Editor's note: Don't miss the essay – and a special note from Porter – at the end of today's Digest. Porter is debuting a new research product from his friend and mentor, Mark Ford. Mark taught Porter about business and investing. And he's never shared his secrets to wealth publicly, until now. We'll be running essays from Mark in the Digest for the rest of the week. We think you'll enjoy them.
The big news yesterday was S&P's warning to the United States... The rating agency put the U.S. on a "negative" outlook. It wasn't even a downgrade. And why anyone cares is beyond us. These rating agencies are the definition of a lagging indicator. We've been telling you for years the U.S. is broken. But when Standard & Poor's agrees (years after the fact), you can be sure we're right...
On the subject of our country's fiscal disaster, everyone wants to know what will happen on June 30... the day quantitative easing part two (QE2) ends. Our bet... Bernanke turns off the spigot. But only long enough for us to feel the sting. Central banks are addicted to printing money. And we're at the point where printing more money is the only way out (at least in the eyes of our government). We've seen how productive austerity measures are. Once the American people realize they "need" Bernanke and his magical printing press, he'll turn it back on. We think the market can continue on its current high for longer than most people realize. But nothing lasts forever.
Maybe we're naïve to think Bernanke will ever stop printing money – even if just for a few months. David Kelly, chief market strategist at JPMorgan, thinks Bernanke will continue reinvesting maturing debt into Treasurys after QE2 officially ends. That would amount to $17 billion a month. This wouldn't expand the monetary base. It would, however, keep Treasury yields artificially low.
The market isn't betting QE and inflation will ease... Gold crossed $1,500 an ounce today.
With low interest rates come yield-starved investors. How else could you explain Greece's ability to issue more debt? The country sold nearly $2.3 billion of three-month bills at a ridiculous 4.1%. Who would buy this garbage? Banks... with the backing of the European Central Bank and China (Europe is China's largest trading partner). The bid on the Greek bonds fell from 5.08% to 3.45% (implying strong interest). According to Greece's Public Debt Management Agency, only 36% of the issue went to foreign investors.
If 4.1% on three-month paper isn't hot enough for you, maybe you'd buy two-year Greek paper for 20%. Yes... two-year Greek bonds are now yielding an outrageous 20% (a record).
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New 52-week highs (as of 4/18/11): Royal Gold (RGLD), iShares Silver (SLV), Barnes & Noble (short sale, BKS).
We get our first "standing ovation" in today's mailbag. Send us your thoughts here... feedback@stansberryresearch.com.
"Bravo Porter, I stood at my desk and gave you a full standing ovation. Well done and thank you for helping to awake an apathetic people. One of my all-time heroes is Ezra Taft Benson, late prophet of the Mormon Church. I am absolutely certain that he stands with me in spirit in applauding Porter in his effort to alert Americans to the evil influence of socialism that grips this great nation. I thank God for brave men like Porter Stansberry who will speak the truth no matter what the consequences." – Paid-up subscriber David Andreason
Regards,
Sean Goldsmith and Porter Stansberry
Baltimore, Maryland
April 19, 2011
Porter comment: Below you'll find a guest essay from my mentor, friend, and business partner, Mark Ford. This is the first of a series of guest essays... and represents an important new project, something I've been planning for years.
I hope you'll give me a moment to explain...
To people in the publishing industry, Mark Ford is a living legend. He's a bestselling business author and a consultant who works with many of the world's best publishing companies. But publishing is only one of Mark's endeavors.
Mark Ford has launched more businesses and served as a mentor to more entrepreneurs than anyone else I know, by a wide margin. Over the course of his career (Mark is in his 60s now), he's sold billions of dollars in products all over the world. He's been a part of more than 50 different start-up companies. He has a deep knowledge of business that goes well beyond understanding accounting and advertising. Mark has an intuitive understanding of what people want and need and how they will react to events.
I've seen this mastery firsthand over the last 15 years. It is simply uncanny. It is almost like he's able to read people's minds. I don't mean this in a mystical way... Mark just has a sixth sense about people – what they think, how they will act, the choices they will make. You could call it "street smarts" or wisdom. But it gives him a huge advantage in life.
I believe these unique skills explain why Mark has been so successful – and not just in business. Mark has been married to the same woman since his early 20s. He's a published poet. He's become a world-class art collector. He's built one of the most beautiful homes in Palm Beach. And when he turned 50, he decided to become a Jiu Jitsu fighter – the kind of cage fighting you see on TV. Believe it or not, despite being well into his 60s, Mark continues to fight much bigger, younger opponents – and he regularly beats them. He has the physique and the physical stamina of a 20 year old.
Mark has taught me more about life, people, investing, business, and maintaining my health than anyone else in my life. After my father, no one has been more important to me... or a bigger influence.
