How to make commodity investing risk free...

In today's Digest, we're going to continue our three-part series on what I (Porter) believe are the only kinds of stocks that most individual investors should ever buy.

On Wednesday, we covered insurance. On Thursday, we covered capital-efficient stocks. Today, we'll take on resources. That undoubtedly will seem like an unusual and risky choice. But follow along... As usual, there's a slight twist that hopefully will make sense to you. It's a way of understanding commodities that actually makes them risk-free.

First, though... congratulations are in order. When we decided to get "long" natural gas following that commodity's bottom in the spring of 2012, I asked Stansberry's Investment Advisory analyst and longtime friend David Lashmet to go to Texas and learn all that he could, on the ground, about the prospects for exporting our country's massive energy bounty.

He spent months on this project. He came back with one word: propane. It was a brilliant discovery. You see, although it's essentially against the law to export crude oil, and although it will take another five years or so before liquefied natural gas (LNG) facilities that are being built now will be able to export a significant amount of methane (aka natural gas), there were facilities and boats available to export propane.

And as the price of propane plummeted because of soaring domestic supplies, one company moved aggressively to buy up and control most of the available export capacity in the U.S. As Dave discovered, that company was Targa Resources (TRGP). This was one of the greatest investment opportunities I had seen in my entire career. As we explained in the December 2012 issue of my Investment Advisory...

Thanks to government tariffs, regulations, and licenses, it's almost impossible to get the huge new supplies of domestic energy out of the U.S. The one exception is the clean-burning, easily stored NGL family of fuels – mostly propane. And Targa controls one of the country's two propane export terminals, as well as the entire associated infrastructure necessary to supply it. Besides Cheniere, that's as close to an American export monopoly as you're going to get.

At the time of our purchase, Targa was a newly created company that had been created by private-equity firm Warburg Pincus. The company's primary initial assets were purchased from failed energy-trading firm Dynegy. At the time we wrote about the business, very few people had ever heard of Targa, even in Texas. David did a fantastic job of following the energy surplus, literally down the pipes, to figure out who would be able to gain the huge profits available to companies that could acquire energy supplies at U.S. prices and sell them at foreign prices. It was Targa that owned that "bridge." By figuring this out, David has helped our subscribers earn tremendous profits. The stock has marched straight up...

We first recommended the stock below $60 a share. Yesterday, the stock rose 25% to close at $150. My subscribers are up 218% in 18 months. That's great, of course, and we congratulate Dave on this result. But... what matters even more to me than the stupendous profits is that Dave nailed the "why." He didn't just deliver big gains – which often enough happens randomly. He delivered the critical piece of information that allowed us to profit on a huge and important trend in our economy. How do I know?

Yesterday, Targa's price soared because of a $15 billion offer to acquire the company. The bidder? Energy Transfer Partners (ETE). Dave recommended that company, too – about a year after he recommended Targa. And we're up a huge 67% on ETE in just 10 months. In fact, the stock was up as much as 3% today because it seems likely its offer for Targa will be accepted.

Dave's work here is stunning – by far the best energy analysis I've seen anywhere over the last two years... and by a wide margin. When there's an important, valuable, and complicated opportunity to pursue, I send Dave. Longtime subscribers: When you count your blessings, don't forget to count Dave. I do. And I have every day since I met him in 1996. He was the last professor I had in college... and the only one I admired.

Now, let's get back to how we think about investing in commodities... and how, if done correctly, commodity investments can be almost risk-free. Rather than give you a bunch of theory, I'd rather show you precisely how I put these ideas to work, starting two years ago.

Longtime readers will recall that I was a vehement and frequent critic of "Peak Oil." Promoters of this idea were the most intellectually dishonest people I have ever met. The true believers were worse. They were criminally stupid. There was no way we were going to run out of oil or any other hydrocarbon. Not any time in the next 100 or more years. But such arguments did scare people. They sold a lot of books. They raised a lot of money for oil companies, even for idiots who proposed importing natural gas into the American market. (That's like setting up a business to import oil to Saudi Arabia.)

Meanwhile, while the press and the promoters were crowing about Peak Oil and starting a panic, the actual leaders of the oil business in the United States were figuring out how to combine hydraulic fracking and horizontal drilling to produce huge amounts of gas and oil from shale rock. One of the first was Mitchell Energy, which began producing huge volumes of gas out of the Barnett Shale (north of Dallas) in the early 2000s.

