Plenty of 'A+' Grades to Go Around

The next part of our yearly review... Plenty of 'A+' grades to go around... Our remaining core Portfolio Solutions products – and more... Bonds, China, small caps, cannabis, and cryptos... 'Hall of Fame' picks from a couple of editors...

Let's continue what we started a week ago...

In case you missed it, I (Brett Aitken) unveiled Part I of our 2020 Report Card last Friday.

We began with The Capital Portfolio... It earned an "A+" for this year's grading period. Our Director of Research Austin Root has done a masterful job leading this product...

This portfolio has produced a nearly 105% return since inception in 2017, crushing the benchmark S&P 500 Index's 76% gain over the same holding period. The outperformance is just as strong over shorter time frames, too... If you listened to Austin's advice in The Capital Portfolio in 2020, you would've made 41%, while the S&P 500 was up 18%.

Last Friday, we also reviewed the eight traditional publications from which Austin and the rest of the Portfolio Solutions Investment Committee pull their recommendations for The Capital Portfolio. Those newsletters are Stansberry's Investment Advisory, True Wealth, Retirement Millionaire, Stansberry Innovations Report, Commodity Supercycles, Extreme Value, Stansberry Gold & Silver Investor, and DailyWealth Trader.

We're bringing you Part II of our annual review today...

First, we'll cover the two remaining Portfolio Solutions core products – The Income Portfolio and The Total Portfolio. And then, we'll discuss eight more of our traditional publications...

As you'll see below, the services we're grading today are Income Intelligence, Stansberry's Credit Opportunities, True Wealth Systems, True Wealth Opportunities: China, Stansberry Venture Value, Stansberry Venture Technology, Cannabis Capitalist, and Crypto Capital.

We'll wrap up our 2020 Report Card next week with everything else.

One more thing before we get started today... If you're wondering how I determine my grades, I encourage you to first read the "Our Grading Criteria" box from last week's Digest.

With all that said, let's get to what you've all been waiting for...

The Income Portfolio: C

The severity of the sell-off last March wrecked a lot of investors' portfolios.

And The Income Portfolio was no exception... Through the height of the COVID-19 panic, about 25 positions hit their recommended stop losses – and Austin honored all of them.

But more important, he also recognized that a bunch of great bargains were appearing...

Armed with a big stockpile of cash, he quickly deployed it into the stocks of some of the strongest names that offered solid dividends at the time. He also recommended some safe bonds with attractive yields that were trading at discounts to par value ($1,000 per bond).

For example, Austin added home-improvement retailer Home Depot (HD) to The Income Portfolio in April, when it paid a 3.1% dividend. The stock had plunged from more than $240 per share in February 2020 to less than $160 per share by late March. At the time of Austin's recommendation, Home Depot had bounced back some... but it still traded for around $191 per share.

In other words, he added a source of steady, safe income at a beaten-down price. And the move has paid off... By the end of the year, Home Depot was up 41% in this portfolio.

Austin also recommended buying bonds from casino giant MGM Resorts (MGM) and oilfield-services company Baker Hughes (BKR) at a discount, when they were yielding 7.8% and 3.6%, respectively. And these positions were up 13% and 27%, respectively, by the end of 2020.

As I mentioned last week, this is one of the benefits of having an intelligent, experienced portfolio manager scour our entire universe of investment research for you...

Austin and his team can look across all 10 publications that correspond to The Income Portfolio to spot the bargains and find the opportunities that offer the safest high-yielding returns. The two bonds were initially recommended in our bond-related service Stansberry's Credit Opportunities, while Home Depot is a longtime member of the "Global Elite Monitor" – an added benefit for lifetime subscribers of our flagship Stansberry's Investment Advisory.

These winners are great, but this portfolio hasn't shined as bright as The Capital Portfolio...

During this year's grading period (from its inception in 2017 to the end of 2020), The Income Portfolio produced a total return of 48.6%. Meanwhile, its benchmark – the Vanguard Balanced Index Fund – returned 53.7% over the same period. This portfolio's average annual returns of 11.1% slightly trailed the benchmark's 11.9% as well.

As a result, The Income Portfolio gets a "C" for this year's Report Card.

But please note that even though The Income Portfolio has slightly underperformed its benchmark over this four-year period... these are still great returns for an income investor.

You would be lucky to get paid 1% on your money at any regular trading bank today. But these results show that it's possible to generate safe, double-digit returns for your money by following some tried and true methods. We're pleased with its performance overall.

