Introducing Ten Stock Trader

Introducing Ten Stock Trader... The difference between technical and fundamental analysis... How our in-house technical-trading expert got his start... Much more than trendlines and charts...

Editor's note: The Stansberry Digest team is in Palm Beach, Florida this week for our annual Spring Editors' Conference. Each year, we gather our analysts and closest business contacts to share our top ideas and ongoing research.

Over the next few days, we'll be featuring a special series from our colleague Greg Diamond in place of our usual Digests. As regular readers may recall, Greg joined Stansberry Research last year as part of the Stansberry NewsWire team. Before that, Greg worked at a $3 billion hedge fund and a $35 billion pension fund.

In this series – excerpted from the Ten Stock Trader introductory special report, the "Hedge Fund Trader's Manual" – you'll learn more about how Greg approaches the market, an overview of his favorite technical analysis strategies, and more.

We hope you enjoy it. We'll return to our normal fare later this week. For now, here's Greg...

'I'll give you $1,000 if you burn that book right now'...

I was 22. Sitting at my desk, I had been lost in my reading – studying for my Chartered Financial Analyst (CFA) exam.

I had started at the hedge fund just a few weeks before. My boss had trained under a trading legend. It was a huge opportunity to work with him. I was excited, but aware of the pressure. I wanted to learn as much as I could as quickly as possible.

But I was startled when my boss walked up and told me to burn my books. What the heck was he talking about?

It turned out this would be the beginning of an obsession.

This boss would lead me down an entirely different path than I had imagined.

And I never did end up getting that CFA certification...

But I'm getting ahead of myself...

Let me tell you what my boss said next (I'm paraphrasing a bit)...

Look, if you want to understand risk, if you want to understand trading, if you want to understand portfolio management... you can't just focus on fundamentals. It's not that fundamentals don't matter. But to get really high returns and really exceptional trading results, you have to understand... how markets move and what markets move, and the psychology behind why markets do what they do.

The CFA exam and materials focus almost entirely on fundamental analysis. They go deep into the weeds of debt and profits and management teams. And while all that is important... what my boss was trying to tell me was that he followed a different path.

You probably know there are two schools of thought when it comes to looking at the market.

There's fundamental analysis and technical analysis... And he wanted me to focus on technicals.

Technical analysis focuses on price behavior of a stock or asset through various indicators and price patterns.

As my boss said... "Technical analysis focuses on now, fundamentals on what was."

That's what I want to share with you here. It's an entirely different way of looking at the markets. Fundamental analysis works for a lot of people, but it's not how I invest...

Today, I'm going to introduce you to trading like the way the hedge funds do...

I spent more than a decade on Wall Street trading multimillion-dollar portfolios across multiple asset classes.

Gold, crude oil, stocks, futures, options, copper... I traded all of it.

Within weeks of joining the hedge fund, as I told you about earlier, my boss taught me the greatest lesson of my career.

Eventually, after years of intense studying, and a formal examination in front of the board of Chartered Market Technicians, I received my "CMT" designation.

Technical trading became my bread and butter.

But eventually, I got fed up with all the greed, backstabbing, and lying I saw on Wall Street.

The environment was toxic.

Several colleagues' marriages failed, and political games between bosses and employees took precedent over leadership and teamwork.

All I cared about was the markets. I didn't want any part of the other nonsense.

I would much rather live a simpler life with my wife.

I also grew tired of not knowing who I worked for. Why was I trading millions of dollars a day for clients I never met? Why try so hard to help the rich get richer?

So I walked away...

Soon after, I met Porter Stansberry.

I was floored by his analysts' knowledge and expertise, and even more blown away by how much they helped the individual investor.

I'm originally from North Carolina, and many of my family members served in the military.

Integrity, honesty, hard work... those are the principles I grew up on. And that's what I found at Stansberry Research.

And I plan to embrace the Stansberry way. I'm going to work to make you as much money as I can.

I'm going to show you how to trade like the hedge funds do...

That means that we'll be looking at technical setups and trends in the market and finding ways to trade them.

Every week:

• I will publish a weekly market outlook – sent directly to your e-mail – that outlines the best trading setups each week.

• You can expect up to two to three trades per week and instructions on when to enter and exit these trades.

• I will share daily post-market updates, trade alerts/updates, and detailed analysis around my technical strategy through my live feed.

