How to Finally Put Your Financial House in Order

'Getting there'… Did you benefit from our best advice this year? How to finally put your financial house in order… Attaining your goals in 2017… I was wrong about gold… Last chance to order OneBlade before Christmas…

Since gold prices began to correct in September, I (Porter) have been getting "nastygrams"...

Paid-up subscriber Peter G. has been sending me these snarky e-mails, filled with vitriol. At first, it was just one or two a month. Then it became five or six.

And over the last few days, with gold trading below $1,200 an ounce, Peter G. is now e-mailing me angry messages three or four times a day.

Here's a sample...

End of America? Gold 10,000? Puts? Shorts? Tesla? Deflation? Stay long? Be short? Corp Bond bust? Wow you guys cover it all and then brag about one or two things you get right. Next thing you know you'll be preaching a razor shortage.

But most of his e-mails are just one-liners, reminding me about our open positions that he seems to think aren't currently trending in our favor. Like, "How's Tesla working out?" (It's doing fine. We're short at $218. The stock is at $200... and still in a downtrend.)

As I hope is obvious to everyone, I don't have any kind of fiduciary relationship with Peter G. I'm not managing his money (or anyone else's). I don't have any detailed knowledge of what he's invested in or how he is actually managing his wealth.

I do know, however, that Mr. Snarky suddenly appeared in my inbox when gold began doing poorly. And various comments in his e-mails about how gold has "stung" him and the increasing animosity of his tone makes it plain to me that Peter G. was far too heavily invested in gold and gold stocks.

Gold investors tend to be very emotional. Thus, all the signs suggest that Peter G.'s greed got the better of him at some point in 2016. And now he's paying the price. Like most people, he can't face his responsibility for these losses, so he's angrily blaming me.

You might think I'm bothered by his e-mails...

I'm not. In fact, I wished Peter G. a Merry Christmas yesterday and he thanked me. How can I read such angry and mean-spirited e-mails with equanimity?

Easy. Peter G. isn't saying anything I haven't heard hundreds (or thousands) of times before. It's no surprise to me that Peter G. is getting lousy results. And I know that has nothing to do with me or any of the work we've published.

You see, I know from his comments that Peter G. hasn't been following our advice. I know he's not because we've had a great year with our investment recommendations – one of our best years ever. If he had been following our advice, he'd be thanking us instead of condemning us. And unfortunately, I knew Peter G. wouldn't follow our advice...

I don't, of course, actually know Peter G. or what he, as an individual does with his money. But in a collective way, I know most of our subscribers simply will not use our work effectively, no matter how carefully we spell out the instructions.

For some reason, it seems that most people don't take good investment decisions (asset allocation, position sizing, and risk management) seriously...

Likewise, it seems like some law of human nature dictates that most people will only buy investments that are extremely risky and volatile. Subscribers tend to completely ignore our best advice, which is to build a portfolio around a firm foundation of super-high-quality, low-volatility stocks. (Yes, I'll show you exactly how to do this below.)

I'd estimate about 90% of your actual investment results are dictated by your allocation decisions – how much capital you put into each position – not which particular stocks you buy. So while Peter G.'s e-mails amuse me and confirm what I already know about human nature, I'm pull-out-my-hair frustrated that so much of our excellent work goes unused.

I want that to stop forever.

I'd like 2017 to be the year that most of our subscribers finally begin to take our work (and their portfolios) seriously. I'd like 2017 to be the year you finally realize your ultimate investment goals, which are to be firmly in control of your wealth and completely on the right track.

And I'm going to do everything I can to help you get there… including what you'll find below…

In today's Friday Digest, I'm going to give you the most valuable gift you might ever receive...

I'm going to tell you exactly how to finally "get there" with your investing. Let next year be the year when you don't end up bitterly disappointed with your investment results.

There's no reason you can't achieve great results. You have the information you need. Now you just have to take about an hour each month – no more – to put it to work.

And I'll explain exactly how to do it.

First, though, let's justify Peter G.'s criticism: Gold is down, a lot...

After the election of Donald Trump, gold has fallen hard (almost 20%). The U.S. dollar has rallied to its highest level since 2003. Gold stocks have fallen, on average, about 40% since Trump's win.

This is an outcome that we didn't expect. A lot of my work this year was based on a completely different macro outlook. I was worried about the ongoing financial repression of the Obama administration being continued by Team Hillary. I was worried about negative interest rates and a looming credit crisis. And had Hillary won the election, I'm confident these problems would still be on the "front burner."

So I was wrong – completely – about my macro outlook. But how should that have affected your portfolio?

Sure, it would be wonderful if I had a crystal ball and could predict exactly how the future will unfold.

But that's never going to happen.

You have to design your portfolio to succeed no matter the macro environment.