Our other two core Portfolio Solutions products are overperforming their benchmarks over the past four years. And given the way we're hitting our stride with these products, I'm confident that The Income Portfolio will also outperform in the coming months and years.

The Total Portfolio: A+

We'll cut right to the chase with the highest core product in our Portfolio Solutions suite...

The Total Portfolio has smashed its benchmark – the Bloomberg Equity Hedge Fund Index – recording a 71.7% total return since inception. That's nearly 2.5 times better than the 29.4% total gain of its benchmark over the same holding period.

And the thing is, some people don't appreciate one important tidbit about these results...

In The Total Portfolio, we hold some short positions and "crisis hedges" in addition to the regular long positions. These forms of portfolio protection often drag down the overall performance during a raging bull market – like the one we've had over the past decade.

It's a big reason why some folks might argue that they would rather stick to a long-only portfolio... When the market is only going up, they can enjoy higher upside potential.

But The Total Portfolio is for investors who know better than that...

It's designed to help folks grow their wealth with capital appreciation and income – while also reducing the damage from the inevitable corrections and bear markets.

You can think of it as having hurricane insurance... before the hurricane hits.

People who buy this type of insurance can sleep much better at night knowing they have some protection to help offset the property damage (or market losses) they might experience when the hurricane hits (or the bear market hurts their long positions).

For example, in this portfolio, Austin had held a short position in mall retailer Nordstrom (JWN) since December 2019. And amid the market chaos in early 2020, it paid off...

As the S&P 500 fell 34% during the sell-off last spring, Nordstrom plunged more than twice as much in a similar span. The stock lost nearly 70% of its value over that period.

That's right... Nordstrom plummeted further and faster than the overall market.

When it turned higher with the overall market in early April, the short position triggered its trailing stop and Austin closed it for a gain of nearly 50%. Those kinds of returns – even on a small position in your overall portfolio – can help offset losses on the rest of your holdings.

While The Total Portfolio still suffered losses as the market turned lower last March, it fared better than the broader market thanks in part to these types of short positions.

Aside from holding shorts and crisis hedges, Austin also took advantage of the "fire sale" prices at the time... He recommended several high-quality, capital-efficient businesses.

I don't want to give away too many names here, but as an example...

In early April, Austin said to buy social media pioneer Facebook (FB), which had lost roughly 35% of its value from its peak in late January 2020 through its bottom in March. The stock then soared 62% from the time of his recommendation through the end of 2020.

Then, in May, he told subscribers to add a pair of our "Best Business in the World" picks in property and casualty (P&C) insurance... These two P&C insurers are up 49% and 34% today.

Austin made a ton of money-making moves throughout 2020...

Regular readers know that Software as a Service ("SaaS") is one of our favorite parts of the technology space. Last January, he recommended a SaaS firm that's up 224% in a year.

Austin also timed the crypto market perfectly... adding a small stake in bitcoin in August before things took off (more on that in our Crypto Capital write-up below). With bitcoin trading at about $48,000 today, Austin's 3.5% position is up 321% in roughly six months.

And finally, Austin gave the portfolio some exposure to Dr. Steve Sjuggerud's "Melt Up" thesis, as well as a couple of "special situation" stocks – including one that more than doubled before he recommended selling it while "rebalancing" the portfolios for 2021.

This is a truly robust "all weather" portfolio. And it's clearly hammering its benchmark...

As a result, The Total Portfolio gets an "A+" for this year's Report Card.

Income Intelligence: C

Amid the market mayhem in early 2020, Doc and his team of analysts lost a boatload of positions... They were forced to close 25 positions throughout February and March.

That's a lot for any publication – especially an income-focused one. It nearly cleared out Doc's entire portfolio. But as he explained to subscribers in mid-March, context is key...

The gains [from these closed positions] far exceed the losses. For our Income portfolio, we use volatility-based stops that tend to be very tight. Some of our positions triggered their sell stops by falling as little as 12% from their highs.

Among these 25 positions, Doc booked several triple-digit winners. They included a 542% gain in software giant Microsoft (MSFT)... a 332% return in global burger franchise McDonald's (MCD)... a 182% gain in energy processing and transportation firm Enterprise Products Partners (EPD)... and a 164% return in Coca-Cola.

Overall, 16 of the 25 positions were winners. The average gain across all of these positions was 75%. And here's the next important note that Doc told his subscribers...

While we do buy quality businesses for the long term, with our income investments, we like to keep the potential losses small. For one, we hate losing money. Conservative investors looking for income must protect their capital.

Once the dust settled and Doc felt it was safe, he started rebuilding the portfolio...