In this week's Digest series, you'll find some more details about technical analysis, the types of patterns I look for, and how I plan to set up this portfolio.

'Human nature never changes'...

"History repeats itself."

These adages stick around because they're true.

They're even true in the markets. The ups and downs of the market are nothing more than the graphic representation of human behavior... expressed on a chart of buyers and sellers. And this market behavior tends to repeat.

That's how technical analysis works. We know what's happening because we've seen this all happen before.

Here is a perfect example of a type of technical analysis called intermarket analysis that was warning of a storm brewing at the start of the financial crisis in 2007... WELL before the market crashed.

Intermarket analysis is based on correlations between asset classes, and when one of these asset classes turns down it may be a warning sign for other assets classes (in this case stocks). We know this, because these chart patterns have shown up before, and other assets have fallen.

Take a look...

The S&P 500 Index (in black) and U.S. 30-year interest rates (in blue) traded in tandem for much of the early 2000s – then, in 2007, the correlation broke down. Interest rates started to turn down – a sign of a slowing economy.

Look at the red line...

See how stocks made new highs, while interest rates failed to? That was a warning that something was wrong.

Of course, most of the fundamental analysts pointed to strong earnings and solid "fundamentals." I could hear my boss's words in my head... The only thing that mattered was what prices were signaling.

The ultimate fundamentalist – former Federal Reserve Chairman Ben Bernanke – proclaimed around this time that the effects of "the subprime sector on the broader housing market will be limited and we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system."

You know what happened next.

This is the essence of technical analysis – understanding the behavior of markets and history. This concept is lost on many investors who simply write it off. They simply don't understand and aren't willing to put in the time and effort necessary.

Technical analysis is much more than trendlines and charts. It is understanding the past to profit in the future. In tomorrow's Digest, I'll discuss the only thing that matters when it comes to investing... and share some important technical indicators and terms.

Editor's note: As of this morning, Greg's Ten Stock Trader has officially gone live for "beta testing."

Typically, these opportunities are available only to our lifetime Stansberry Alliance members.

But for the first time ever, he's allowing any interested Stansberry Research readers to beta test this product for up to 85% off what it will cost when we open it up to the public.

Better yet, if you take advantage of this opportunity by Wednesday, April 18, you'll receive a gift worth $1,888 – absolutely free. Click here for all the details.

New 52-week highs (as of 4/13/18): KraneShares E China Commercial Paper Fund (KCNY), Monsanto (MON), and Newmont Mining (NEM).

In today's mailbag, two readers respond to Porter's latest Friday Digest, and another sends his thanks. Send your notes – good or bad – to feedback@stansberryresearch.com.

"Good stuff, Porter. I'm guessing that the middle-aged paint salesman with no finance experience has not started his own newsletter. Just a guess. Thanks for the information on CenturyLink. I've made some jackass investing decisions in the past, but thanks to the solid information published by Stansberry Research I am now more of a horse who likes water." – Paid-up Flex Alliance member M.K.

"'I had just been fired, ungraciously, from the only research job I had ever held. My former boss told me I was 'the least entrepreneurial person' he had ever met on my way out the door. He replaced me with a failed, middle-aged paint salesman who had zero finance experience and was clearly mentally unstable.'

"Been there. Done that. Surely it makes success taste sweeter. But it leaves scars. I am thankful for Stansberry Research. Thanks to you all I have become wealthy. I became successful in my previous occupation. Now that I am retired I trade options and am successful at it. But it is thanks to Stansberry. Does that insult hurt me today. Sure. But we are people that rise above. Porter, I salute you for being a guy that rises above." – Paid-up subscriber Jeff S.

"I truly have come to embrace that the Stansberry team – individuals – touch upon so much more than 'making money' etc. I feel so warmed to the obvious dedication to the more important aspects of life that 'you' endeavour to incorporate and spread. That said, how you can carry on with the (possibly?) overwhelming, pathetic views and doubts of too many of your subscribers as to your ethics is so much appreciated.

"The '80/20' of us that are in fact very appreciative of the moral fibre you individuals possess and express... yet so underappreciated by those subscribers whom... and letsbe true (OK, lets just stick with MY opinion...) Just don't, and, sadly, never will 'get it'. However, they did pay for their admission. Thanks for what you are trying so hard to do." – Paid-up subscriber Gerald N.

Regards,

Greg Diamond
Palm Beach, Florida
April 16, 2018