Wed, Apr 24, 2019|Justin Brill

Steve Sjuggerud Was Right Again

Steve Sjuggerud was right again... New closing highs for the S&P 500 and the Nasdaq... The world's 'top' tech investor loses $130 million in bitcoin... The Tesla 'circus' continues...

Late last year, our colleague Steve Sjuggerud made another bold call...

Just before Christmas – at the worst of last year's stock market correction – Steve called "the bottom."

But that's not all...

For the first time since the 2008-2009 financial crisis, he also personally invested a significant amount of new money in U.S. stocks. In fact, Steve told readers that he put more money to work in stocks than he did in both of those years combined.

Why was Steve so bullish?

He explained his thinking in the January 8 edition of our free DailyWealth e-letter, roughly one week after his investment...

"I'm scared as hell," one family friend told me at a holiday party two weeks ago. "Trump, the trade war, the market volatility... I'm getting OUT."

I couldn't say it at the party, but that "scared as hell" sentiment is what I live for as an investor.

When I see and hear that people are "scared as hell" – it's game time. It doesn't happen often. But when it does, that's when you tend to get the biggest upside potential – and you have to take advantage of it. I personally took advantage of it in...

Late 2008 and early 2009 in stocks...

2011 in Florida real estate...

And in the first half of 2016 with gold stocks.

It's been a few years since I've "backed up the truck" to buy, like I did with those trades.

I've been setting cash aside, waiting for the next "scared as hell" investment. Now, here we are. And I'm taking advantage of it...

In particular, Steve singled out December 26 as the 'point of maximum fear'...

Well, we know now that Sjug was exactly right again...

As regular readers know, stocks did bottom on December 26. They've run nearly straight higher ever since. And just yesterday, two of the "big three" major U.S. indexes – the S&P 500 and the Nasdaq Composite – closed at new all-time highs.

The S&P 500 is now up 17% so far this year, its best start to a year since 1987. Meanwhile, the tech-heavy Nasdaq is up 22%, its best start since 1991.

We should also note that despite some early volatility, Steve's "Melt Up Millionaire" portfolio within his True Wealth Systems advisory is performing well, too. While his subscribers did get temporarily stopped out of some positions in December, the median gain of the open positions in this portfolio is currently 46%.

Kudos to Steve for another great call.

Speaking of bold calls...

This week, we learned that billionaire tech investor Masayoshi Son recently made a big personal bet of his own. Unfortunately, it didn't work out quite as well as Steve's...

Regular Digest readers may recall that Son is the founder of global conglomerate SoftBank. Our colleague Bryan Beach recently explained how Son is almost singlehandedly inflating a massive bubble in a number of popular tech companies.

Today, Son is highly regarded for his investment success in the tech sector. But as Bryan noted, he has made some serious missteps in the past... And it seems this big bet was no exception. As the Wall Street Journal reported yesterday...

Masayoshi Son, the billionaire founder of SoftBank, made a huge personal bet on bitcoin just as prices for the digital currency peaked, losing more than $130 million when he sold out, according to people familiar with the matter.

Mr. Son... made the investment in late 2017 at the recommendation of a well-known bitcoin booster, whose investment firm SoftBank bought that year, the people said.

The exact size of the bet couldn't be determined, but it came at the peak of the bitcoin frenzy after the digital currency had already risen more than 10-fold in 2017, the people said. Bitcoin peaked at nearly $20,000 in mid-December 2017, and Mr. Son sold in early 2018 after bitcoin had plummeted.

Now, if you're like most folks, you probably don't care...

You likely have little interest in the personal dealings of a Japanese billionaire.

But we'll remind you that Son is also responsible for the investment decisions of one of the world's largest and most influential venture-capital funds. As our colleague Dan Ferris quipped in a private note following the report last night...

I'm sure the $100 billion SoftBank Vision Fund will turn out differently than his own $130 million personal bet. Nothing to do with one another.

When Vision liquidates for $9 billion in 5-6 years, everyone will say, "Nobody saw this coming..."

Finally, we'll check in on the latest trouble for one of our favorite whipping boys...

Our friend Whitney Tilson shared his short thesis on electric-car maker Tesla (TSLA) with Digest readers earlier this month.

In short, he believes Tesla CEO Elon Musk's "luck" has finally run out. And after warning folks to avoid shorting Tesla shares for years, he now expects the stock will crash by the end of the year.

Among his many well-reasoned criticisms, Whitney cited two particular concerns...

One was the huge number of recent departures by senior Tesla executives and board members, a serious "red flag." Another was the notable loss of investor confidence following Musk's increasingly erratic behavior.

Unfortunately for Tesla bulls, these problems have only worsened since that Digest...

On Friday evening, long after the closing bell, we learned that four more directors – including one longtime friend of Musk's – are now leaving the company. As the New York Times reported...

Brad Buss, a member of the board since 2009, and Linda Johnson Rice, who joined two years ago, have asked not to be re-elected when shareholders convene on June 11 for Tesla's annual general meeting, the company said in a preliminary proxy statement.