Since April, he has recommended nine stocks for subscribers. And as I write, all but one of the 16 open positions in his model portfolio are winners. That "loser" is showing a small, 2% loss since last July. And six of his 2020 recommendations are already up double digits.

Longtime subscribers know that Doc recommends a diversified portfolio of securities in this publication – including high-yielding stocks, preferred shares, bonds, and real estate plays. Even better, along the way, you receive a great lesson about each sector... the minefields to watch... and any hidden or misunderstood opportunities to earn safe and steady income.

I also love this publication's "Income Investor Dashboard"... You can check out Doc's Inflation Monitor, The Real Income Index, the Income Market Overview heatmap, the Yield Corner, and much more for a bird's-eye view of the overall space in less than five minutes.

As I mentioned in Part I of the annual Report Card last week, Doc earned an "A+" for his Retirement Millionaire publication. His long-term track record of picking winning stocks is not only among the best at Stansberry Research... it's among the best in the world.

Income Intelligence comes with a similar track record of success...

Since launching this publication in 2013, Doc has earned an "A" or better every year except one. The one time he didn't? He received a "B+" in the 2018 Report Card.

That's a phenomenal track record.

And the 61% win rate for Income Intelligence over the five-year grading period for this year's Report Card is better than most investors will achieve over the long run.

However, the publication's average and annualized gains of 10.5% and 8.3%, respectively, both come in just below its benchmark... The Vanguard Wellesley Income Balanced Fund returned 11.0% and 8.7%, respectively, for those metrics during similar holding periods.

So for this year's grading period... Income Intelligence earns a "C" grade.

Now, before I move on, I want to say that I've seen what happens when Doc gets anything below a "B" in our annual Report Card. And I wouldn't bet against him this time, either...

I believe we'll see Income Intelligence return to the "A" level next year and beyond.

Stansberry's Credit Opportunities: A

Perhaps it's the word "bonds"... Maybe it's the general jargon associated with this sector... Or possibly, it's just that most regular folks don't want to step out of their comfort zones.

No matter the reason, this corner of the market seems to scare many investors away... But as I've said before, I wish every Stansberry Research reader would give this strategy a try.

I still recall the day we launched Stansberry's Credit Opportunities back in late 2015...

We were convinced that the credit cycle would soon roll over. And as that happened, based on what has occurred in previous cycles, we knew that subscribers would have plenty of opportunities to buy high-yield corporate bonds at steep discounts to their par value.

If you aren't familiar with the jargon, it simply means that these bonds have a face value – usually $1,000. But sometimes, when the bond market grows concerned about the underlying financials of the company, they trade below par. That means you might be able to get these bonds at $0.90 on the dollar... or $0.80... or perhaps even lower than that.

And yet, as long as the companies that issue these bonds are in no danger of going bankrupt, they'll keep paying their regular interest payments – usually every six months.

For investors in these bonds, it's a one-two punch of opportunity... On one hand, you earn steady income through these interest payments. But in addition to that, this strategy also gives you the potential to earn capital gains on the bond as they return to their par value.

Of course, more than five years later... we're still waiting for the next credit crisis to unfold. While we've had a few "false starts" as fear spiked briefly, it hasn't happened yet. So it's clear that we were early with our expectations. The Federal Reserve's "whatever it takes" approach to saving the U.S. economy is a big reason for that.

But as editor Mike DiBiase and analyst Bill McGilton have shown, this strategy can still be profitable. Even though things haven't played out as we expected, they're still thriving...

Mike and Bill have consistently managed to find bonds trading at discounts to par that they believe are safe to own. And over the long term, they're producing outstanding results.

For example, as I briefly mentioned last week, the COVID-19 crash opened an opportunity – albeit briefly – that Mike and Bill have been waiting five years for. And they didn't miss it...

On March 27, Mike sent subscribers an urgent alert titled, "Our First Wave of Distressed-Debt Buying Is Here." Here's what he told subscribers in that special update...

Corporate-bond prices have collapsed. The "distress ratio" – a term coined by [leading academic Edward] Altman – is the number of bonds trading at a spread of more than 1,000 [basis points] higher than U.S. Treasurys. It's now at 30%... its highest level since December 2008, when it was at 80%.

As the [high-yield] credit spread soared, the junk-bond market dried up... Since February 21, only one junk-rated company has issued a new bond. And in most cases, lower bond prices are appropriate because as we explained, the default risk is much higher for many companies. However, you must remember... Not every company with a bond that sold off will default.

This is the type of environment we've waited for since we launched this publication back in November 2015.

