"This is the real deal... 97% kill rate on the first shot."
I picked up my first handgun last Saturday after the seven-day waiting period. It's a Smith & Wesson 686 with a six-inch barrel. The gun-store employee – who looks down upon anyone who doesn't know as much about guns as he does – was describing the ammo I needed for my new purchase. I don't know anything about guns, but a 97% kill rate worked for me.
After signing a few papers, I met my friend at a local shooting range. This being my first gun purchase, I haven't spent much time at shooting ranges. It's a different crowd. After I walked in, three rednecks with bald heads and goatees followed. One was carrying a fully automatic weapon. The other two were wearing Glock and Jack Daniels sweatshirts, respectively.
After signing more official documents (gun ownership involves a lot of paperwork), I walked behind the glass to the range. I locked the target on the trolly, loaded seven shots of range ammo (not the kill shot), and took aim...
BOOM!
Before I pulled the trigger, a bomb went off. I jumped (with a loaded gun in my hand).
BOOM!
It exploded again… My ears were ringing (through my hearing protection). The entire range stopped shooting. I looked over to see what could have made such a loud noise. Of course, it was the three rednecks. The shooter had taken off his Jack Daniels sweatshirt, unveiling a Jack Daniels T-shirt. He was holding a revolver with at least a 12-inch barrel. It was the biggest handgun I've ever seen. I grabbed a casing off the floor. It was three times larger than my .357 magnum shells.
Suddenly, my six-inch-barrel Smith & Wesson didn't seem that impressive…
The news is littered with municipal-bond headlines on the day of the Congressional hearing covering the topic. But we've found our favorite. This will go down as a permanent black spot on this guy's resume…
"When it comes to municipal bond defaults, both Warren Buffett and Meredith Whitney are not only dead wrong, they are out of their league."
So says the illustrious Richard P. Larkin, senior vice president and director of credit analysis at Herbert J. Sims. You've never heard of Herbert J. Sims? Neither have we. And what of Richard Larkin? After graduating from Iona College and receiving a master's in economics from Fordham University, Larkin began a long career of municipal-bond cheerleading. In addition to covering municipal bonds at Fitch Ratings and Standard & Poor's, Larkin also has a long relationship with the Government Finance Officers' Association – a municipal-bond interest group.
Just as we never trust a "buy" rating on an equity from an investment bank, we certainly don't trust Larkin's opinion on muni bonds. He's just trying to get headlines with a brash call (mission accomplished). And while the verdict's still out on Meredith Whitney… Buffett's reputation is entrenched.
We're not Buffett worshippers. But we respect the guy for his investment prowess – after all, he has amassed a near-$50 billion fortune. And he's achieved most of that wealth through insurance. Larkin's knock on Buffett comes after Berkshire pulled out of the municipal-bond insurance arena.
(On a side note, one of our favorite short sales is the largest remaining municipal bond insurer. Stansberry's Investment Advisory readers are already up more than 20% on the position.)
Larkin told CNBC, "You have to remember these are governments. They don't go out of business. They have to continue in business. They have to continue to operate. They have to continue to provide services."
Yes… And real estate always goes up. The facts are simple… Every arm of our government (federal and local) has spent too much money. We're facing mounting debts and declining tax earnings. There is no way to overcome the huge budget deficits. How does this end?
We would advise Larkin to read the feedback e-mail from Pablo Chiaraviglio (below), who's spent most of his life in South America. Then, he'd understand that while governments may not technically "go out of business," they can be inflated and corrupted into obsolescence.
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If you've tried the website, looked in your e-mail, and still have trouble, call our customer service at 888-261-2693. Any other questions? Send them to feedback@stansberryresearch.com.
"Your last Digest was great, not only because it happens to be my birthday, and I'm in a benevolent mood, but because what you say, although true to the last period, seems so obvious to us living in the southern part of the American continent, it almost begs a 'so?'. You see, having lived most of my life in South America (Argentina, Brazil, Venezuela, among other countries), and personally having lived through 3 bank runs, 2 hyperinflation bouts and a devaluation which eliminated 12 zeros from the currency (yes, twelve); we have seen this before.
"We pay only cash here for homes, cars, etc (credit does not exist, for all practical purposes), and I when I say cash, I mean bills with Ben's face on them (no, Franklin's). Its not uncommon for 400 grand to change hands in a private room in a bank, where an 'Escribano' (sort of like a Notary Public) attests to the fact that Joe gave Bob 400 large, for this or that property. Sure it would be great to just sign a paper, and be done with it, but after 2 centuries of cronyism in government and blatant abuse of the system, it falls apart. Nobody believes in anything except 'things' and cash (read Greenbacks, and now even those won't be worth the paper they are printed on).
"So you see, what you describe in the 'End of America' is not new (as you know) to the rest of the world, especially those of us that live in the third world. So to all your informed readers that know only of life in North America: Welcome to our World...the third one!" – Paid-up subscriber Pablo Chiaraviglio
"I am sure you will get many of these. I am an alliance member. I have logged on to your web site and looked under my subscriptions and there is no bright red Beta followed by any mention of Grail. Mr Goldsmith, perhaps you could double check what might NOT be happening." – Paid-up subscriber Ronald T Cossey
Goldsmith comment: We've been working on this issue all day. Due to an internal systems glitch, a handful of Alliance members cannot access the beta issues of the S&A Grail Trader. I won't go into the details, but we're currently working to correct it. You should be able to access the S&A Grail Trader no later than Friday. Sorry for the inconvenience.
