Mon, Dec 19, 2011|Brian Hunt

Kudos to Dan Ferris and Dr. David Eifrig...

Kudos to Dan Ferris and Dr. David Eifrig... The world wakes up to semiconductors and cigarettes... An interview with the legendary Van Simmons... The rise and fall of Bitcoin... Feedback for Porter Stansberry...

We're approaching the end of the year... the time where most people look back at the past 12 months and note what they accomplished... or what they got wrong.

One of the things that makes me, your Editor in Chief, Brian Hunt, most proud is the consistent and unrelenting advice from Dan Ferris (editor of Extreme Value and The 12% Letter) and Dr. David Eifrig (editor of Retirement Millionaire and Retirement Trader) to focus new stock buying on the world's biggest, safest, best dividend-paying stocks... the Microsofts, Altrias (maker of Marlboros), Cokes, and Intels of the world.

In a year that was filled with liquidity panics, the euro crisis, and plunging stocks, larger, safer stocks held steady... while riskier, lower-margin businesses (like steelmakers, airlines, and resources) fell by 25%... 33%... even 50%.

The reason for the extraordinary 2011 outperformance of companies like Intel and Altria is simple. Many people are terrified of what's going to happen with the Western world's debt mess. Therefore, they are fleeing riskier assets and businesses with "so-so" business models... and flocking toward the world's strongest companies... ones with reliable cash flows and ever-increasing dividends.

Many of these "best of breed" companies are cheap... but we're not sure for how long. The rest of the world is coming around to Dan and David's advice. The "biggies" like Intel and Altria are surging. As you can see from the one-year performance chart below, Altria (red line, up 25%) and Intel (black line, up 11%) are climbing, while the broad S&P 500 Index is struggling (blue line, down 2.5%).

We're also proud of how "Doc" Eifrig took the idea of "going long" the big blue chips to an incredibly profitable new level….

Doc's system of designing income-producing options strategies around these dividend payers has produced incredible results for his readers. In most cases, Dr. Eifrig has taken big blue chips – like Intel, Johnson & Johnson, and Microsoft – and turned them into vehicles that allow people to earn extremely safe 10%–20% annual income streams. His trading techniques are especially valuable in a market that drifts sideways for long periods of time.

They're so effective, low-risk, and result in such large amounts of income, I've heard several Stansberry & Associates employees say things like "Why in the world would you trade any other way?"

We've heard from many traders and investors how "nothing worked" in 2011. We simply reply, "Well, you must not have been reading Doc's letter."

Doc has now closed 49 trades in his Retirement Trader service… and all 49 have been winners. Several months ago, he wrote this short DailyWealth essay about how he does it. Make sure to read it, and consider using his income-producing techniques this year. Like some of us at S&A, you might never own another stock or bond after "getting hooked" on this system. To find out more about Retirement Trader, click here.

Another idea worth mentioning...

Over the past year or so, Stansberry & Associates' daily news and insight aggregator, The Daily Crux, has been conducting a series of interviews we've labeled "The World's Greatest Investment Ideas."

These interviews are conducted with our most knowledgeable, experienced, and wealthiest contacts and analysts. They cover "timeless" ideas on wealth, investment, and trading... like how to identify a great company (with our own Porter Stansberry)... how to master the cyclicality of natural resource investment (with master resource financier Rick Rule)... the idea of gold (with legendary speculator and historian Doug Casey)... and why wealthy, sophisticated investors like to own timberland assets (with our own Steve Sjuggerud).

We believe this interview series will make up one of the greatest collections ever of timeless ideas on all angles of wealth and investment. But don't get us wrong... we have no illusions that this collection of interviews ever sell a million copies. We know in advance that it will never result in a large amount of sales for our company.

These interviews carry far too much common sense insight and far too little hot-stock-tip appeal to be of interest to a broad audience. We know only our most "hard core" group of readers will find value in these interviews. We've found most people aren't serious about making money with their investments, and thus, have no interest in advancing their education... or listening to someone with as much knowledge and experience as Rick Rule or Doug Casey. As Porter frequently highlights in his Friday Digests, we receive boatloads of refunds and hate mail when we try to pass along timeless wisdom, rather than the stock tip of the day. Still, we press on...