Yes, we have been wrong about gold this year... no doubt about it. But so what? If you've followed our advice, then gold and gold stocks make up about 10% of your portfolio. And if you bought our recommendations at reasonable prices, you're down 10% at the most on gold and gold stocks this year – or maybe even up a little.

Even in the worst-case scenario, if 10% of your portfolio is down 10%, then your overall portfolio would be down 1%, assuming everything else is flat. Is that worth getting upset about?

What Peter G. forgets (or maybe doesn't understand) is that we offer advice for investors, not gamblers...

We give you the tools to build a complete portfolio, one that's completely "bulletproof."

Our core advice, which we've been offering for nearly 20 years, is that investors should build their portfolios around super-high-quality, capital-efficient companies. This year, once again, the majority of our research focused on this super-safe and extremely rewarding part of capitalism.

In my Investment Advisory newsletter, we recommended six new, ultra-high-quality, capital-efficient businesses during 2016. Did all of our new recommendations go up? Almost. One is down slightly. Any way you measure it, our results are far better than satisfactory. Here are all of the capital-efficient stocks we recommended in 2016...

.
Even if you were starting from scratch with us this year, you should have done well...

Assuming you put 5% of your portfolio into each of these stocks, about 30% of your portfolio appreciated substantially this year. The simple average gain of these recommendations is 13%. And keep in mind, the average holding period for these investments hasn't even hit six months yet. On an annualized basis, you're making more than 30% a year, so far, with these recommendations.

Also… just to be clear… I'm not "cherry-picking." These are all of the new recommendations we've made and put into the Investment Advisory "Magic Stock" and "Capital Efficient" portfolios.

If you've been reading our work for about the last year, then you surely noticed that we were "pounding the table" on distressed corporate bonds last fall. (Peter G. apparently doesn't understand our contrarian approach to the bond market… that when corporate debt comes under pressure, you buy bonds. He seems to think that our work on bonds led to failure. It didn't.)

As I've claimed for a long time, most individual investors would be far better off not buying any stocks at all and just buying corporate bonds (when you can get them at a reasonable discount from par).

If you followed our advice on distressed debt, something around 20% of your portfolio would have been in our distressed debt recommendations (found in our Stansberry's Credit Opportunities portfolio). Out of the 10 actionable recommendations we've made over the past year or so, all are in the black.

The returns on these investments have been even better than what we told investors to expect. That's because we "hit it out of the park" with our two synthetic convertible bond positions. Our Stansberry's Credit Opportunities model portfolio currently has gains of: 81%, 45%, 28%, 20%, 14%, 14%, 12%, 10%, 8%, and 1%.

That's close to a 40% annualized average return (in bonds!), with an average holding period of around six months… and zero losses. What do you think about that, Peter?

[Silence.]

Starting from scratch last year and following our advice would have led you to build a portfolio of ultra-high-quality stocks and safe distressed debts.

These investments would constitute about half of your portfolio (or a little more). On these core investments, you should have seen immodest gains and virtually no losses.

So if that was the case, do you think you'd be worried about your gold investments being down a little? In the worst case, with our recommended allocation, your gold position shouldn't have "taxed" you more than 1%. You should still be up a lot.

But wait a minute… Did we recommend only super-volatile junior-mining stocks? Did we recommend only buying gold bullion?

No, of course not.

Instead, when we launched Stansberry Gold & Silver Investor earlier this year, we produced an entire portfolio in day one. We're not gamblers. We recommended a safe, diversified approach.

Our allocation in this precious metals portfolio included a 35% allocation to physical gold, a 30% allocation to the leading gold-royalty firms, and yes, a 20% allocation to gold miners, too. But only low-cost producers with lots of gold in the ground. Most of these stocks are still up in price.

Finally… the super-volatile explorers made up only 15% of our gold and silver portfolio. And guess what? Based on our entry prices, this portion of the portfolio is still up, too.

So if you look at our actual recommendations and measure the performance of our portfolio according to the allocations we also recommended, then our gold and silver portfolio is essentially at breakeven, up about 0.7%.

If you had really been following our advice, you shouldn't have lost anything on your gold investments. But owning these investments safeguarded your wealth from some of the worst macroeconomic policies our country has ever followed. Last August, when negative interest rates seemed destined to occur in America (after ravaging Europe and Japan), this portfolio kept your wealth safe.

That's why having a diversified portfolio is critical. You should always have some of your assets allocated to insurance against worst-case scenarios.

"Now, hold on, Porter," you're probably thinking...

"What about all of those short-sell recommendations? And what about your speculations? You guys recommend some very risky stocks in Stansberry Venture and from time to time in Stansberry's Investment Advisory. These might have been smaller parts of your recommended portfolio, but they still count, don't they?"

That's right.