In that alert, Mike and Bill recommended buying seven different safe bonds at discounts to par – including one each from casino operators MGM Resorts and Las Vegas Sands (LVS).

Within three months, they locked in 7% and 19% gains, respectively, on those two bonds.

In the end, they closed all seven of these positions for an average return of 17% over an average holding period of just 115 days. That works out to a 53% average annualized gain.

Remember, we're talking about "boring" bonds here. Most stock investors don't achieve those kinds of results... Yet Mike and Bill did it in less than a year with a collection of bonds.

Now, please know... this investing strategy – like all others – comes with some risk.

We like to say that bonds are "binary"... Companies either pay you what you're owed or they default. And obviously, Mike and Bill aim to avoid companies that are in danger of default. However, no one – not even Mike and Bill – can perfectly predict the future...

No one could foresee the COVID-19 pandemic and its related shutdowns. As a result, unfortunately, it led to a couple of defaults and restructuring situations within this portfolio. This is why Mike and Bill stress the importance of holding at least 10 different bonds in your portfolio... It's a critical move to diversify your risk in case situations like these occur.

Still, overall, the results in Stansberry's Credit Opportunities speak for themselves...

Since launching this publication, Mike and Bill have made 52 recommendations. They've closed 36 winning positions and currently have another seven profitable positions in the model portfolio. Overall, including all closed and open positions, they have an 83% win rate. (For the five-year grading period in this Report Card, their win rate was 80%.)

Overall, four of their recommended bonds defaulted while they were holding them. They suffered a 51% loss on one... a 41% loss on another... and they're holding two others through bankruptcy. As the process plays out, they expect to recover something better than if they were to simply sell today.

Factoring everything in, as of this week, their average gain across all open and closed bonds is 11.2%... with an average holding period of 340 days... and an annualized return of 12%.

That performance beats its benchmark by a wide margin... In comparison, the annualized return of the iShares iBoxx High Yield Corporate Bond Fund (HYG) equals just 7.9%.

And as always, context matters...

The results on the closed positions are more telling in this case. Because unlike stocks, it doesn't really matter where bonds trade between the purchase date and when they mature.

Since they're binary, when you buy, you know how much the bonds will pay in interest... on which dates everything will be paid... and how much money you'll get at maturity.

So unlike stocks, if the bond temporarily trades lower than the entry price, it doesn't really matter. As long as the company doesn't default, you'll get paid everything that you're owed.

Through today, the closed positions show 36 winners out of 43 picks. That's an 84% win rate. The average gain is 15.5% over an average of 289 days... for an annualized gain of 19.6%. That's more than double the 8.7% you would have returned by investing in HYG over the same stretch.

And these numbers include seven losing positions – two of which defaulted. It's a truly impressive result... And I believe it's important to consider when grading this publication.

With all that said, Stansberry's Credit Opportunities earns an "A" for this year's Report Card.

Aside from their spectacular results, like Doc in Income Intelligence, Mike and Bill also provide a monthly "dashboard" for their subscribers to track the corporate-bond market...

As part of this dashboard, they provide a watch list of safe, moderate, and distressed bonds – arranged through their proprietary bond-rating system – for subscribers to monitor. It's an additional piece of value for the "do it yourself" investors who receive this publication.

True Wealth Systems: B

Longtime subscribers know this publication is like the "computerized version" of Steve...

You see, several years ago, we invested millions of dollars to develop a system that took all of Steve's investing concepts and ideas... and leveraged them so his team could look across dozens of different markets, sectors, data points, and indicators around the globe. It's also a way to look at more niche sectors and find opportunities to "juice" their overall returns.

With Steve and his team overseeing the operation, it's an incredibly powerful tool to help uncover investment opportunities that might otherwise go unnoticed. After the computers spot the opportunities, Steve recommends how to hop on the trend... and ride it until it stops.

The challenge with this strategy comes when the market crashes like it did in 2020...

You see, this strategy works best in trending markets. The computers are designed with that concept in mind. So when you hit a big enough bump in the road – like the worldwide panic from the COVID-19 pandemic – it will trigger stops and knock you out of positions.

As I've said in the past, sometimes this means you might take a few small losses before the trend gets going on the way to larger, longer-term gains. Patience is key to this strategy.

From February through April 2020, the sell-off triggered 10 stops across the model portfolio. Steve only closed two of these positions for a profit, but once again, the losses were small...

I understand that the top-to-bottom drawdown is a different calculation. But when looking at just the 10 closed positions, Steve booked an average loss of just 7%.

