, as well as claim a discount if you're one of the first 150 readers who respond here.

New 52-week highs (as of 6/18/15): American Financial Group (AFG), Altius (ALS.TO), Allied World Assurance (AWH), ProShares Ultra Nasdaq Biotech Fund (BIB), CVS Health (CVS), Dollar General (DG), iShares U.S. Insurance Fund (IAK), iShares Core S&P Small Cap Fund (IJR), Prestige Brands Holdings (PBH), and ProShares Ultra Health Care Fund (RXL).

In the mailbag, dozens of unbelievably kind and supportive messages relating to our recent customer-service snafu. As I explained earlier, a technology migration and an unexpected surge in new subscribers created unprecedented demand for customer service. We did not manage this process well and, due to a lack of communication, the problem quickly spiraled out of control.

Let me update you on our progress, as of Friday morning. First, in regard to wait times... we were able to almost immediately drop average wait times to less than one minute. On Thursday, average hold times were 48 seconds. And in regard to processing our backlog of refunds, more than 80% of them are now complete. I feel certain we will easily meet our self-imposed Monday deadline.

As always, if you don't feel like you've been well served by any aspect of this business – whether it's editorial, marketing, or customer service – I'd like to know about it. I appreciate your ongoing feedback. There's no better way for me to ensure that we continue to treat and to serve our customers in the same manner that we'd expect if our roles were reversed. Send your notes to: feedback@stansberryresearch.com

"Your Digest today is exactly why I became a lifetime member many years ago. Sure, the investment advice has been good and I have learned a lot from you and your crew. But most importantly, you have always been straight up in the past and you always continue to do things the right way. Good Luck with the mishap. I am sure you will get it straightened out." – Paid-up subscriber Rob N.

"I'm one of those who felt pretty screwed over. I requested a refund May 7... As of last week, I still didn't have the refund. So I called and left a message and another and sent e-mails. NO contact back from Stansberry.

"So I took time off work and went to my bank to file a complaint to get a refund.

"Finally [a customer service representative] contacted me via e-mail. And after me trying a few times to connect with him, he assured me it will be right by Thursday.

"I wanted to get ahold of you directly. I'm a financial services person. My clients read your stuff so I stay up on it. I wanted to vent my spleen about the reindeer games. But you took responsibility, said it was wrong wrong wrong and that your company failed.

"I admire that, sir, and will continue the recommend your products and use them myself. Thanks for your honesty." – Paid-up subscriber Maggie B.

I have been a long time subscriber (Flex Alliance & Venture), and I am continually amazed by the superior quality of service you offer.

"The fact that you personally address issues at your company astounds me; what you describe as a problem that you are fixing urgently is standard operating procedure for almost every other service I have subscribed to in the past – they strive to make contact impossible, are impossible to reach, never say what they mean, or mean what they say.

"The fact that your company publishes the best investment advice AND you care about your subscribers is why you are growing at such a phenomenal rate.

"No apologies are necessary; I think congratulations are in order. All the best." – Paid-up subscriber Diana R.

Porter Stansberry

Baltimore, Maryland

June 19, 2015