More important than a regular Digest...

 We're starting the Digest a little differently today...

 

What I'm about to tell you is more important than anything going on in the news, any stocks hitting new highs, or any updates on our portfolio companies.

 

Porter himself said in a special presentation we hosted last week that the work I'm going to describe is among the best we've ever produced. But before we get to Porter's quote, here's a glimpse at what I'm talking about.

 

Last week, Dr. David "Doc" Eifrig hosted a live webinar to teach the strategy he used to amass 166 winners out of 168 closed positions – a win rate of more than 98%.

 

Yes, you've read that line before... But when we love an idea or a specific recommendation, we turn on the bullhorn. We only do it for ideas that we believe are incredibly safe and profitable... something we know will make you a better investor and make more money for you over your career. After all, that's our job, to bring you the best ideas and money-making strategies in the world.

 

And we've never seen anything like Doc's win rate over the four years he has been at the helm of Retirement Trader. As Porter said during his surprise appearance on last week's webinar:

 

I gave Doc the same review I gave everyone else. Doc's performance has just been clearly superior. If you look at all of our Report Cards I've written since Doc has joined the firm in '08, Doc is so clearly our best analyst and so clearly our best trader. If you just go back and read the Report Cards and see all the evidence for that, it's just right there in front of you. So I don't think it's a matter of opinion. Objectively, Doc's track record in terms of annualized returns, it's the best we have.

 

 We believe in this idea so much – it's the safest and most consistent way to generate extra income in the market – we're making an incredible offer... Again, we want as many people as possible learning about Doc's options-trading strategy.

 

Doc's Retirement Trader service normally costs $4,000 a year. And people are happy to pay that, considering we've received feedback from people who are making an extra six-figures a year using this strategy.

 

But for a few more hours, we're offering you two years of Retirement Trader for only $3,000. But we want you to make sure you're comfortable selling puts. We want you to make a trade or two and see how simple it is... and how much money you can make.

 

That's why we're giving you six months to try this product. If you decide it isn't for you, we'll give you a 100% refund.

 

 You only have until midnight tonight to claim this offer. Don't miss out. Click here to learn more...

 

 In Tuesday's Digest, we noted that New York Stock Exchange debt had reached a record-high $465.7 billion. Margin debt on its own doesn't tell you much... Jason Goepfert at advisory service SentimenTrader (a favorite of the S&A team) says you need to pay attention to "available cash" – debt versus cash in investment accounts... And right now, investors have a net worth of negative $177 billion, exceeding the previous low of negative $129 billion in February 2000.

 

Goepfert notes the debt-to-cash ratio is now 1.62... Said another way, investors have $1.62 of debt for every $1 of cash in their accounts.

 

 We also discussed Federal Reserve Chair Janet Yellen's comments at a meeting in Chicago clearly indicating her intention to keep supporting the markets with the central bank's "easing" efforts. The Federal Reserve is committed to pushing the stock market up. If you're smart, you won't fight the Fed.

 

Expert trader Dennis Gartman, who writes the Gartman Letter, said that's the most important lesson he has learned in his career. He told CNBC yesterday:

 

I've been at this 40 years, and I've learned one thing: Don't fight the Fed. If you do, it's a losing battle. They have a bigger margin account than you or I will ever dream of having, and they're continuing to fund your margin account.

 

 David Tepper, the billionaire founder of the Appaloosa Management hedge fund, expressed the same sentiment in September 2010...

 

The Federal Reserve had said it would do whatever necessary to boost the economy. At the time, Tepper was massively long the market. "What, I'm going to say, 'No, Fed, I disagree with you, I don't want to be long equities'?" he told CNBC. "We're a bond place, but we changed up to a little bit more equities recently."

 

He went on to make billions of dollars in profits.

 

 So for now, the same logic applies... The Fed is committed to boosting asset prices. Don't fight them.

 

 Steve Sjuggerud addressed the same topic in today's DailyWealth... When stocks are going up, investors get nervous. They want to take profits. But that's the wrong thing to do...

 

The truth is, new highs are a GOOD thing...   History is clear on this one. You want to get rid of stocks hitting new lows. And you want to keep ones hitting new highs.   Too bad everyone wants to do the opposite.

 

 Steve quotes a study from asset manager James O'Shaughnessy who studied stocks back to 1926, concluding, "winners continue to win." You can read the full essay here.

 

 But with the market at all-time highs, the bears will certainly come out to play... And there's no bigger bear than master short-seller Jim Chanos, founder of hedge fund Kynikos Associates. Chanos is best known for his short call on fraudulent energy firm Enron.

 

Today, he's shorting the so-called "1%"... the super-wealthy.

 

 Chanos presented a version of the following chart of auction house Sotheby's on CNBC today...

 

 

 And he noted "that's what people are buying." Fine art and other collectibles like wine and jewelry are long-time favorite asset classes of the super-wealthy. In general, these are rare assets, coveted by the elite. And in an economic environment like today's, when the Federal Reserve is expanding our monetary base at a furious pace, the prices for these collectibles tend to rise.