"I am new to investing and your newsletter, and was startled to read in the latest Digest issue that the Top Ten 'Open' Recommendations are not necessarily recommendations to buy today. Maybe you should title the list as 'Closed' Recommendations? Anyway, my more important question is, Why do you not publish a list of buy recommendations? I see a lot of Digest adds for other newsletters to get such information, but I have a hard time determining what your investment advice is." – Paid-up subscriber Daryl Allen
"I read the S&A Digest almost every day and I am always amazed at the vitriol and 'rhetoric' that comes from the readership. S&A gets hammered for 'misleading' statements, advertisements and failed portfolio's. This 'blame' is miscast. If we should be upset at anyone, it's the education system and politicians and sometimes our parents.
"Why haven't we been taught even basic finance throughout school? Simple. So we can be taken advantage of. The banks and politicians need uneducated consumers or else they wouldn't make money off of us. Sure you can get a 1.9% yield on 25K from Wells Fargo and have your funds tied up for almost six years, while the same bank turns around and lends YOUR money in the form of credit cards at upwards of 15% interest. Not to mention creating money out of thin air, collecting interest on that non-existent money, which yields a return of infinity, since it cost them nothing to produce it!
"There are no programs teaching our children to read corporate balance sheets, P/E ratios, the meaning of EPs, etc. I've learned all of these things in my late twenties. I have decided to educate myself for the sake of my children and teach them about finance. It affects everything we do. Our retirement plans, how we vote and eventually how much we 'give' to the government in taxes. We offload too much of our lives and responsibilities to other people.
"I read S&A for their investment advice but also to educate myself. What I have learned through my subscriptions, S&A Digest, Growth Stock Wire and DailyWealth Premium have been invaluable to my education and my children will thank you. A teacher once said to me, 'You are just as responsible for your education as I am.'" – Paid-up subscriber KL
"I am in agreement with other paid up members, not getting much for the initial investment. How you make your big bucks is bombarding me with videos that I watch with anticipation, then discover I need to pay up to $3,000.00 for the information. Unfortunately my choice is to pay the $3,000.00 and then have no money to invest or invest and not have the money to purchase the video. Or are all the other paid-up members richer than I am." – Paid-up subscriber Wolf Johnson
Goldsmith comment: I'm not sure how you can accuse us of not delivering what we promised in return for your "initial investment." If you pay for one newsletter, you receive a subscription for that newsletter. We e-mail that letter to you monthly (or weekly, depending on the subscription). You can also access your newsletter through our homepage (www.stansberryresearch.com).
With your subscription, you also receive the S&A Digest (the publication you're currently reading), DailyWealth, and Growth Stock Wire for free. As for the promotional videos… We never apologize for our marketing. That's how we stay in business.
Honestly, we've written about this so many times… and don't know how much clearer we can be. I urge any subscriber who feels he hasn't gotten (or doesn't know how to get) what he paid for… please call our customer service department 888-261-2693.
After today, I don't know what else to tell you… Though I encourage you to read the next (unsolicited) e-mail…
"OK. Here we go. I have been a subscriber (True Wealth Alliance and Extreme Value) to S&A publications for the past few years.
"Trailing stops. When I first subscribed I did not understand the concept of trailing stops. In fact, I sent an e-mail asking what does 'do not enter your trailing stops into the market' mean? Simply, it means do not set trailing stops with your broker.
"Well, obviously, that didn't seem like good advice. I mean, why keep track of your positions when your broker can perform that duty for you. Then came the flash crash; May 2010. I was stopped out on Cohen & Steers REIT (RNP) when I should not have been. Now, I track my positions (40-plus across 3 accounts) on a spreadsheet and update daily. Takes me less than 5 minutes per day.
"The Daily Digest. How can so many people not understand that the digest is a freebie with your subscription? Every S&A subscription I have purchased is accompanied by e-mail verification and links to the appropriate Web site for the subscription. Also, right at the top of the Top 10 Open Recommendations Table it says, 'Top 10 highest-returning open positions across all S&A portfolios.' I believe this is a reflection of customers not reading their subscriptions and simply seeking a 'get rich quick' solution to investing. Good Luck with that.
"Your political views. Just provide me with solid investing advice. If I agree (or disagree) with you political views is immaterial if you are providing your customers with qualified investing ideas. All of my subscriptions have all provided me with great ideas. I have my favorites, but read all of them. I will decide what works for me and what does not. I am currently up 25+% for the past 12 months across all S&A positions in my portfolios. I don't care if you agree or disagree with the current administration; just keep the solid advice coming.
"Monsanto. I did not invest in Monsanto. That was my choice. It was a great, timely pick and one that I am sure benefited many of your subscribers. Again, I will decide what works for me and what does not. If subscribers want to judge you on one pick perhaps they should look in the mirror. Your charter is to provide your customers with what you deem to be the best advice for the current market.
"Bottom line. S&A has made me a better investor and I have the returns to prove it." – Paid-up subscriber JR Ketelsen
Regards,
Sean Goldsmith
Baltimore, Maryland
February 9, 2011Shooting guns with rednecks… A nobody challenges Buffett… Major food shortages in China… Dan Loeb calls the top… Some mailbag praise… And more ridiculous questions…