How to profit 93.2% of the time...
How to profit 93.2% of the time... The greatest track record we've ever seen... A strategy we want every Stansberry Research subscriber to know... Praise and anger in the mailbag...
Today's Digest is shorter than normal, but we're excited to make a special announcement...
If you've been with us for long, you've likely heard about the incredible track record our colleague Dr. David "Doc" Eifrig has racked up in his Retirement Trader service...
Since launching his service in 2010, Doc has gone an astounding 260 for 279 – a 93.2% win rate – with an average return of 6% (or 38.1% annualized). We're not kidding when we say Doc's Retirement Trader track record is one of the greatest achievements in the history of our business.
You've probably also heard that the strategy Doc uses in Retirement Trader – selling put options – is one of the safest and most consistent ways to generate income in the markets...
As we often say, the goal with this strategy isn't to go for "home runs"... It's to conservatively hit lots of "singles" and "doubles." Over time, those consistent gains can really add up, as Doc's annualized returns show.
You've also likely heard that we don't just recommend this strategy to our subscribers. It's one many of us use ourselves...
Porter and several other analysts have called selling puts on high-quality, blue-chip stocks "the most consistent trading strategy" they've ever used. Many of us personally use and recommend this strategy to our friends and family. Some of the more advanced investors on our staff even use it almost exclusively.
But again, none of this is "news"...
We've written pages and pages about this strategy over the years... explaining exactly how it works... why it's so safe... and walking you through countless examples of actual trades Doc has recommended.
And yet, despite this incredible track record... despite the fact that we receive tons of feedback from satisfied Retirement Trader subscribers... and despite practically begging subscribers to simply try the strategy... we know only a small fraction of our subscribers have taken us up on the offer so far.
So this time, we're trying something different.
Later this week, you'll be hearing from Doc himself...
He'll be "pulling back the curtain" on this strategy in a special Digest series, leading up to an educational "webinar" where he'll be discussing all of these ideas in person next week.
He's also doing something he's never done before...
He's asking our readers – especially those who have been skeptical about this strategy in the past – to take a pledge...
If you pledge to simply attend this free webinar and give his research serious consideration, Doc promises to teach you what you need to know to collect at least $1,000 in additional income every month in 2016.
Whether you've been putting off learning about this strategy for years, or you're hearing about it for the first time, we urge you attend. Again, the webinar is absolutely free... There's no obligation to buy Doc's Retirement Trader or any other service.
Click here to take Doc's pledge. And look for more from Doc in the Digest this week.
Our friend Meb Faber, chief investment officer at Cambria Investment Management, recently published a new book, Invest With The House: Hacking The Top Hedge Funds.
To coincide with the launch, Meb has made three of his previous e-books FREE to download on Amazon. The only catch is this offer ends TONIGHT at 12 a.m. Eastern.
As Porter often says, there is no teaching, only learning... If you'd like to learn from one of the few truly original thinkers in finance, click here to download these excellent books now.
New 52-week highs (as of 1/8/16): short position in Capital One Financial (COF), short position in iShares MSCI Canada Index Fund (EWC), short position in Santander Consumer USA (SC), and short position in Suncor Energy (SU).
In today's mailbag, a new subscriber shares his experience with Stansberry Research... while another "frustrated investor" is upset. Send your e-mails to feedback@stansberryresearch.com.
"Porter- you ask for feedback and I would like to take a minute to give you mine. I saw an ad for your small book America 2020 and to get it I had to take an introductory subscription. You know what they say about fishing lures, 90% of them are designed to catch fishermen, not fish. I thought it was just a way to separate you from your money so as soon as the book came. I cancelled without even getting one letter or email.
"I read the book cover to cover (3 times) and I was just so impressed with the content. I have felt for a few years that somehow the country has lost its way (personal responsibility, crooked bankers, foolish politicians, handouts to everyone for anything, high and wasteful taxes, choking regulation, etc.) but I could not figure out why. Now I know and more importantly I know what steps to take to try and protect myself.
"I bought a 1 year subscription for $149 and it was some of the best money I ever spent. I have learned so much and I feel like I won't be caught with my pants down like in 2008. Last week the lifetime subscription was offered and even though I had 7 months left on my original order I bought that for $750 too. I know I am not getting the 'Cadillac' service for that price. But I don't have the big money it takes to invest in bonds or to participate in some of the other high end services (a lot of money in rental property).