That is exactly what Steve does best... cuts his losses short and lets his winners ride.

And just like he did with True Wealth in 2020 (which we explained in Part I last Friday), he waited until he felt that it was safe to get back in, then started rebuilding the portfolio...

From May through the end of the year, Steve added nine positions to the standard True Wealth Systems model portfolio. He also relaunched the "Melt Up" portfolio in late October.

Again, out of respect to Steve's paying subscribers, I don't want to give away any individual names. But in just the past nine months alone, Steve has recommended a technology stock that's up 130% since last May... an emerging-markets position that's up 63% since September... and four other positions with 50%-plus gains already.

And within his Melt Up portfolio, Steve has already led his subscribers to an incredible 334% gain in one company since October. And another position is up 113% as we go to press.

Just as Steve predicted several years ago... the Melt Up is here. And even better, in True Wealth Systems, he's showing his subscribers exactly how to maximize their gains.

In the five-year period for this year's Report Card, Steve's average gain and annualized gain in True Wealth Systems equaled 8.4% and 17.5%, respectively. Those numbers topped the S&P 500's average return (7.7%) and annualized return (15.9%) over similar holding periods. But I would like to see a better win rate than Steve's 53% in this grading period.

Because of that, I'm giving True Wealth Systems a "B" grade this year.

True Wealth Opportunities: China: A+

I recall when Steve pitched the idea of launching this publication several years ago... It was met with some caution and skepticism because very few people were investing in China.

But Steve insisted that it could be the biggest opportunity in decades... yet no one was telling the story, showing the way, or investing any real money in the country.

You might recall that I said last week how Steve has made some major macro calls over the past two decades. And in my mind, this is among his biggest calls of the past five years.

The results don't lie... He has earned an "A+" or "A++" every year since launching this publication back in 2016. And this year is no different...

With an impressive 79% win rate, average gains of 41.3%, and annualized gains of 25.8%... it's clear that True Wealth Opportunities: China is operating as Steve envisioned. These returns crush the publication's benchmark, the iShares China Large-Cap Fund (FXI).

That's why Steve earns another "A+" for this publication in this year's Report Card.

As we go to press, the True Wealth Opportunities: China model portfolio contains 10 triple-digit winners. Some of his biggest returns today include 240% on a Chinese online retailer... 173% on a Chinese gaming giant... and a 113% gain in a Chinese education business.

And Steve is always looking to add more value to this publication...

For example, late last year, Steve and Brian Tycangco (his lead analyst on this publication) started a separate category of stocks focused on what they call the "Next Chinas." These companies are from other Asian countries – like India, Indonesia, Thailand, South Korea, and Malaysia. Brian believes the next bull run on emerging markets is starting now. And from what we've seen so far, it looks like he has discovered something big...

Among the biggest winners on this list is a 386% gain in a technology play that they first recommended in December 2019. They're sitting on another triple-digit winner from a South Korean gaming company... And two other recommendations are up at least 55% already.

If you're not yet following Steve and Brian in this opportunity, I'd encourage you to take a look... Massive upside still remains on the other side of the globe.

Stansberry Venture Value: A+

In Stansberry Venture Value, editor Bryan Beach looks for small-cap stocks – typically companies with a market cap of less than $1 billion – that have huge runways ahead of them...

This is a great strategy for patient investors. And it's one part of the market where the little guys like all of us have a distinct advantage over the large Wall Street institutions...

You see, most of the companies Bryan recommends have little to no Wall Street analysts covering them. We love that... It means they're too small for larger institutions to consider buying – at least not yet. It also means that their growth trajectory is practically unlimited.

Think of Amazon (AMZN) back in 1997, when it traded for less than $50 per share. Of course, more than two decades later, the online juggernaut now trades for about $3,200 per share.

One day, when Bryan's small-cap recommendations get big enough, institutional money will start flowing in... or a larger competitor might buy the stock at a premium... or both.

But small stocks can be volatile. And you need to stay clear of those that will never make it.

Fortunately, Bryan is one of the most diligent analysts I've ever met... He offers deep-dive research across multiple sectors. You won't find more thorough research anywhere else.

Through the end of 2020, Bryan's biggest winners so far include a huge 328% return in a combined position with an online gambling-software company... a 213% overall gain in a health care technology company... and a 145% winner in the fast-moving SaaS sector.

In fact, Bryan has developed a real talent for finding hidden SaaS companies – a sector that had grown at around 66% per year, on average, for the past four years through 2020.

