Better Than Lies

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

As of 07/08/2013

Cockeysville, Maryland

* * * Saw our first flurries here last night. But it’s absolutely gorgeous this morning. Crisp and windy, a blue sky with a few wispy clouds. All the way down Fall’s Road into the city, the canopy is on fire: Everything is yellow and red. Spectacular. Let’s hope the good weather holds. We’re having around 100 of our closest friends over to the house this weekend for our first-ever Bull & Oyster Roast. It’s a Maryland tradition. Now that we’ve lived here for eight years, we figured it was time.

* * * Cisco, the dominant producer of Internet hardware, is hitting new highs. There’s a new version of Internet Protocol (IP), the software that governs the routing of bits through the Internet. Called IPv6, this upgrade has been in development for 20 years. IPv6 will expand available IP "addresses" to an almost infinite number, allowing more devises to be "wired." In short, the old IP software was running out of room – the current version supports a "mere" 4 billion addresses. The U.S. government is leading the charge, setting IPv6 as the standard for all government agencies by the summer of 2008. That’s 1,175 agencies… all moving onto IPv6 in two years. Estimated total upgrade expense: $25 billion.

* * * Here’s a strange and wondrous fact… 53% of U.S. workers have less than $25,000 saved for retirement. Because our paper currency is the world’s reserve currency… and we can print as much of it as we want… we’re the only country in the world that’s not seriously handicapped by a total lack of savings. At least not yet. Most things that are too good to last, don’t.

* * * Last week at our Alliance meeting in Aspen, the editorial panel got a very good question at the end of the day: Name two financial advisors that you read (outside of Stansberry). Here’s a partial list, in no particular order: Richard Russell, Doug Casey, Marc Faber, Outstanding Investor Digest, Chris Weber, James Grant, Dennis Gartman, Chris Mayer, Fred Hickey (High Tech Strategist), and Jeff Matthews.

* * * Portfolio update: Jeff Clark’s call options on a coal producer have soared, up 86%. And there are a dozen of our recommendations at new highs – half from Graham Summers’ Inside Strategist: Enterprise Products, Coke, AutoZone, and ITT Educational, among others. It’s easy to see why Graham’s picks do so well. He only buys stocks that have a tremendous amount of insider buying. Who knows these businesses better than their CEOs and board members?

* * * Subscriber feedback, regarding Extreme Value. Says a paid-up subscriber to True Wealth and PSIA, "Extreme Value costs more than I’m comfortable paying, but I am interested in reading an issue."

Ah… that’s the rub, isn’t it? Most people have trouble discerning value at a high price. When it comes to many items, there isn’t any value at the higher price. Take gasoline. Is the 93 octane really any better than the 87? If so, I can’t tell.

But what about newsletters? That’s easier: Just measure the results. Since inception, Dan’s efforts have produced a compounded annual rate of return near 24% – which is by far the highest return out of all our investment letters. (Jeff Clark argues his trading service does even better.) Fewer than five of Dan’s recommendations have lost money – that’s less than one in 10. Is that worth $1,000 per year? To anyone managing at least $100,000, the answer is an obvious "yes." Most investors spend far greater sums on money managers, brokers, or hedge funds… and don’t get results nearly as good. What we charge is a pittance, a rounding error compared with the gains Extreme Value produces. It’s the greatest value in the business, according to its fans. If you don’t agree, we’ll refund your money. What could be fairer?

* * * Keep the e-mails coming. We may not agree with you… but we’ll read whatever you send us: feedback@stansberryresearch.com.

* * * My good friend and fellow long-time Agora (our parent company) hand, John Forde, recently had a baby – Katharine Austin – with his wife Mimi. Like many of us, John – who’s written some of Agora’s best marketing copy – met his future wife on Agora’s campus in Baltimore. (I met my wife there too…) A lot of folks say that their company is like a family. Ours has become one: There must be 20 Agora-kids by now.

* * * I’m generous in theory. Luckily, people around me are generous in fact. When I have an idea – like treating our best customers to a whole day of food, booze, and investment insight in Aspen, Colorado – someone else has to make it all happen. Otherwise, it never would. All of us that spent a wonderful couple of days in Aspen last week should send a special thank-you note to Kristen Kossuth, 1217 St. Paul Street, Baltimore, MD 21202. Without Kristen, our project manager, there’d be no parties.

* * * * * * * * * * * * * * *

"There are ominous signs that the earth’s weather patterns have begun to change dramatically… [This could lead ] to a drastic decline in food production, affecting just about every nation on earth. Scientists have urged governments to consider emergency action to head off the terrible threat of global cooling."

– Newsweek, April 1975

In a speech on the Senate floor in 1982, Al Gore laid out his solution to the nuclear "arms race."

His plan was perfect… politically. It was simple, it played with the day’s political football (the nuclear freeze movement), and it was impossible to carry out. Gore wanted to limit each missile in our arsenal to only one warhead. And thus, all of our technological advantages would disappear. The Russians’ out-dated arsenal would once again be as powerful as our own.

The Russians themselves could have hardly come up with a better plan. It was brilliant. And utterly useless.

As we know now, our spending billions to develop the multiple-warhead MX missiles was one of the primary drivers behind the collapse of the Soviet Union. That country’s planned economy didn’t generate enough wealth to keep up with U.S. technology. Of course, no one knew that in 1982. Back then, the leading thinkers of the eastern elite, such as M.I.T. economist Paul Samuelson, believed the Soviet’s central planning was more efficient than our free market.

Given his history, it’s no surprise Al Gore’s latest brilliant idea is entirely useless. Gore proposes to combat global warming with a "carbon freeze" (strict limits on the emission of heat-trapping gases) that would destroy most of the economic advantages the U.S. enjoys.

But I have to hand it to him. It’s another doozy: It’s simple and it can’t be done. Thus, it won’t be Gore’s fault when something bad happens. Perfect. It’s better than a lie.

I’m sure you recognize global warming as the latest "Big Problem."

Global warming mirrors the nuclear freeze movement. All the same infantile morons are there – it’s like a big-government playhouse. You’ve got your Gore and your Nader and your Kennedy. You’ve got Hollywood stars (most of them high-school dropouts) flying around in private jets blathering complete nonsense to corporate leaders who, stunningly, don’t even crack a knowing smile.

Finally, just like the nuclear arms race, global warming is a problem that’s so big and so dire it scares the crap out of people – but it can’t be accurately measured or evaluated.

Global warming is so complex, you can’t prove any idea true or false. It’s this complexity that attracts all of the politicians to the stage. Unlike the national debt, public education, or declining real wages… nothing about the Big Problem can be verified as true or false. It’s perfect material for liars. If the public can’t evaluate the problem or the solutions based on outcomes, they’re left to choose their leaders based on the apparent sincerity of the speaker.

And who is more sincere than Al Gore?

Regards,

Porter Stansberry

P.S. New feature for our Digest – the Stansberry Top 10. It’s a list of our 10 best current "open" positions. As I’ve been telling you, our Extreme Value product is by far our best performer. I’ll comment on the list from time to time, when we add a new position.

Stansberry & Associates Top 10 Open Recommendations