Devon bought the company for $3.5 billion in 2001. Note the date. By 2001, everyone in the oil business knew very well that large increases to domestic onshore production were possible. It took a while, of course, for the industry to figure how to optimize and economize the strategies that Mitchell pioneered. Those efforts, in fact, continue today.

But everyone should have known, as I did, that new technology, massive increases to drilling, and rapidly growing production would eventually create a glut. The risk wasn't that we would run out of hydrocarbon. The risk was that too much capital would be invested in the fields and that a glut would develop. As early as 2006, I began to warn that a huge natural gas glut was inevitable. From the June 2006 issue of my Investment Advisory...

As more rigs come on-line and consumers use less natural gas because of its high price, guess what is bound to happen? A glut of natural gas, with more and more natural gas in storage. Is that happening? Is there a glut of natural gas developing? Right now, there's 41% more natural gas in storage than average for this time of year. That's how markets work: the price of the commodity goes up, increased production follows, consumer behavior is impacted by higher prices, and, eventually, a surplus leads to lower prices. It's not about Peak Oil. It's simply a regular commodity cycle. Boom precedes bust. And when it comes to natural gas, unlike housing, we can't just sit on the extra capacity. It has to be either stored or liquidated. That's why natural gas prices might go lower than anyone expects, for a long time... Natural gas could fall even further to below $3.

Keep in mind, when I wrote that, I had no idea that the global economy would collapse in 2008. I simply knew that there was far too much capital being put to work in oil and gas fields... that prices were far too high based on inventories... and that marginal producers would continue producing for years, simply to keep cash coming in the door. In fact, as late as 2009, I was still expecting natural gas to fall below $3 per thousand cubic feet (MCF). At a conference that March, I famously told global resource expert and longtime natural gas investor Rick Rule, "If you're long natural gas, you should have your head examined." I then bet him a case of fine Bordeaux that prices would continue falling, to below $3. They did. (Rick, being a man of his word, paid up.)

I want you to understand... I wasn't trying to predict the future. I simply knew that all over the U.S., formerly marginal drilling sites were being turned into gushers with new technology that was becoming more and more efficient. I knew that production was soaring. And I knew that natural gas consumption was falling because high prices were leading power companies to burn more coal. Supply was soaring. Demand was falling. Inventories were bulging. And best of all, the public was fully entranced by the nonsense of Peak Oil. There was only one possible outcome: a huge glut of natural gas. This isn't rocket science. It's common sense. You can see what inevitably happened below...

The trick to buying commodities is to wait until there's a bust. Wait until prices for the commodity have fallen so low that producers can't produce the commodity at a profit. Wait until inventories have surged and rolled over. Wait until prices have reached a nonsensical level. And remember... these trends take a long time to develop.

With natural gas, I went from bearish to bullish in the spring of 2012. Here's what I wrote in my April 2012 issue, titled "The Best Opportunities of the Next Two Years"...

I am extremely bullish on natural gas... For most investors, the opportunity unfolding in natural gas will be one of the best investment opportunities of the next decade. Right now, natural gas is so cheap that many companies are simply flaring it off – they're burning it – rather than bothering to pipe it across the country and sell it. Not only that, but right now you can buy natural gas reserves in the stock market for free. Sooner or later, the price of natural gas will rebound sharply... and not just because it always has in the past. What will propel natural gas prices over the medium term (say, five years) is an economic truism: It's impossible for a surplus of energy to exist for long. As prices fall, more and more uses for natural gas will appear. At some price, natural gas becomes competitive with other forms of energy. In my mind, you ought to buy all the natural gas you can afford because these energy resources will not be cheap forever.

By the spring of 2012, I knew a few things that gave me total confidence that natural gas prices had reached a bottom. First, I knew that at the current spot price (under $2 per MCF), it was impossible for any of the independent natural gas companies (Devon, Chesapeake, Anadarko, Southwestern, Encana, WPX, and Ultra) to make money. The chart below shows how their operating margins were collapsing as their hedges rolled off and they began transacting at the new, much lower price of gas...

Next, because natural gas is only one form of hydrocarbon energy, I could see that it had reached a comparative price that was simply unthinkable. The real commodity you're buying when you buy natural gas is energy. At some price, all forms of hydrocarbons are relatively interchangeable. For example, right now there's a plant being built in Louisiana to refine natural gas into gasoline.