Our top speculation for 2016 was to buy shares of Fannie Mae (FNMA) and Freddie Mac (FMCC), the U.S. mortgage firms. We recommended these stocks when each was trading for less than $2 a share. We specified that together they should make up one position in your portfolio – at most, a 5% position. They're up about 150% currently. Peter G, of course, never comments on this huge win for us.

In Stansberry Venture – our most speculative research service – we've also done well.

Our only semiconductor pick for 2016 is up more than 100% since May. Our only precious metals recommendation was bought out last week, good for 25% gains since June. The other recommendations are a mixed bag, so far, with two stocks down 25% or so and a few more up a bit or flat. That's not a big surprise. It almost always takes more than a year for these ideas to play out.

Assuming a reasonable 10%-15% allocation to our speculations, I'm sure these ideas would have added five to 10 points to your portfolio's total return.

On the short side, the road has been a lot rockier, as it always is.

Shorting stocks successfully is hard. We maintain a short portfolio as a hedge, expecting to break even or just a little better, over the long term. This is our insurance against a catastrophic bear market.

I wouldn't expect our short portfolio to do well, given the huge rally in stocks we've seen since the election. But actually, we're doing fine this year because we started well. We locked in a huge 49% gain with our short of subprime auto lender Santander Consumer USA (SC). And we've done pretty well with our other car shorts (Hertz and Avis, up 12%). But we got hammered trying to short GM again (down 34%). Our mall short is doing OK so far (up about 8%). And we're doing fine with our latest Tesla (TSLA) short, too (up about 5%).

Once again, if 10%-20% of your portfolio has been short these stocks, you should be quite happy with the fairly positive effect that has had on your total returns.

Meanwhile, if Hillary had been elected… these positions might have saved your bacon.

Finally… I know most subscribers aren't new to our business.

It's more likely that you have been reading our research for years. If you have, then you hopefully took our advice about property and casualty ("P&C") insurance stocks to heart. Those companies should be the ultimate foundation of your portfolio. And if that's the case, then 2016 has been a great year for you.

Our four long-term P&C insurance holdings have all done great this year, far outpacing the gains in the major stock indexes: Axis Capital (AXS, up 16%), W.R. Berkley (WRB, up 23%), American Financial Group (AFG, up 22%), and Travelers (TRV, up 9%).

Now… how have you done in your portfolio?

If you've been following our advice, you should have done pretty well. But… if you haven't taken the time to get organized... if you don't take a whole-portfolio approach... if you inevitably put too much capital in the wrong stocks, and not enough in the right ones… what are you going to do about it?

You have two choices.

You can satisfy one well-known definition of insanity and keep repeating the same experiment while expecting different (better) results.

Or… option No. 2… you can finally begin to invest like a pro. You can finally begin to capitalize on the research you've already bought. You can allocate appropriately. You can follow your stop-loss discipline. You can finally "get there."

And you can do it all in about one hour per month. How?

Early next year, on January 11, we're rolling out a new product...

It's designed to make following our advice completely foolproof – so easy that the average sixth-grader could do it. Even better, we're going to make using our best ideas to build your wealth more convenient than ever before.

You see, starting on January 11, I'm going to change the focus of our business forever. Rather than publishing just individual newsletters with a list of recommendations, we're going to create complete portfolio solutions.

That's why we're calling this new product Stansberry Portfolio Solutions.

These will be completely built-out portfolios. All of the positions will be selected by our investment committee (that's me, Steve Sjuggerud, Doc Eifrig, and Sean Goldsmith). To serve all of our subscribers, we'll offer three different portfolio options. You can subscribe to one or all. Let me tell you just a bit about how each portfolio will work...

The first portfolio is called "Capital."

You'll find around 20 different positions in this portfolio. All of our best ideas are in here, selected from our leading publications: Stansberry's Investment Advisory, True Wealth, Extreme Value, Retirement Millionaire, Stansberry Research Resource Report, and Stansberry Gold & Silver Investor. All of this will be allocated for you, down to the exact number of shares to buy per $100,000 invested.

To follow our advice, you'll just have to hand the list to your broker or type in the stocks on your online brokerage account. Done.

The second portfolio is called "Income."

Again, you'll find around 20 positions in this portfolio. They will overlap some with the "Capital" portfolio, but here, the positions are geared to produce current income. That means we'll add our fixed-income research (Stansberry's Credit Opportunities and Income Intelligence) into the mix.

Once again, you'll get our complete advice about allocation – down to the number of shares to buy. You're free to modify our portfolio in any way you want, but if you just want to follow our advice, you'll be able to do so, immediately, without lifting a finger or reading a single newsletter.

(Obviously, anyone who subscribes to these portfolios will get complete access to the underlying newsletters, too. And we certainly hope that you'll read them and stay fully informed. But the point is, you don't have to if you don't want to.)