And the above numbers also don't tell you everything... Among Bryan's 17 open positions, he currently has an incredible seven triple-digit winners. And over the past two years, Bryan's annualized gains have come in at a whopping 64%. It's truly remarkable stuff.

Naturally, I'm thrilled with every aspect of Stansberry Venture Value's performance...

When we launched this product, our founder Porter Stansberry said it was the missing piece in our research. And I've said before that I believe this product will ultimately have one of the most successful track records in our history. So far, the results look very promising...

We launched Stansberry Venture Value in February 2017... So the publication hasn't been around for the full five-year grading period that we're using for this year's Report Card.

However, after almost four years, this strategy is working out exactly as we expected...

Since inception, Bryan has compiled a 62% win rate. And his average returns of 30.5% and annualized gain of 23.8% roughly double his benchmark, the Vanguard Small-Cap Index. Its numbers for those metrics were 14.9% and 11.6%, respectively.

This performance earns Stansberry Venture Value an "A+" for this year's Report Card.

Stansberry Venture Technology: A+

Editor Dave Lashmet made Stansberry Research history last year...

Regular readers know that we list our company's "Hall of Fame" at the bottom of the Digest every day. It's the top 10 highest-returning closed positions throughout our 21-year history.

And you might've noticed that Dave now occupies three spots on this list...

His recommendation of biotech firm Inovio Pharmaceuticals (INO) is at No. 2. Last June, Dave booked an incredible 1,139% gain in a partial position in Inovio. But he wasn't done...

In early July, he told subscribers to sell part of their stake in graphics-card maker Nvidia (NVDA) for a remarkable 777% return. That position is now at No. 4 in the Hall of Fame.

And finally, earlier this year, Dave recommended locking in a 691% gain in a partial position in space-satellite company Maxar Technologies (MAXR). It now occupies the seventh spot.

Of course, none of this is surprising for those who've followed Dave for a while... He has a knack for finding more winners in the tech and biotech markets than anyone we know.

From this publication's launch in late 2014 through 2020, Dave made 67 recommendations. Among them, 25 have gone on to double or more. That means that roughly one in every three of Dave's recommendations returns 100% or more for his subscribers.

I don't know anyone on the planet who is getting those kind of results – especially in the niche sector that Dave focuses on. It was just a matter of time before one or more of his recommendations made the Hall of Fame... Now he has three.

And unlike some of our other services, the COVID-19 crash treated Dave's portfolio well...

You see, throughout the year, he kept his subscribers up to date on what he believed the science was telling us... and just as important, where the opportunities were for investors.

Throughout 2020, Dave uncovered eight stocks that he knew would benefit during the COVID-19 pandemic... These recommendations included companies that made masks, developed antibodies, built test kits, and more.

Six of these recommendations are showing a profit today, with two already doubling. As I write, one of the two losers is essentially flat (down just 3%). Overall, these stocks are up an average of 45%.

We've always said that you can find truly life-changing gains in the biotech sector. But you also must know the risks... It's a minefield that can wipe out inexperienced investors.

You see, hundreds of companies are searching for the next blockbuster drug. And despite the promise and their best intentions, most don't make it. For every stock that doubles, triples, or more... dozens go to zero. The secret, of course, is not blowing up your portfolio by loading up on losers. And that's why having an expert like Dave can really pay off...

His research in this space goes far deeper than anything I am aware of in the industry.

For example, Dave doesn't sit behind a Bloomberg Terminal stock screening for ideas... Instead, he reads clinical trial reports and science journals. He travels all over the world to attend conferences, meeting and consulting with experts – like heart surgeons or rocket scientists – who help form part of his research. It adds tremendous value to the quality of the research... and speaks to the incredible results that Dave has achieved for subscribers.

With a 65% win rate, an average gain of 75.5%, and an annualized gain of 36.3%, Dave destroyed the S&P 500 over the five-year grading period for this year's Report Card... The index's average and annualized gains were 37.8% and 18.2%, respectively.

If you want exposure to small-cap biotech and tech stocks, you want Dave in your corner. With that in mind, I'm happy to award Stansberry Venture Technology an "A+" this year.

Cannabis Capitalist: A+

We launched Cannabis Capitalist in March 2019, so we don't have five years of results to report yet. But with nearly two years under its belt, we wanted to share the results so far...

Thomas Carroll, the editor of this publication, was among the most experienced and respected health care analysts on Wall Street before coming to Stansberry Research.