That's because, compared with oil, natural gas is still far too cheap on an energy-equivalent basis. For decades, oil has been about 10 times more expensive than natural gas, on average, on an energy-equivalent basis. But by the spring of 2012, oil was trading at price equal to more than 50 times the price of natural gas. There was no way that such a price disparity would last, because one form of energy is ultimately interchangeable with another...

All right... by the spring of 2012, we could see that a glut had developed (as we had expected). We could see that prices had collapsed to historic lows. We could see that the marginal producers (the U.S. independents) were going to experience massive operating losses. But how did we know the time was truly right? Our timing was dictated by significant reductions to both production and inventories.

The chart below shows the natural gas rig count maintained by oil-services giant Baker Hughes. It's the number of rigs currently working in the U.S. to produce natural gas. You can see that in 2012, the rig count plummeted. That's the producers "taking their ball and going home."

This move – plus a large and surprising decline in natural gas inventories in March 2012 – was the final sign I had been waiting to see. The neat thing about commodity markets is that they are purely logical. High prices (during a boom) spur production and cause consumers to cut back consumption.

But at the bottom, the opposite occurs. Over the last two years, we've seen all kinds of new demand for natural gas emerge because the price has been low. We've seen a surge in exports (see the Targa story above) and we've seen power companies switching from coal back to natural gas. And we've seen global manufacturing relocate to the U.S. to take advantage of the surplus of cheap energy – particularly the petrochemical industry.

If you go back and look at the best-performing S&P 500 companies over the long term, you'll find that almost all of the companies are either capital efficient (mostly drug companies and companies with addictive products) or energy companies. That's because the operating margins and returns on investment in the resource sector (particularly energy) can be huge. Investing in commodity stocks is generally perceived as risky.

But using a small amount of common sense and information that's widely available to all investors (see above), it's not only possible, it's easy to identify very safe opportunities to invest in commodities. The trick is waiting until prices are so low that the entire production industry is failing and then not 'pulling the trigger' until inventories begin to sharply decline. The other trick is remembering that these cycles are long-lived. You might only get the kind of opportunity we saw in natural gas back in 2012 once or twice every 20 years. You have to watch these markets over the long term and be prepared to make large commitments when the time is right.

There are two more things you should know about investing in commodities... two genuine "inside" secrets that very few people will ever explain to you. If you will watch the cycle develop like I describe above, you can reduce your risk by 90%. All you have to be is patient. You can't force a commodity price cycle to change. If you're able to be patient, you can virtually eliminate the remaining risk by only investing in royalty-paying securities. These are companies – like natural gas royalty trust San Juan Royalty Trust (SJT) – that simply own royalty interests in wells or mines.

The cool thing about these trusts is that their payout increases tend to follow commodity-price changes by about six months. If you look at San Juan Royalty Trust, for example, it really began to move higher in 2013, even though natural gas prices bottomed in April 2012. We call this the "royal" delay. It gives investors a second chance to buy into the bottom of a commodity. That's great for obvious reasons, but the real reason royalty trusts help you eliminate investment risk is because they don't have any debt or any overhead. It's next to impossible for them to go bankrupt.

The other safer option than buying the producers is to focus on the "picks and shovels" companies. Take Halliburton, for example. It's the leading provider of services to the production companies I listed above. Its shares are up 150% over the last two years! That's a far better return than almost all producers' shares.

The great thing about buying a well-run service company is that you get industry-wide diversification, as all production companies use Halliburton's services. Thus, you don't have to try and figure out which fields are the best or which producer is going to strike the biggest wells. Whoever is doing best, they will be using Halliburton. You can accomplish much the same by buying ETFs that hold stakes in all of the producers, like FRAK, for example.

The point is, if you're trying to invest in the commodity price cycle, it can be very low risk if you're buying securities like royalty trusts, service companies, or ETFs that don't have any single stock risk. If you'll combine this approach with buying a few of the highest-quality producers (think EOG in the Eagle Ford, Devon in the Permian, or Continental in the Bakken) I'm sure you'll be successful. The commodity price cycles I'm watching right now are coal and uranium. I think uranium has a long way to go. But coal looks very interesting...

That wraps up our three-day review of the three best sectors for outside, passive, common shareholders to invest in. Two of my three choices are intuitive: insurance companies can produce consistent, market-beating returns for long periods if they're able to underwrite policies at a profit. Buying these kinds of insurance stocks is just about the safest and best form of investing I've ever discovered.