Finally, we're calling the last portfolio "Total."

As you'd expect, it will contain investment ideas drawn from all of the research we produce, including our most exclusive publications, like Stansberry Venture, Venture Value, Stansberry's Big Trade, Retirement Trader, Stansberry Alpha, and True Wealth Systems. This portfolio will be a bit larger as a result, with up to 40 different positions. This is the option for folks who want everything and want to be most diversified.

This new, higher level of service will finally allow every subscriber to keep up with our best ideas and never again suffer from "portfolio disappointment."

To make this option even more appealing, we're going to include two things that I think will make a lot of you very, very happy.

First, we'll be building a new team of analysts to create a "portfolio newswire" service. This team will analyze every single bit of information that's released by or about these companies. They'll pass along any important developments to you, in real time. You might not want to read every single piece of news about your investments. But if you do, you won't have to go looking for it anymore. It will come directly to you.

Second, we're going to package everything up and send it to you once a month. In one e-mail, you'll find the current portfolio, any changes we're making to it, a brief review of all of the news surrounding our portfolio companies, and a few brief notes from our managing director of content, Sean Goldsmith.

To make sure that you stay organized, we're going to prepare one-page summaries of each portfolio company. You can place these summaries in a leather binder (which we'll send you) so that you can review your portfolio with anyone – your wife, your adviser, your children – without even having to turn on your computer.

With Stansberry Portfolio Solutions, you'll be able to manage your wealth in less than one hour per month. You can finally "be there" in regard to your investment goals.

What's this service going to cost? Well, it won't be as cheap as a newsletter because we're going to give you a lot more service – more service than we've ever provided before. I'll have more details to share as we approach our launch date on January 11. But I'm happy to offer you a taste of the kind of portfolios and specific advice we're prepared to offer.

Last night, I was working on my portfolio selections...

I sent the list of stocks I'll be recommending to the committee for inclusion in our model portfolios to Dr. Richard Smith at TradeStops.

As you hopefully know by now, Richard built the best online suite of software tools for investors interested in monitoring their portfolios. Among the many outstanding features of Richard's software is the ability to measure the risk (volatility) of your portfolio. (Most people are taking far more risk than they realize.)

Another incredible feature is the ability to produce "risk parity" portfolios at the click of a button. What risk parity means is that each position in your portfolio has exactly the same amount of risk. This allows you to own stocks with a lot of potential, without completely wrecking your risk profile. This also allows you to use volatility-based trailing stops without taking any additional capital risks.

This kind of allocation is normally only available at very expensive money-management firms or hedge funds. But Richard's software can do it for you, with the click of a button. So I asked him to run my list through the risk-parity engine and give me the allocations I should use, assuming it's a $100,000 portfolio.

Here's what Richard sent me back...

It's a list of my favorite current investments from across all of our products. This is just a rough draft, the first attempt I made. I'm not suggesting that any or all of these stocks will end up in our final selections. It's just an example of what we're going to do for subscribers starting on January 11. But you can see now all the details we're going to offer.

Richard's analysis includes his proprietary risk measurement, which he calls the volatility quotient (or "VQ"). This shows you how volatile a stock is and allows you to compare the risk of one investment with another. He uses that number to allocate the portfolio so that each position has the same capital risk, despite big differences in volatility.

So for example, in this portfolio, a conservative and safe investment, like insurance company American Financial Group (AFG), ends up as a 6% position, while a risky resource company like Natural Resource Partners (NRP) is merely a 1% holding. That allows us to build a portfolio with plenty of upside potential… without ever taking any outsized risks. And that, over time, is the key to success as an investor.

I hope you'll appreciate this little added bonus. And I hope you'll plan on joining us in our new service, Stansberry Portfolio Solutions. Next year can be the year you finally "get there" as an investor.

New 52-week highs (as of 12/15/16): Automatic Data Processing (ADP), American Express (AXP), CommScope (COMM), WisdomTree Japan Hedged Equity Fund (DXJ), WisdomTree Japan Hedged SmallCap Equity Fund (DXJS), ProShares UltraShort Euro Fund (EUO), short position in Hertz Global (HTZ), PNC Financial Warrants (PNC-WT), Spirit Airlines (SAVE), and Sysco (SYY).

We'd love to hear your thoughts on the idea of Stansberry Portfolio Solutions. Drop us a line at feedback@stansberryresearch.com and let us know what you think.

Regards,

Porter Stansberry
Baltimore, Maryland
December 16, 2016

P.S. If you want to give a great gift – the world's best shaving razor – please order no later than midnight Eastern time on Sunday. After that, we can't guarantee deliver before Christmas. Avoid disappointment and treat yourself to a gift you can enjoy every day for the rest of your life right here.