 

Quantitative easing and inflation help the wealthy... As they accumulate more dollars and subsequently lose more and more faith in paper money, those dollars chase art, wine, watches, etc.

 

 We've followed the trend over the years in the Digest, as auction sales resulted in higher and higher asset prices, often setting records... (You can read examples here and here.)

 

 Porter also discussed another major advantage of high-end collectibles in the February 14, 2013 Digest Premium:

 

[O]wning collectibles offers one major advantage – one that I think drives 90% of the demand for collectibles: It's a great way to protect your wealth from the IRS. People know that when they die, the IRS won't have any idea what is hanging up on their walls or hiding in their vaults. So they hide money in these trophies to give to their children to avoid estate taxes. Mind you, I'm not passing judgment on these actions, nor am I recommending them... I just believe that's why a lot of demand for collectibles exists.   Collectibles are also easily transferrable across borders. You can take a Picasso on a private jet and move $100 million offshore. And no one even knows you have it...   When you buy collectibles, you're betting on the irresponsibility of the government and the wickedness of the tax system... If the government gets more irresponsible and the tax system gets more heinous, you'll probably do well. And I think that's a good bet. But you should understand that's what you're betting on.

 

 Back to Chanos...

 

He said the market for contemporary art (think Andy Warhol) has gone "bonkers." And although auction houses like Sotheby's are experiencing record sales, that doesn't trickle down to the average American – the other 99%.

 

"This is still driven by art, which is socially acceptable conspicuous consumption," Chanos said. "It's one of the ultimate barometers of the 1%, or the one-tenth of 1 percent."

 

"I own a couple pieces," Chanos said. "[But] anybody who buys art should be looking to hedge it right now." Chanos is short Sotheby's.

 

 

 New 52-week highs (as of 4/2/14): Brookfield Asset Management (BAM), Anheuser Busch InBev (BUD), Chicago Bridge & Iron (CBI), Comstock Resources (CRK), Carrizo Oil & Gas (CRZO), Dorchester Minerals (DMLP), Devon Energy (DVN), Energy Transfer Equity (ETE), Fidelity Select Medical Equipment & Systems Fund (FSMEX), Corning (GLW), KLA-Tencor (KLAC), Medtronic (MDT), Marvell Technology Group (MRVL), PowerShares Buyback Achievers Fund (PKW), Superior Energy Services (SPN), ProShares Ultra S&P 500 Fund (SSO), Cambria Shareholder Yield Fund (SYLD), Targa Resources (TRGP), and United Technologies (UTX).

 

 Another subscriber improving his financial situation... We love to hear it. Send your feedback to feedback@stansberryresearch.com.

 

 "Porter, I trust that you are coming up with a new GM CEO letter. As an investor I have never understood why anyone would invest in a company that has been laughably badly managed for so very long. Let alone bail it out.

 

"Way back in the '80s, when they were issuing debt... I thought that it was one of the worst investments you could make. I guess it continues to prove that to be a wise view of a company that is destined to go away.

 

"All of these things that are current are shameful examples of how corporate America deals with responsibility. Of course I assume that it will continue unobstructed.

 

"Beyond that... thanks for all that you have done for my family finances. Although we are not making millions we are making more and more every quarter. So much of it is due to the education that everyone provides." – Paid-up subscriber Jeff Spranger

 

Regards,

 

Sean Goldsmith

New York, New York

April 3, 2014

 

The best way to play the Spanish real estate recovery…

 

In today's Digest Premium, we continue our discussion of Spain's improving economy and Stansberry International editor Brett Aitken's favorite way to play the recovery.

 

To subscribe to Digest Premium and receive a free hardback copy of Jim Rogers' latest book, click here.

Editor's note: In yesterday's Digest Premium, Stansberry International editor Brett Aitken described how big institutional money is going to work in Spain... Today, he continues that discussion by describing his favorite way to invest in the trend…

 

 

 According to a report compiled by the financial newspaper Expansion, consulting firm Bain and Company says that at the end of 2013, private-equity firms had more than €780 billion ($1 trillion) to invest around the world over the next five to six years. It says these firms captured around €334 billion ($460 billion) last year alone. And they are focused on shakier European economies… like Portugal, Italy, Ireland, Greece, and Spain (the so-called "PIIGS"). According to the report, some of this cash could end up in Spain.

 

We talked about this in our January issue of Stansberry International.

 

We gave readers interested in buying properties the following list of real-estate websites:

 

Spanish Real Estate Opportunities
Entity	Website	Number of Houses*	Main Region
BBVA	www.bbvavivienda.com	19,098	Cataluña
CaixaBank	www.servihabitat.com	7,748	Barcelona, Valencia, and Sevilla
Banco Popular	www.gesaliseda.es	8,991	Andalucía and Castilla y León
Banco Sabadell	www.solvia.es	7,934	Mediterranean Arc and Islas Baleares
Catalunya Banc	www.cxinmobiliaria.com	10,624	Cataluña and Levante
Santander	www.altamirasantander.com	6,196	Andalucía, Valencia, and Cataluña
Bankía	www.bankiahabitat.es	11,450	Valencia, Madrid, and Cataluña
Caja España Duero	www.giasainversiones.es	3,964	Valladolid, Burgos, Costa, and Madrid
Bankinter	www.bankinter.com	1,704	Alicante, Valencia, and Murcia
Unicaja	www.unicajainmuebles.com	2,175	Andalucía Coast
Grupo BMN	www.bmnviviendas.com	2,407	Anadalucía, Murcia, and Baleares
Ibercaja	www.ibercaja.es	2,058	Cataluña, Levante, and Andalucía
Kutxabank	www.kutxabankinmobiliaria.es	1,551	Levante and Madrid
Liberbank	www.liberbankvivienda.es	667	Castilla-La Mancha
*Data from January 2014 Source: Expansion