Next, I don't think it's difficult for any investor to identify companies that have great brands, great business models (capital efficient), and products that are addictive. I would personally avoid drug stocks, as least as individual securities, because I've found it's damn near impossible to figure out which company's new drug will be accepted by the FDA, etc.

That still leaves plenty of very profitable businesses. See my recent recommendation of Lorillard – it's a classic bet on capital efficiency. Keep in mind, these are long-term bets. Real outperformance in these stocks typically won't emerge for five or 10 years. You must be patient and learn to buy at the right time (ideally, when other investors panic).

Finally, although most investors think investing in commodity businesses is very risky... I believe if you're willing to time the commodity price cycle and if you focus on royalty firms and "picks and shovels" plays, these investments can be among the safest you'll ever make. In the right circumstances, you can produce trades with zero downside and huge upside potential. Just remember to wait for historically low prices, collapsing profit margins (in the producers), and suddenly shrinking inventories.

New 52-week highs (as of 6/19/14): Apache (APA), Anadarko Petroleum (APC), Activision Blizzard (ATVI), Bank of Montreal (BMO), Anheuser-Busch InBev (BUD), Chesapeake Energy (CHK), C&J Energy Services (CJES), Callon Petroleum (CPE), Comstock Resources (CRK), Carrizo Oil & Gas (CRZO), Chevron (CVX), WisdomTree Japan Small-Cap Dividend Fund (DFJ), ProShares Ultra Oil & Gas Fund (DIG), Dorchester Minerals (DMLP), Devon Energy (DVN), Eni (E), SPDR Euro Stoxx 50 Fund (FEZ), Freehold Royalties (FRU.TO), Cambria Foreign Shareholder Yield Fund (FYLD), Corning (GLW), WisdomTree Europe Hedged Equity Fund (HEDJ), Intel (INTC), SPDR S&P International Health Care Fund (IRY), Coca-Cola (KO), Lorillard (LO), Medtronic (MDT), Altria Group (MO), National Fuel Gas (NFG), PepsiCo (PEP), Royal Gold (RGLD), ProShares Ultra Technology Fund (ROM), RPM International (RPM), Sabine Royalty Trust (SBR), Sanchez Energy (SN), Superior Energy (SPN), ProShares Ultra S&P 500 Fund (SSO), Constellation Brands (STZ), Cambria Shareholder Yield Fund (SYLD), Triangle Petroleum (TPLM), Targa Resources (TRGP), Travelers (TRV), ProShares Ultra Utilities Fund (UPW), W.R. Berkley (WRB), and SPDR Utilities Select Sector Fund (XLU).

In the mailbag... a lot of very kind and thoughtful praise. While not as helpful (or entertaining) as the vitriol we were seeking, it's not every day you get a letter from someone who was a friend of Ted Williams. Oh, also, don't miss the one about why I don't recommend insurance-company ETFs. It's a classic. Send your questions and comments to feedback@stansberryresearch.com. I promise to read your note.

"With regard to your comments in yesterday's S&A Digest about poor people: yes there is an industry that exists by keeping them poor rather than enabling them to get out of poverty, and that does have to change. And yes, there are people like one person I know who just had a massive stroke who do, at least for some time, genuinely need help. And yes, a lot of people who aren't working, should be. And we as a society need to start doing a decent job of determining who really does need help, and who doesn't, and acting accordingly with each. But I think there is one vital point that you missed: for decades now, we have systematically eliminated every job that a person of less intellectual ability can do. I am referring to all the jobs we have eliminated in the name of 'efficiency,' or for another 1/10 of a cent of earnings, or just in the name of 'progress.' There is no more elevator operator, no more parking lot attendant, no more switch board operator, and there are very few manufacturing jobs...

"Not everyone can start a business like you did, and like I'm doing right now. We're lucky, we're gifted and inspired... We need to get some manufacturing jobs back, we need to get some low-level administrative jobs (like the switch board operator) back, we need to get some jobs back that add a personal touch to things like the elevator operator did (if you were ever on an old time New York City elevator, you probably know what I mean: that guy knew everyone, knew their schedules, etc., and provided a touch of humanity to every person who boarded his elevator. Instead we just eliminated the toll-takers on the Golden Gate Bridge. For decades there was an unwritten rule that you always treated the toll taker with courtesy, and almost always the favor was returned, and humanity was added. Now we have an automated system that bills your credit card. And where is that toll taker working now?