Don't miss the latest installment of The World's Greatest Investment Ideas, published yesterday. It's titled "How to buy rare coins, art, and collectibles." Longtime readers will be familiar with our interview subject, Van Simmons.

Van is one of the world's leading authorities on coins, art, and collectibles. If it can be traded, collected, hoarded, bartered, or graded, chances are good Van knows more about it than anyone else. Nobody in the world has a broader range of "real world" knowledge about this area. Van and his business partner David Hall literally revolutionized some of the world's most popular collectibles markets (like coins and baseball cards). Plus, Van is too wealthy to be interested in BSing anyone.

If you've ever been interested in this idea, Van's interview is a great "common sense" way to see the coin, art, and collectibles market. You can get access to this interview, totally free, by signing up for a Daily Crux subscription. Access it in 60 seconds here.

Of course, not all of our efforts result in success. We've had a flood of negative feedback from readers who have lost money in gold this year.

Keep in mind... we've been recommending readers get long gold with various vehicles since 2002. We've recommended it every single year since then. We've even published several books on gold. We know our gold recommendations have resulted in extraordinary gains for longtime readers. However, we never forget that gold is a financial asset. And like all financial assets, gold's value fluctuates.

Just last week, gold fell to less than $1,600 an ounce... its lowest point since July. Latecomers to the bull market are furious... and are losing money.

Traders around the world are scrambling for liquidity right now. And when traders scramble for liquidity, one of the things people sell is gold. But nothing has changed with gold's long-term drivers. The United States and Europe are still on the hook for debts and liabilities that cannot possibly be paid back with sound, honest money. The populations of China and India still get a little bit richer every year... And they are buying gold.

When you consider these bullish tailwinds and step back to take the "long view" of gold, you see that it could fall much further... even down to $1,400 or $1,300 per ounce and remain in the confines of its bull market. We're still long.

Speaking of gold and money, don't miss Wired Magazine's fascinating article on "The Rise and Fall of Bitcoin."

As many readers know, Bitcoin is the digital money created by free-market-minded computer geeks several years ago. Supporters of Bitcoin say it is a perfect currency... which cannot be corrupted by governments. Critics of Bitcoin say the whole thing is a dangerous scam.

Whatever you think about gold, paper currency, or new forms of "digital currency," it's a story worth reading... and arguing about. Colleague Tom Dyson and I had a lively Bitcoin argument over the weekend. (I prefer gold over Bitcoin, but I'm an old fashioned guy.) You can check the article out for free right here.

End of America Watch

Wall Street might not be good for much, but it does a great job of issuing contrarian signals… That's because Wall Street is populated by human beings, and human beings love to wait until everyone agrees with them before taking action. It's even worse on Wall Street… If you make a decision there and nobody agrees, you could lose your job.

So… is it any surprise that Standard & Poor's downgrade of the United States' debt rating was just about as perfect a Wall Street contrarian buy signal as you could ever hope for? Bloomberg reports dollar-denominated assets have done well since S&P cut the U.S.' credit rating on August 5. Government bonds are up 4.4%, the dollar is up 8.6% relative to a basket of currencies and the S&P 500 is up 1.7%.

Higher bond prices mean lower yields, which means lower borrowing costs for the U.S. It's not supposed to work that way. When your credit rating gets cut, your borrowing costs are supposed to rise immediately. But ever since S&P said U.S. Treasury debt wasn't "risk-free" anymore, the average monthly yield on U.S. 10-year debt has fallen below 2% for the first time since 1950. It makes you wonder if ratings agencies offer investors any value at all.

Of course, as we've written before, this dollar rally reflects short-term fears about the euro. Fear leads people to sell risky investments. And when they sell, they get dollars. In the end, we can't outrun our national debt problems forever… The dollar's value will be decimated… and gold will soar.

To see the End of America video that started it all, click here...

Also, to read an exclusive interview with Porter Stansberry explaining how to protect yourself from the End of America, click here...

