The Best Idea I've Ever Heard

Sterile rooms, great things... The biggest disruption in history... A global manufacturing reset... The 'largest investable transition'... Stocks are cheap, there's no bubble... Yields are higher than they look... How investing works...

Bad lighting and hotel coffee can be a magical combination... 

Hotel conference rooms are like warehouses carpeted floor to ceiling.

The carpet deadens the sounds so you can't hear someone talking 15 feet away without a PA system.

The lighting makes everybody look like they haven't been outdoors in months.

The air conditioning is too cold, and all of it feels sterile and unsettling, like you've been kidnapped for a round of Squid Game.

But truly amazing, magical things happen under bright lights in sterile places. Brain surgery, childbirth, semiconductor manufacturing... and, it turns out, meetings with my colleagues.

This week, I (Dan Ferris) met with a few dozen of my colleagues from Stansberry Research and several of our corporate affiliates. We spent two days together at the Salamander Hotel in Washington, D.C.

And I listened to some of the best and most compelling ideas I've heard... which always happens when you feed these folks enough coffee under fluorescent lighting.

The discomfort jolts them all into genius mode. I genuinely have trouble keeping up with the cascade of ideas. I'm surrounded by tech gurus, bona fide traders, accounting nerds, and former hedge-fund mavens.

I came away as I usually do, very excited about much of what my colleagues and I are up to these days.

At one point, as part of a panel on energy issues, I held forth about the longer-term effects of the Iran war and the closing of the Strait of Hormuz.

The oil market is pricing in a return to fairly normal conditions by December. But I doubt that'll happen. More than one industry observer has called it the biggest oil-market disruption in history. I don't think you get past such an event so easily.

It's worth comparing today's situation with the last big global oil-market disruption...

I'm talking about the 1973 oil shock.

That was also due to U.S. involvement in an armed conflict in the Middle East. The U.S. provided Israel with weapons during the Yom Kippur War of October 1973.

Arab members of OPEC didn't like that, so they stopped all shipments of oil to the U.S., Netherlands, Portugal, Rhodesia, and South Africa, all of which supported Israel in the war.

The embargo began in October 1973, causing a global oil shortage. Oil prices quadrupled from $3 per barrel to $12 per barrel. By the time the embargo was lifted in March 1974, everything had changed forever.

Oil's spike exacerbated rising inflation... The consumer price index was already up 7.4% in September. By March 1974, it was more than 10%. U.S. average gasoline prices rose from $0.36 per gallon in 1970 to $0.53 in 1974, roughly equivalent to $3.58 per gallon in 2026 dollars.

Yes, that's right, with AAA's average national price at $4.53 per gallon today, gasoline is now about 25% more expensive in inflation-adjusted terms than in 1974 – in the wake of what was then the biggest oil shock in history.

In the 25 years before the embargo, Western oil consumption had doubled, making the world more dependent on cheap oil. After the embargo, the global auto industry prioritized fuel efficiency. In direct response to the crisis (and at the government's usual speed), Congress passed the Energy Policy and Conservation Act in December 1975.

The new law established Corporate Average Fuel Economy ("CAFE") standards and mandated fuel-efficiency ratings labels on new cars' window stickers. It also created the Strategic Petroleum Reserve, which today has a maximum authorized capacity of 714 million barrels.

The law also encouraged domestic energy production and set efficiency standards for dozens of categories of appliances and other equipment.

These were novel changes in response to a long-term problem.

And if today's analysts are right, and I believe they are, the world's oil supplies are facing another sustained disruption...

That means we should expect higher oil prices and higher gasoline prices over the next several months. 

Right now, thousands of oil wells in the Middle East are offline, accounting for 9 million or more barrels of daily oil production. For reasons I'll explain in detail in the upcoming May issue of The Ferris Report, I believe perhaps a significant number of those wells will never be restarted.

Without getting too deep in the weeds, the fact is that oil wells aren't like your kitchen faucet. They don't go on and off at the twist of a knob. An oil well is a delicately balanced, pressurized system that breaks down once the drills stop turning. The loss of pressure can do permanent, irreversible damage in different ways that my Ferris Report subscribers and Stansberry Alliance members will learn about when the issue hits their inboxes this coming Wednesday.

(If you don't already subscribe to The Ferris Report, click here to get access at a 84% off the normal price.)

Besides oil wells, refineries, liquefied natural gas and natural gas processing facilities, aluminum plants, and port infrastructure have also been damaged in the region. They can be repaired, but it'll take a few years and billions of dollars. Repairs and rebuilding probably won't get underway to any significant degree until the shooting stops. And as we noted in our April 24 Digest, the ceasefire doesn't mean they've stopped shooting.