Steve Jurvetson, who just returned from an extended leave of absence, will not seek re-election at the 2020 shareholders' meeting, the proxy said; Antonio Gracias, a close associate of the chief executive, Elon Musk, intends to leave at the same time, a year before his term ends. Mr. Gracias' early departure must be approved by shareholders at the June 11 meeting.

However, this news was quickly overshadowed on Monday...

During Tesla's Autonomy Investor Day, Musk made a number of statements that were outlandish... even by his standards.

First, Musk promised that Tesla vehicles would be fully self-driving within a year (a promise he originally made almost three years ago, in October 2016).

He also said Tesla would have more than 1 million of these cars on the road next year. Musk claims these cars will operate as autonomous "robotaxis" that can earn Tesla owners tens of thousands of dollars each year.

Musk then predicted that two years from now, Tesla will be producing cars with no steering wheels or pedals.

And finally, he said buying any vehicle other than a Tesla today is "financially insane." He added that, "It would be like owning a horse in three years."

Whitney shared his latest thoughts on the Tesla 'circus' with his readers yesterday...

As he wrote in Tuesday's edition of his Empire Financial Daily e-letter...

Question: How can you tell when Elon Musk is lying?

Answer: His lips are moving!

It's not a pretty sight watching [Musk] implode. He's an incredible entrepreneur and visionary who has created not one but two companies that are changing the world.

But something's gone seriously wrong in his brain, causing him to become a reckless, narcissistic brat and pathological liar.

Tesla is set to announce its latest quarterly earnings after the close tonight...

And Whitney believes Musk's recent behavior is a signal that the report could be worse than expected. More from Empire Financial Daily...

I have even more conviction today about the big call I made on the stock [last month] when it was at $295, that it would fall to $100 by the end of this year.

Musk has a long history of being wildly overoptimistic, but that's par for the course in Silicon Valley. However, starting with his notorious $420 "funding secured" tweet last August, Musk has gone off the deep end, as even Tesla cult members finally appear to be realizing.

There was a time when [Monday's] orgy of crazy talk would have pumped the stock 10% or more as Musk's lemmings blindly swallowed his every proclamation. But instead, the stock fell. You know the saying: "Fool me 100 times, shame on you. Fool me the 101st time, shame on me!"

Musk's inability to pump the stock anymore is a key reason why I think it's now a good short, after years of warning my short-selling friends not to short it.

Stay tuned for Whitney's thoughts on Tesla's earnings later this week.

In the meantime, if you missed his free Empire Investment Summit last Wednesday night – during which he revealed the name and ticker symbol of his No. 1 retirement stock today – it's not too late. For just a few more days, you can still watch a full replay of this event right here.

New 52-week highs (as of 4/23/19): Automatic Data Processing (ADP), American Express (AXP), Blackstone (BX), First Trust Nasdaq Cybersecurity Fund (CIBR), Disney (DIS), Hannon Armstrong Sustainable Infrastructure Capital (HASI), McDonald's (MCD), Microsoft (MSFT), Motorola Solutions (MSI), Match Group (MTCH), Rollins (ROL), and ProShares Ultra Technology Fund (ROM).

In today's mailbag: One reader sends kudos for Doc Eifrig's Blackstone recommendation, while another weighs in on the rise of socialism. As always, send your notes to feedback@stansberryresearch.com.

"I have been a subscriber to both Income Intelligence and Retirement Millionaire for years and have had outstanding returns. I invested in BX at the time of Doc's original recommendation with an 8%+ yield. When BX faltered in December, I again followed his advice and added to the position. I could not be more pleased and continue to sing Doc's praises!! Now a happy Alliance subscriber." – Paid-up Stansberry Alliance member John S.

"Baby Boomers and those over age 45 are shocked at the socialist leanings of the latest political candidates, thinking it must be an oddity, and certainly a passing thing. But Americans don't realize that these home-grown socialists are playing to young Americans who have been through the public-school system and have been taught to think this way. And if you think I am talking about the typical college campus... I only wish I were. We have raised 10 children and have found that the twisting of their minds against this republic and our constitution starts as young as the 3rd grade. It is in every K-12 school district in the nation. It is the reason why 85% of those under the age of 30 voted for Bernie Sanders in the last election.

"As the over 40 crowd dies off, the socialists will be voted in by Americans who do not know U.S. history, nor understand the principles this country was founded on. Our children are being brainwashed into hating this country and to look with contempt on our western culture, i.e. our Judeo-Christian heritage which brought into existence the free-est and most exceptional nation ever.

"This great experiment of human freedom (that our nation has afforded us) may be ending abruptly if the public school brainwashing of our children continues. Personally, I am not hopeful. I have seen the learning materials and when I brought a spotlight to this at local school board meetings, the general reaction from the school board was 'parents need to shut-up and sit down and let the experts take care of the children.' We ended up using alternatives to public school, but the other 90% of the children are still being brainwashed against this nation at taxpayers' expense, no less." – Paid-up subscriber D.C.

Regards,

Justin Brill
Baltimore, Maryland
April 24, 2019