"In short: we not only need a society where everyone who can work is motivated to, we need a society where he/she can find the work they are motivated to find and are intellectually able to do. Not everyone can be computer programmer!" – Paid-up subscriber Dave J. Fladlien

Porter comment: These are classic 'Luddite' arguments. You believe that we should deliberately keep people working in jobs that aren't productive so that they can have something to do. If we follow that course, all we will do is put the burden of their poverty in a different part of our economy. That doesn't remove the burden. Whether they're doing something like pushing a button on an elevator or doing nothing at all, they aren't contributing to society. The result will merely be additional costs in your high-rise building – that's just a different form of charity.

I strongly suggest you take a vacation to Singapore. Nothing in Singapore is free. Nothing. Not the roads. Not food. Not the schools. And certainly not the real estate. There is no welfare. There is no phony Social Security. There are no crappy government hospitals. And guess what? There is no poverty. And there are no B.S. jobs. Everyone does something useful and productive. As a result, Singapore is, by far, the wealthiest country in the world on a per-capita basis. Fifty years ago, it was nothing but a steaming hot colonial outpost. Oh, by the way, there's almost no manufacturing in Singapore anymore. Those jobs have long since moved to Malaysia, where deeply poor people are still grateful to have them.

I've long dreamed of demonstrating the same exact economic principles would work right here in America. Just imagine if we could set up the city of Baltimore (which has a wonderful natural harbor) as a "free zone." Inside the city limits, there would be almost no rules or regulations. And if you lived in the city, there would be no welfare of any kind. No minimum wage, either. No FDIC. Don't trust the bank? Don't put your money there. Caveat emptor is the world's only regulation that actually works. Within 25 years, Baltimore – currently one of the worst places in the world to live – would be the most valuable city on earth.

Like it or not, Dave, we can't live at the expense of our neighbors. Nor can we afford to create phony jobs for people. That will only perpetuate the cycle of dependency. It's just another form of welfare.

"Your argument for insurance companies as a number one investment sector had some very positive and compelling arguments. I'm surprised you didn't include a couple of stocks or ETFs as good examples for our investment dollars. If the fundamentals for insurance companies (and the entire insurance sector) are so good, you should have easily been able to make comparisons of stocks and ETFs with either other sectors or with popular indexes like the S&P 500." – Paid-up subscriber Marty K.

Porter comment: No offense to you, Marty, but it's e-mails like these that leave me shaking my head in disbelief. In the June issue of my Investment Advisory, there are five insurance stocks that pass our underwriting quality test and that we have recommended to investors. All you have to do is open the issue and look at the back page. Three of these stocks are currently rated "buys." All I can do is lead the horse to water. I'm not going to shove its face in it.

As you mention, there are plenty of insurance ETFs. The four that come immediately to mind are KIE, IAK, KBWI, and KBWP. The only one I'd consider is KBWP, because it specifically doesn't own life-insurance stocks. If you look at that ETF, you'll find a few of our top recommendations. But I still wouldn't recommend it. Why not? Two great reasons...

First, as a whole, the insurance industry loses money on underwriting. When you buy these ETFs, you're buying 100 different companies. Most of them won't make money on underwriting. The stocks that do make money underwriting are rare and, in my view, vastly more valuable than those that don't make money. That's the entire point of what I wrote. And it makes me want to pull out my hair to realize that at least some of my subscribers missed the message completely.

Secondly, insurance stocks are great long-term investments. As you (hopefully) noticed in the charts I posted, they produce stable results, they pay solid dividends, and when bought at the right time, you should never have to sell. As such, I believe they are a poor choice to own through a managed vehicle, because the costs of owning the ETF will add up over many years. Not only that, but the relative underperformance of the industry (as represented by the ETF) will weigh heavily against the long-term outperformance of the companies with profitable underwriting.

In short, why own a big group of average insurance stocks when we've already given you a relatively big list of all-star insurance stocks?

An example of what I'm saying is below. This chart compares the ETF I mentioned above (KBWP) with what was, a year ago, our highest-rated insurance stock (AFG). Again, why settle for an average return if you know the secret to outperformance?

