Dinner with Doc Eifrig

Dinner with Doc Eifrig... The first issue of Retirement Millionaire... What are the banks selling now?... What would you buy with $1 billion per day?... Yacht shopping... Bonner's birthday... Jeff's face... Moving PSIA to next week (again)…

Last night was a memorable evening... Our good friend, Dr. David Eifrig, joined us for dinner. To be precise, he insisted on coming over to the house and cooking dinner for my wife, Andrea, and me. There's not much better than a guest who brings supper. And it's even better when the guest is a partner in a fine wine shop with access to the best "cult" cabernets made in California.

In addition to the grand cru, Doc Eifrig prepared shrimp shish kebob with jalapenos and plums. Don't knock it until you've tried it. The main course was ribeye – medium rare – and grilled fresh vegetables. We ate dinner outside on the patio behind the house. It was a clear, cool night... candles on the table... stars above our heads.

Then, just before we started to eat, we heard geese honking overhead for the first time since spring. We must live underneath one of the major "goose-ways." They seem to fly right over our house each spring and fall. We've never seen them so early in September before. It's been an unusually mild August, with dry, chilly nights. Nature seems to be warning us winter is going to be long and cold.

Over dinner, Doc Eifrig told us about his latest adventure... cruising in a luxury RV out west for only $19 per day. "If you're willing to drive one-way and if you're willing to take the thing where the rental company needs it, you can rent a big RV for about $20 a day – instead of paying $150-$200 per day," he explained. He's heading to Vegas tomorrow to check on the plummeting real estate market there and pick up his RV for a week of cruising.

The one-way RV vacation is one of Doc Eifrig's many Retirement Millionaire secrets. After a decade-long career as one of Wall Street's top derivatives traders, a second career as a medical doctor (not to mention a dozen other business ventures along the way, including biotech start-ups and fine wine shops), Eifrig has picked up a fair number of bona fide secrets to good living. He's now embarked on a third career as a financial newsletter writer, so he can share those secrets with you.

Tonight, S&A Alliance subscribers will receive the first beta issue of Doc's new publication, Retirement Millionaire. As always, our new publications are included in your lifetime membership. Please give our latest effort a careful read. And let us know what you think about it: feedback@stansberryresearch.com.

If you can just get the obvious stuff right, you'll make a lot of money in finance. Take the single greatest "buy" indicator of my career: In 1999, the Swiss central bank announced it would sell most of its gold hoard. That sent gold down to less than $250 per ounce. They say nobody rings a bell at the bottom of a market, but in this case, the Swiss actually did.

At the same time, the Financial Times called gold a "barbaric relic" and said it had no place in the modern world. It was the perfect moment to buy. So... What are central banks selling today? And what do the newspapers say is worthless? The Wall Street Journal points out China's biggest banks have sold half of their Fannie Mae- and Freddie Mac-backed mortgage securities this year. Hhhhmmmmnnn...

In the midst of the global credit crisis, worldwide mergers and acquisitions are down 27% year to date. U.S.-based private equity, a large driver of activity, is frozen because it can't find funding to back its multibillion-dollar deals. But foreign firms are picking up the slack. In particular, the oil-rich, Arab nations…

Yesterday, Abu Dhabi – which recently bought stakes in Ferrari, GE, Carlyle Group, and Citigroup – proposed buying the English Premier League soccer team, Manchester City for $357 million. And today, Abu Dhabi announced it would invest $1 billion in films produced in cinema capitals Hollywood and Bollywood (and elsewhere)... But these deals are just "chump change." Abu Dhabi brings in approximately $1 billion a day in oil revenue.

It's the darkest irony of good intentions... As the government spends more and more money trying to fix the economy and as taxes become more and more "progressive" in an effort to redistribute wealth, inflation inevitably accelerates. And that, paradoxically, makes the rich (who own hard assets and can effectively short the dollar via fixed-rate loans) vastly richer, while destroying the savings and the lifestyle of the middle class.

Thus, as inflation has heated up over the last six years, the wealthy have begun to get richer, faster. To take advantage of the trend, the world's leading luxury brands (already involved in apparel, cars, and booze) are turning to yachts. Louis Vuitton Moet Chandon (LVMH), the world's biggest luxury goods group, agreed to buy Royal van Lent, a Dutch builder of custom yachts. Last week, Hermes, a French fashion house, announced a joint venture with Wally, the Monaco-based yachtmaker. Royal van Lent, with 2007 sales of around $200 million, builds a small number of yachts each year, for a minimum of $40 million. Its order book has been growing 20% a year since 2000.

Another hedge fund goes down... Ospraie Management, run by "Tiger Cub" Dwight Anderson, will close its largest hedge fund after it lost 38.6% this year on bad bets in commodity stocks. The Ospraie Fund lost 26.7% this month after a "substantial sell-off in a number of our energy, mining and resource equity holdings," wrote Anderson in today's letter to investors. "I am extremely disappointed with this result and the fund's sudden reversal in performance... After nine years of striving to be a good steward of your capital, I am very sorry for this outcome."

He may be sorry. But we doubt he'll return any of the hundreds of millions in performance fees he's been paid over the last eight years. Oh, by the way, Extreme Value short sale Lehman Brothers owned 20% of Ospraie.

Tonight, I'm heading down to Annapolis to the annual meeting of our parent company, global newsletter titan Agora Inc. The meeting runs through Saturday evening and closes with a birthday party for my old friend, mentor, and partner, newsletter pioneer Bill Bonner, the president of Agora.

Bill, who still does 150 push-ups each morning, is turning 60. A few years ago in Argentina, I asked Bill why he continues such a punishing morning exercise regime. "Compared to 150 push-ups, the rest of my day is easy..." If you're a long-time reader of Bill's e-letter, The Daily Reckoning, and you'd like to offer him a birthday message, please use our feedback inbox: feedback@stansberryresearch.com. I'll make sure he gets it.

A scheduling note: Due to my obligations at the company meeting, I'm moving the September issue of my newsletter, PSIA (which is normally published on the first Friday of the month), back one week to next Friday.

I've tried in the past to write my letters in advance. But it just doesn't work. Something inevitably happens in the markets, which alters our strategies. The only way to write a timely letter is to write it up to the deadline.

Also, we'll have to rely on Goldsmith to handle The Digest on Friday.

New highs: Covidien (COV), Johnson & Johnson (JNJ).

Apparently video evidence of the FreedomFest presentation is in circulation... Holding any other gems? Let us know at feedback@stansberryresearch.com.

"Hey there subscribers... did anyone else imagine Jeff Clark (before watching the video) short and with dark hair???? its actually good to see that the person you read so often... also has a face! keep up the good work." – Paid-up subscriber Mr. Barnatan

Porter comment: Surprisingly, perhaps... everyone who works at Stansberry has a face. A few are even fairly attractive.

"I got a DVD of your Amerika presentation @ FreedomFest, but I loaned it to a friend right away & just got it back today. Re: '... & I won't be invited back,' Idunno why. You mentioned the reason may be language, but it really wasn't 1/2 as bad as I expected. A friend once told me he would rarely/occassionally curse 'because I firmly believe in the power of language.' You made your points well, but you weren't obnoxiously profane... Anyway, you're a fantastic writer, but not a great speaker. Granted, you gave it a disclaimer re: the prior night, but you weren't very engaging. Keep up the great writing, indignance, & vitriol." – Paid-up subscriber Jared Johnson

Porter comment: Maybe I'm better in person...

Regards,

Porter Stansberry

Baltimore, Maryland

September 3, 2008

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