"I feel though that even with a 'basic' service if I use my head and be a little creative, I can profit greatly from it. For instance, I am uncomfortable selling short as I don't want my possible losses to be too high. So when you recommend a short, I buy a put. Just what I've made on Santander alone already paid for my lifetime subscription. Now I'm playing with house money. I was never interested in gold or silver thinking that they pay no interest. I learned that isn't what they are for. They are a hedge or insurance if you will. In the last 6 months I bought 2000 oz. of silver and 40 oz. of gold bullion. I am 1/2 way to my goal of 4000 / 80 which I will hit this year if prices stay low. I have become somewhat of a gold bug and I see why countries and people have gone to such great lengths to get it. Holding it is intoxicating.
"I have about $20 k in a brokerage account as my 'gambling money.' I have bought a bunch of junior miners that you and the Resource Report (I subscribe to that too) have recommended. I am going to, in the near future, sell a put and buy a call. An idea that sounds crazy till you explained it so well.
"I know this letter is long but Porter I have been involved in many small businesses throughout the years and I've learned when you do something right the customer tells no one, that's what he expects. But do something wrong and he tells EVERYONE. I just wanted to tell you you're doing a lot right. Proof of this is one of my sons is a Silicon Valley computer genius. I get a lot of emails about stocks and finance (somehow they just get my address) and sometimes I pass them along to my sons. My son in Calif. said the other day "dad just send the STANSBERRY ones, they offer practical info that I can use. The rest just try to scare you and clutter up my mail box." – Paid-up subscriber Frank P.
"To whom it may be concerned: I originally bought 50 of these [Wal-Mart] calls at .52. Shortly, thereafter they dropped to .47. I thought I may have overbought and reduced my exposure to 25 call positions. Over the next couple days, the price of these calls almost doubled. Since there is no one more concerned about my money than me, I placed a trailing stop at 20%. A couple days later I was stopped out at .97. As it was mentioned, these calls went to 2.20; which was fantastic.
"I am a lifetime FLEX member and have not seen the time spent managing my portfolio equal to my 'gains'. I have gotten better with placing trailing stops since it's hard to catch a falling knife, but then I don't catch the once in 20 trades such as this Wal-Mart call. In summary, I have gotten stopped out and my portfolio isn't any better than when I started a year ago... Shall I just cancel my subscription and go to 4 Index Funds (Vanguard Total Domestic, International, Emerging Markets, and Commodities)...
"I expect nothing in return from my comments above... ... ... ..I know, I know, I know... .past results do not Guarantee future blah, blah, blah. And on top
Of all that blah, blah, blah, there is risk involved Crossing the street, leaving your home and placing monetary 'bets' on the stock market. I think the whole market it rigged. I will not spend time proof reading my email, because I will get a blah, blah, blah response." – Paid-up "Frustrated individual investor"
Jeff Clark comment: This trade was only half of the option combination trade I recommended. The other half involved selling uncovered put options on WMT.
The trade was structured to profit if WMT went up a little, if it stayed the same, and even if it went down a bit. And it would have been very profitable if WMT went up a lot.
Since we were using a small part of the proceeds from the put sale to pay for the call options, we had a conservative trade that would be profitable as long as WMT didn't fall more than about 2% from its already depressed price.
You don't refer to the put option side of the trade. So I have to assume you only bought the call options. In other words, you took my conservative trade recommendation and turned it into an aggressive speculative trade.
That's fine to do, as long as you recognize you are now speculating and you adjust your position size accordingly. You also have to recognize that any further comments I make are going to be on the trade I recommended, not on the trade you took.
You bought 50 call options on a $65 strike price. That's equivalent to 5,000 shares of a $65 stock, or an aggregate value of $325,000. That's a massive speculation.
A trade of that size is going to get you reacting emotionally. You're going to question every move. Should I take profits now? Should I tighten my stop? What if I sell and it goes higher? What if I don't sell and it drops?
You're going to watch this trade for every tick, every second of every day. You're going to be anxious. And you're going to get frustrated – so much so that you'll be disappointed even after you exit the trade for a profit.
If you had taken a more conservative position – like using the trade I recommended, or reducing your speculative position to a more reasonable level – then you could have avoided the emotional roller coaster. You could have stuck to the original plan without constantly second-guessing yourself.
Look... I understand the frustration. I trade for a living.
It's one of the only occupations where I can work all day and leave the office with less money than when I started. It's reasonable to question whether the reward is worth the effort. But there are plenty of other days when I can make a month's worth of income in only a few hours.
After trading the markets for more than three decades, the best advice I can offer you is this... Have a plan for every trade before you make it. Know what you're willing to pay to get in. Know where you'll cut your losses if you're wrong. Know where you'll start taking profits or setting stops when you're right.
If you set the plan before you enter the trade, then you can do it objectively and without emotion. And, for the most part, you can avoid the frustration.
Regards,
Justin Brill
Baltimore, Maryland
January 11, 2016
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