He worked at Legg Mason and Stifel Financial for almost 20 years. And he consistently ranked near the top in industry stock-picking awards... with top five finishes from Starmine, the Wall Street Journal, and Forbes. In addition, Fortune magazine once ranked Thomas as the No. 1 U.S. health care analyst. When it comes to health care, he knows what he's doing.

And overall, Cannabis Capitalist subscribers are benefiting from his advice in this space...

From this publication's inception through the end of 2020, Thomas recommended 14 cannabis stocks. Eight were showing gains at the end of December (57% win rate).

Even better, his average gain through the end of 2020 was a massive 70.2%. And his annualized gain equaled 60.5%. Both of those metrics beat the S&P 500 by a significant margin... Its average return and annualized return were 25.9% and 22.3%, respectively.

But it wasn't a straight shot to success...

When we launched this publication, we believed a declining market trend was coming to an end. It soon became clear that we were early as cannabis stocks continued to languish.

But Thomas remained confident that the sector was still developing... He maintained that the growth opportunity remained as bright as ever... And as his Cannabis Capitalist subscribers can attest, his conviction grew stronger as the markets crashed last March.

It's tough being a lone voice of optimism in a burgeoning industry as most companies' share prices are dropping. And sure, Thomas closed a couple of positions for heavy losses. But he did so because he didn't believe they executed on their plans as anticipated... and it was time to move on.

Importantly, Thomas stayed committed to the sector – and his portfolio. And he was right...

Thomas' biggest winner so far is a 526% gain in GrowGeneration (GRWG). He first recommended the stock in early February 2020 at $5.85 per share – right before the overall market sold off. Then, he watched the stock fall in half before rebounding over the coming months. Through the wild swing, he kept believing in the story. And his patience paid off...

The stock finally soared higher over the summer. Then, it continued its exponential run higher through the end of the year. The stock closed 2020 at more than $40 per share.

Today, it's trading at more than $55 per share... Thomas recommended selling half of the position for a 212% return in August. And subscribers who have followed his advice over the past year are sitting on a gain of more than 840% on the other half of the position.

That is a phenomenal result... We're sure that subscribers are very pleased as well.

As I write, Thomas has 13 positions in the open portfolio – including 11 winners. Seven of the positions are showing huge triple-digit gains... and an eighth position is up 77% today.

Naturally, we're thrilled with these results... and delighted to have Thomas leading our efforts in this endeavor. Cannabis Capitalist earns an "A+" in this year's Report Card.

Crypto Capital: A+

It didn't take long...

Eric Wade already has two positions in our Hall of Fame, including the No. 1 winner in Stansberry Research history. Subscribers who followed his advice with that position – a cryptocurrency known as Band Protocol – could've made 1,169% in a matter of months.

Eric's name is also in the No. 9 spot... booking a 597% gain with the Chainlink crypto. Plus, on any given day, he also has about half of the highest-returning open positions at our firm.

Crypto Capital has only been in the Stansberry Research stable of products since June 2019, but the publication initially launched in 2017 under one of our former affiliates, Stansberry Pacific Research. Eric took over as the editor of the newsletter in October 2018.

The overall performance is truly remarkable... With a win rate of 66%, an average gain of 128.2%, and an annualized return of 167.4%, Eric only deserves one grade – an "A+."

In last year's Report Card, I said something that's worth repeating today...

Everyone should know by now that cryptos are much more volatile than stocks. As we've seen, they can soar hundreds – and sometimes, even thousands – of percent. And the surge can happen extremely quickly... sometimes in a matter of just hours, days, or weeks.

But on the flip side, they can also fall just as fast... And some of them ultimately go to zero.

So if you can't handle a ton of volatility, you should sit this one out. And even if you do want to participate, we recommend only using small amounts that you can afford to lose.

The upswings can be exciting... and wild. But this is a corner of the market – more than any other – where you need to exercise caution, do your research, and have an expert that you trust navigating the way. Fortunately, that's exactly what we have with Crypto Capital...

With Eric leading these efforts – along with his lead analyst Fred Marion – I believe we have the best crypto-focused research on the planet. And it's not just because of their results...

I know how passionate these two experts are about cryptos. They put a tremendous amount of effort into their research before making any recommendations... They make sure they understand the need and use of any crypto they're considering as a recommendation.

For example, in April 2020, Eric explained the rise of oracles connecting real-world data to the blockchain. And he recommended Band Protocol – now the No. 1 winner in our Hall of Fame that I mentioned earlier – and Tellor Tributes. After recommending that subscribers sell some of their stake along the way, the position in Tellor Tributes is up 906% today.