What does all of this have to do with you?
Consider this... In 2008, when the stock market collapsed and dozens of his Palm Beach friends went broke, Mark didn't lose a penny. He knew the stock market was going to tank. He knew real estate was going to collapse, too. We talked about it many times. He tried to warn his friends. But of course, they wouldn't listen. Since then, more and more people have been coming to him, looking for financial advice. He's even started an informal investment group with a few of his wealthiest friends.
I asked Mark if he'd consider sharing his ideas about investing with my readers, the same way he's always shared his ideas with me personally. He's never been willing to do this before because he cherishes his privacy – he doesn't usually even publish using his real name. But he's doing so now and writing publicly about investing for the first time ever.
In part, he's doing so because I've asked him to. But the more important reasons are more personal. Mark believes most of what we've all been taught about investing and what you probably believe about wealth is 100% wrong. As Mark will explain, he almost never loses money – ever – when he makes an investment. And there's a simple reason why.
After spending a career focused on almost nothing but making a fortune – a very large one – Mark has decided to spend his remaining years helping people. I know this might sound like a cliché... but I know Mark is sincere. He definitely doesn't need the money. And he's giving these hard-learned lessons away for free.
And so... over the next few days... you'll have a rare opportunity to learn the investment secrets of a self-made millionaire. He won't load you down with any theoretical information. Mark's offering the real secrets to his investing success.
I hope you'll read these ideas carefully and think about what they mean to you and your wealth.
How 'Chasing The Dollar' Almost Ruined My Life...
By Mark Ford
For most of my life – since I was in my mid-20s – I dedicated myself almost entirely to making money.
I started with service businesses – roofing, carpentry, pool building, and house-painting.
I graduated to retail operations – restaurants, bars, a health club, a martial arts dojo, two travel agencies, and two art galleries. I started two public relations firms and a rare-coin business.
I got into direct marketing. I owned and ran businesses in just about every field you can imagine. We sold watches, jewelry, televisions, grandfather clocks, tomatoes, sunglasses, magazines, perfumes, and cosmetics – just to name a few.
I owned or ran dozens of publishing companies. We sold books, magazines, and newsletters about travel, health, business, real estate, and investing.
I even developed a large vacation resort on the Pacific coast in Central America. And I started several adult education programs.
Many of these businesses were profitable. Some of them soared. One of the businesses I took an interest in, for example, is worth around $1 billion today.
But it wasn't all strawberries and cream. Some of the businesses I got involved in were big flops. (Like the record-of-the-month club I started in the mid-1980s. It lost me about $750,000, as I recall.)
Two of my partners screwed me. And I've had to fire some of my best friends. About 20 years ago, the U.S. government sued me. That resulted in some terrible press in local newspapers.
Then, I had an epiphany…
I remember the day it struck me. My wife and I were walking over a bridge in Rome. She was enjoying the scenery. I was thinking about all the businesses and investments that needed my attention.
Standing on that bridge, looking at the Tiber River, I realized there was no need for me to keep working. I had more money than I could use in three lifetimes. It was time for a change.
I turned to my wife, and I apologized for being a money-driven maniac for 30 years. I promised that I would never again devote my life to making money.
And I kept that promise.
I thank my lucky stars every day she put up with me for all that time. And I'm immensely grateful for our three boys. They are now trying to make their own ways in the world.
These days, I consider myself "semi-retired."
We live in a $5 million home overlooking the ocean in Palm Beach. And we have more real estate, gold, art, and cash than I can keep track of.
I take six to eight weeks off each year to live with my wife in some wonder destination. We like cities. We pick a different one each summer. We've become "citizens" of Paris, London, Madrid, Aix en Provence, Chicago, and our favorite, New York City. (Two of our sons live there.)
Sometimes we rent apartments or villas. Other times we stay in beautiful little boutique hotels she discovers from her reading.
Every six to eight weeks, I travel to our second home overlooking the Pacific Ocean in Nicaragua. There I spend time writing fiction and poetry, reading books, and enjoying fine wine and cigars.
I've made my health a top priority. I work out twice a day and compete at an expert level in Jiu Jitsu tournaments with men half my age.
But the biggest change I've made is how I think about money.
I'll tell you about this in tomorrow's Digest.
I think you'll be surprised.
Good investing,
Mark Ford
P.S. I am sharing a secret with my readers that has made me about $1.5 million over the past few years. The best part is... it is much safer than typical investments and comes with hardly any risk. If you're interested in learning more about this secret and many others, just click here.
Lessons from Porter's mentor... S&P warns the U.S.... What happens after June 30... Gold hits $1,500… Greece's bond sale... China ditches the dollar...