 Real estate in Spain looks like it's finally finding a bottom. If it's not in already... it's very close. Foreign investment is returning.

 

If you're in the market for Spanish property... now is the time to look. In addition to finding a cheap vacation home or investment property, foreigners who invest more than €500,000 ($690,000) qualify for Spanish residency.

 

We know most of you aren't in the position to travel to Spain and buy physical property. But you still have opportunities to profit from Spain's improving economy…

 

 Given all the ingredients, we think investing in Spanish banks is the best way to invest in Spain's property and overall economic recovery.

 

We know that will seem counterintuitive to most investors, considering the country's recent economic troubles, its massive lending over recent years, and the large number of mortgages at or near default ("nonperforming loans"). Yes, it's true... banks provided the cheap finance that helped create the boom and subsequent bust.

 

But remember... we want to invest when a crisis is waning, conditions are starting to improve, and the market is offering tremendous value. As you'll see in a minute, we're not investing in just any banks. We want banks that are worthy of our capital.

 

 And economic conditions are improving. Spain's property sector is finally seeing activity, which is allowing the banks to lighten up on their housing portfolios and bad debts. It's true that the amount of nonperforming loans is still too high. But with the economy improving and the deals being negotiated to get banks' balance sheets where they need to be, we think the worst is over.

 

 As long as the European Central Bank (ECB) keeps the commercial banks' borrowing costs at historical lows, those banks will have the opportunity to make huge profits over the next few years. As we've seen with central banks around the world, the ECB is committed to saving the banks, maintaining the monetary system, and implementing inflationary policies for struggling economies.

 

Like we've said before, we don't agree with many of these policies. All they do is kick the can down the road until the next crisis appears. But this is the approach that central banks believe is right.

 

We've already seen the ECB adopt policies similar to the Federal Reserve. And we're certain we'll see more. Over the next couple years, we believe these policies will mean higher profits for banks. And we should see the value of their assets grow. And as investors climb back into the shares, we'll see their share prices trading higher.

 

 Remember, Spain's banking sector has consolidated. Most of the bailout money went toward saving smaller regional banks. Many of the regional banks merged or have been sold. The remaining large commercial banks are national flagships. They're too big and important to the country's monetary system for the government to let them fail.

 

We like Banco Santander (SAN.MC). It appears at the No. 1 spot on our list of Spanish banks. It's a national flagship. Plus, its international operations spread the risk and allow the bank to grow and profit from opportunities in other markets. A little more than half its revenue comes from Latin America. Brazil alone contributed approximately 24% to profits for the first nine months of 2013. Another 30% comes from continental Europe and about 11% from the U.K. It also has approximately 5% coming in from the U.S.

 

Banco Santander has reduced its loan-to-deposit ratio from the exorbitant heights of 177 in 2007 to 125 in September last year. A recent presentation by the company indicates it has lowered it further to 108. We expect Banco Santander to be among those that benefit most from the ECB's low borrowing rates and an improving Spanish economy.

 

 In tomorrow's Digest Premium, we'll close our discussion on Spain... And we'll share some recent bullish news from Banco Santander's CEO that supports our thesis.

 

– Brett Aitken

The best way to play the Spanish real estate recovery…

 

In today's Digest Premium, we continue our discussion of Spain's improving economy and Stansberry International editor Brett Aitken's favorite way to play the recovery.

 

To continue reading, scroll down or click here.

 

 

 

Stansberry & Associates Hall of Fame
(Top 10 all-time, highest-returning closed positions across all S&A portfolios)

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Sym

Holding Period

Gain

Publication

Editor

Seabridge Gold	SA	4 years, 73 days	995%	Sjug Conf.	Sjuggerud
Rite Aid 8.5% bond		4 years, 356 days	773%	True Income	Williams
ATAC Resources	ATC	313 days	597%	Phase 1	Badiali
JDS Uniphase	JDSU	1 year, 266 days	592%	SIA	Stansberry
Silver Wheaton	SLW	1 year, 185 days	345%	Resource Rpt	Badiali
Jinshan Gold Mines	JIN	290 days	339%	Resource Rpt	Badiali
Medis Tech	MDTL	4 years, 110 days	333%	Diligence	Ferris
ID Biomedical	IDBE	5 years, 38 days	331%	Diligence	Lashmet
Northern Dynasty	NAK	1 year, 343 days	322%	Resource Rpt	Badiali
Texas Instr.	TXN	270 days	301%	SIA	Stansberry