Naturally, these gains are great. But just as important, Eric explained in easy-to-understand terms about the challenges facing blockchain, where oracles would play a critical role, and why it all mattered. It's all stuff I would want to know before investing in this volatile space.

Finally, I wanted to share one more thing about cryptos today...

If you're using our Stansberry Investor Terminal, check out our dedicated "Crypto" page. You can access news, charts, data, weekly video updates from Eric and Fred, and our own "Stansberry Ratings" (which Eric and Fred developed) for more than 500 cryptos.

With cryptos surging once again in recent months, it has been an exciting time for Crypto Capital. But we believe this arena will only get bigger for investors from here...

We look forward to continued success in 2021 and beyond. And if you're not already a subscriber to Crypto Capital, I urge you to check out Eric's latest presentation right here.

New 52-week highs (as of 2/11/21): American Homes 4 Rent (AMH), ARK Fintech Innovation Fund (ARKF), Bunge (BG), BlackLine (BL), Siren Nasdaq NexGen Economy Fund (BLCN), CBRE Group (CBRE), Cognex (CGNX), Comcast (CMCSA), Cubic (CUB), Commvault Systems (CVLT), Disney (DIS), New Oriental Education & Technology (EDU), ProShares Ultra MSCI Emerging Markets Fund (EET), Fidelity Select Medical Technology and Devices Portfolio (FSMEX), iShares China Large-Cap Fund (FXI), Intuit (INTU), Renaissance IPO Fund (IPO), IQVIA (IQV), JD.com (JD), KraneShares Bosera MSCI China A Fund (KBA), KraneShares CICC China Leaders 100 Index Fund (KFYP), KraneShares MSCI All China Health Care Index Fund (KURE), KraneShares CSI China Internet Fund (KWEB), MongoDB (MDB), Microsoft (MSFT), Match Group (MTCH), MasTec (MTZ), NetEase (NTES), Novo Nordisk (NVO), Oshkosh (OSK), ProShares Ultra Technology Fund (ROM), Rayonier (RYN), Scotts Miracle-Gro (SMG), Square (SQ), ProShares Ultra S&P 500 Fund (SSO), Seagate Technology (STX), Trip.com (TCOM), Ulta Beauty (ULTA), ProShares Ultra Semiconductors Fund (USD), Valmont Industries (VMI), Vanguard S&P 500 Fund (VOO), Vanguard Short-Term Inflation-Protected Securities Index Fund (VTIP), ProShares Ultra FTSE China 50 Fund (XPP), and Zebra Technologies (ZBRA).

In today's mailbag, feedback on yesterday's Digest by Dan Ferris about the potential for the "Mother of All Melt Ups." And of course, we would love to hear what you think about our annual Report Card so far. As always, you can tell us what you agree – or disagree – with at feedback@stansberryresearch.com.

"Dan: Once again you hit home. I bought Manhattan Fund when it first came out for my pre-teen girls. Not a big amount but since it would compound at 25% per year it could be enough for their college tuition. Turned out not as publicized.

"I have had some ARKK for 2.5 years and it is 4 times what I paid. The ARKG ETF is up 3.2 times in the two years I have had it. I do have concern that as the funds grow, they buy more of the stocks in the ETFs and push them even higher. It will end.

"I have been fortunate to own Tesla stock longer than I have owned the Tesla car purchased in 2015. I have also owned Tesla calls on which I realized a gain of 277 times my cost.

"No one knows when this will all unwind. I had more anxiety about the leverage in my Tesla option than I ever had for any losing position.

"Until you mentioned it, I was unaware of derivatives or leverage related to the ARK ETFs. I will avoid them like the plague when I learn of them.

"We win some and we lose some. Thanks for helping keep things in perspective." – Paid-up subscriber Bill H.

"Thanks, Dan for today's Digest. Two years ago my full service broker recommended ARKK. Most of my Roth was invested in that. I have enjoyed great returns. Sold some at 2X then sat for a while. Then decided to move to self-directed accounts with TDA. At 3X I sold a little more. Approaching 4X I started selling a little each time it goes up by $5. Not much left, but hoping I have time for at 2 more $5 plus.

"I appreciate the article as I somewhat second guessed my judgment in bailing out. I will sleep better tonight." – Paid-up subscriber Tim L.

Until next week,

Brett Aitken
Baltimore, Maryland
February 12, 2021

P.S. The U.S. markets and Stansberry Research will be closed on Monday for Presidents' Day. We'll publish a pair of crypto-focused essays in this weekend's Masters Series. And then, we'll resume our normal Digest coverage on Tuesday. Have a great holiday weekend.