"Thanks so much to Sean Goldsmith for taking his well-earned vacation. When you mentioned that you would be writing all of the Digests while he is off reaping the rewards for his efforts, I was pretty damned happy. Don't get me wrong, Mr. Goldsmith is a terrific writer. But it is you, Mr. Stansberry, who writes in a way that I find the most enjoyable and informational. I may or may not agree with what you write: it doesn't matter, because I find it both entertaining and chock full of valuable information.

"One of my favorite things to read in any Digest is the feedback. The Wednesday Digest feedback section with your responses was fabulous. My favorite being Paid-up Subscriber 'No-name.' Reading his feedback to you was just like sitting over beers with two of my best friends with whom I grew up in Metro Detroit of the 60s and 70s. They both believe, as No-name, that we are our brothers' keepers, and that if we are successful, we owe it to those less successful to take care of them. You can only imagine sitting in a bar somewhere near us and overhearing our discussions (which would be easy given the volume), which become very animated.

"My one friend who holds a very liberal point of view, has his own business and is quite successful. It befuddles me that he can be in the position he is with a complete understanding of how difficult it is to succeed in business given the risks and red tape, yet he believes his success is in part due to his 'relatively easy childhood' growing up in the western suburbs of Detroit. None of our families had much when we were growing up. We were a mixture of blue collar and lower white collar families and we had to pay for our own ways in school and such, though we did not really suffer from want.

"He and I, on different paths, busted our behinds to achieve the levels of success we have each managed, which is not Earth-shattering, but ain't bad, either. Yet, he seems to believe that because we did not live in the 'hood' as our neighbors in Detroit did, that because we did not riot and burn down our own neighborhoods and businesses, that because our parents raised us to respect each other and others rights, that somehow we should be responsible all these years later for the remaining destitute people within Detroit's city limits. He thinks we should all pay more...

"Your response to No-name was perfect. Some people are born into a mess. That is awful. Yet, there are stories of many working their butts off to get out of that situation. The vast majority will make a different choice. And make no mistake, it is a choice – to settle for the most they could ever expect from the least of their efforts. And they end up working crap jobs and wonder why they aren't paid a 'fair' wage (there's that word again). It is much easier to blame someone else than it is to try and achieve something in life.

"Results in life are certainly, in at least a small part, a result of your circumstances. But, the choices we each make, as individuals, impact those circumstances. Life is all about choices. Make better choices, get better results. Learn to accept failure as the learning tool it is and move up and on. Again, thanks so much, and I look forward to the remaining Digests under your pen!" – Paid-up subscriber Jeff H.

"Now this is the kind of reading I like to see in the Digest, (6/19/14). I am thrilled to say I own a good number of both your 50 year performers and 20 year performers. I cannot tell you how much I appreciate your(s), Dan's and Doc's work on the WDDG type stocks. I lost so much money in the internet bubble, I thought I would have to work forever. But, I threw in the towel on trading and 'invested' in 2008 when the market gave me a chance to load up on the great stocks of this country. I watch my account grow, and grow and grow with the dividends I reinvest. I am 54, and at this rate I will have a great retirement. Your strategies allow us regular retail investors the ability to sleep at night while the crooks and Wall St. play their daily trading games... Keep up the great work." – Paid-up subscriber Jim J.

"Your reference to Ted Williams hit a sweet spot for me. I had the pleasure of being Ted's stock broker for a period of time. In his book The Science of Hitting, he cites, 'You certainly cannot go through the motions and be a great hitter. Not even a good hitter,' pg 82. I don't think it is too much of a push to suggest that you cannot be a 'great investor' without putting the principals you so generously share with your subscribers to work." – Paid-up subscriber Jack T.

"About the time you think you have read it all the people at Stansberry come out with stuff like this... you realize that the money you spent for Private Wealth Alliance was money well spent at the time and continues to be a wise investment. Thanks to all of you... nobody can produce what you all produce. The quality is second to none." – Paid-up subscriber Jeff S.

"Porter, these Digests you are putting out are sooooo good. Reading this stuff feels as good as eating pizza and drinking red wine! Keep 'em coming. I'm reading everything you're putting out and referring to all of your linked articles, shareholder letters, archived issues, etc, and taking notes. I have become a good investor since the 2008 crash because of your services. Thank you for all your hard work and the education you're providing me." – Paid-up subscriber Rich B.

Porter comment: Rich, I appreciate it. But let's be clear... nothing is as good as red wine and pizza.

Regards,

Porter Stansberry

Baltimore, Maryland

June 20, 2014