To sign up to receive the latest information about our Project to Restore America, click here.

New 52-week highs (as of 12/19/11): Keyera Corp. (KEY.TO), Altria (MO).

And now… the mailbag. Lots of activity in there over the past few days. Porter has been called every name in the book. He's been told to perform acts that most physicians will tell you are anatomically impossible. He's been branded a traitor and a lunatic. After all, his latest issue… "The Corruption of America" is one of the most controversial newsletter pieces I've ever read.

Still… some of the other feedback we've received suggests a few of you out there still believe in the old-fashioned notion that you should be held accountable for your own actions… that it's not your job to financially support your neighbor. Today, we're running a smattering of your notes… Send your e-mail to feedback@stansberryresearch.com.

"If you've said it once, you've said it a million times: 'There is no teaching – only learning.' I'm not sure if the December issue was the best you've ever written, but it was the best I've ever read (over and over and over). Please include me as one of the thousands of subscribers who applaud your work in general, and rate this essay as the cornerstone of financial history and perspective. I sent it on to all of my friends and hope they learned as much from it as I did." – Paid-up lifetime Alliance member M.L.

"I know you're convicted in your beliefs, beyond that, it matters not what others think. It's tough trying to change the world, just ask born-again Christians who have a mandate from God to teach the truth to the lost… talk about rejection. All that matters is that you decide how to run your business, and people will choose to accept, ignore or even flee from your advice.

"You don't strike me as the type of person who needs to be re-affirmed, but just in case, keep up the good work. As I was reading the Dec 16th Digest, I was compelled to send it everyone I know, and was glad you gave permission to do so." – Paid-up subscriber L.W.

"Just wanted to let you know that I sent a copy of your letter about the corruption in America out to a number of my friends and co-workers on Friday. I felt it was a very well-written article and contained the truth about what has been happening in this country to the extent that I wanted others to read it. I received an email from one of my friends that afternoon saying the article was very good and that he would be passing it around. I expect to see other similar replies. Good work!" – Paid-up subscriber K.A.

"Your piece on 'The Corruption of America' was excellent and should be required reading for everyone. Thank you for all of the hard work that you obviously put into it. I am sure that you expected some negative fallout for putting it out, but do not let the bastards bring you down! Keep up the good work and good riddance to those that did not want to hear the truth or in some other way felt slighted or offended. We need more people like you to spread the message.

"As you suggested, I have passed it along to a number of people, hoping that it will enlighten them. It is truly amazing to me how many people just do not pay attention or care what is happening to the country." – Paid-up subscriber Todd

"I have been reading your stuff and other stuff from your associates for about 4 years now. I took the plunge and subscribed to S&A recently. Your info is the best. You don't candy coat anything, you don't coddle me and you don't hold my hand through each and every recommendation. And if you did, I wouldn't subscribe.

"You see, we Americans all need a little kick in the proverbial pants. You have been kicking butt for years now. Frankly, I don't even need to subscribe. You and Steve Sjuggeruud give enough info in the Daily Wealth to make money or more importantly, protect capital that I could gain all the insight I need just from that free daily newsletter.

"I hope the cry babies out there don't put you out of business because I have now come to look forward to the daily S&A stuff, not just the monthly. Keep up the good work and by the way, I have to admit – I printed half a dozen copies of your newest monthly newsletter (Corrupt America) for some people I know who need some butt kicking." – Paid-up subscriber M.S.

Hunt comment: Thank you for noting Porter's work. We appreciate all of your notes and beliefs about personal responsibility. Many Americans, unfortunately do not. But perhaps we can change a few minds. Just to remind all Stansberry's Investment Advisory subscribers... We feel so strongly about the ideas presented in Porter's "The Corruption of America" issue, we are allowing readers to forward this issue on to as many people as they know. Print it up and pass copies around your hometown.

If you believe in returning America back to a place that encourages personal responsibility… and if you disagree with people, like Nancy Pelosi, who claim that passing out more welfare checks and food stamps "stimulates" the economy, please pass these ideas around.

Good investing,

Brian Hunt

Delray Beach, Florida

December 19, 2011