Another reason the Iran war is the biggest oil disruption in history is that it's not just an oil disruption. A few dozen other fuels and chemicals transit the Strait of Hormuz. So it's not just an energy shock. It's a global manufacturing reset.

Given the long-term effects of the 1973 shock, it's only reasonable to assume that the current bigger disruption will have larger and more far-reaching effects. Those effects will create massive opportunities, one of which Ferris Report subscribers will receive in their inboxes on Wednesday.

I believe it'll be the first of several more equally attractive chances to earn multibagger returns in energy and energy-related stocks – and some you might not think are energy-related – over the next year or two.

I joined several other energy bulls in my panel...

These were Stansberry Research's Market Maven editor Gabe Marshank, Joe Austin from Chaikin Analytics, Joel Litman from Altimetry, Lucas Downey from TradeSmith, and Louis Navellier from InvestorPlace.

Like me, they're all generalist investors who focus their attention wherever they find the greatest opportunity. Their sheer presence on the panel made me more bullish.

As good as the energy ideas were, they were no match in my mind for what is easily the best idea I've ever heard at one of these meetings...

It was presented by Stansberry's Mosaic Trader editor Josh Baylin.

Josh's resume includes impressive financial shops like Legg Mason and uber-trader Steve Cohen's S.A.C. Capital. During a 20-year career, he went from Washington, D.C. to Wall Street to Silicon Valley, pursuing a passion for how organizations understand and use their data.

I don't want to steal Josh's thunder. He'll decide when to share his own full story. But he presented a view of the future in which human beings themselves are transformed by technology.

If you're thinking about Elon Musk's Neuralink implant product, you're in the right ballpark... but Josh's vision goes way beyond a single product.

Josh presented a complete, fully coherent worldview, on a timeline stretching to 2035 and beyond. He has imagined numerous future implications of AI, biohacking, and other recent and future breakthroughs... how they'll interact... and the order in which they'll have to happen.

And he showed us more than 50 different companies he expects to play out along two complementary arcs through time, all representing attractive ways to exploit his thesis.

Josh is fully aware of the breadth of his own vision. He calls it the largest wealth-creation event since the Industrial Revolution and the biggest investable transition of any kind in modern history – the transition from what human beings are now, to what we'll become when we're augmented with various smart technologies.

I couldn't do Josh's vision justice even if I tried, but Stansberry readers will find out soon enough what I'm talking about.

It's my job to identify investment themes and ideas, and I've never seen one so compelling, thoroughly conceived, and accompanied by such a coherent plan on how to exploit it. I hope he writes a book about it. I'd gobble it up as quickly as I could.

In the meantime, you can get Josh's research and stock recommendations in Mosaic Trader. It recommends stocks Josh identifies using his proprietary, hedge-fund-style Shadow Data Indicator. It uses overlooked information to spot stocks that can double or more within 90 days. Learn more here.

As he usually does, Altimetry's Joel Litman also said something that made a big impression on me...

Joel said the stock market is cheap, and there is no AI bubble.

You might be rolling your eyes at that assessment...

If you look at the usual sources, like economist Robert Shiller's website, you'll see that the S&P 500 Index is trading at the lofty multiple of 32 times earnings. That doesn't seem cheap.

But Joel looks behind the reported numbers to determine the economic truth behind corporate results. Using Altimetry's Uniform Accounting principles to analyze S&P 500 earnings, he says the index is really trading at just 18 times earnings. Based on the data he's using, U.S. companies are growing earnings at double-digit rates and firing on all cylinders. It was hard to listen to Joel talk without becoming a raging bull on U.S. stocks.

This blew me away. I've often thought that, if you applied sound accounting to the S&P 500, earnings would be lower, not higher... and the market would be shown to be more expensive, not cheaper.

I remember perhaps 14 or 15 years ago, seeing a presentation by a value investor in Austin, Texas named Arnold Van Den Berg. He said with better accounting, the S&P 500 earnings would be at least 10% lower, so the market was more expensive. That stuck with me, and it's widely understood that corporations use accounting to manipulate earnings in their favor.

Joel left me rethinking my position.

The day after Joel made his comments, I noticed the S&P 500's dividend yield is now at its lowest level in all recorded history...

And that's from data going back to 1871. Investors have never been paid less to own U.S. stocks. Yields have dwindled to just 1.04%. Take a look... 

But just like there's more going on with S&P 500 earnings than meets the eye, there's more going on with dividends...

Two factors that can cut into dividend yields are higher share prices (making a dividend worth a lower percentage of the share price) and lower profits (giving companies less money to pay out in dividends). Neither of these would be good news.

But something else is happening.

Over the past couple of decades, companies have turned more to another way of returning cash to shareholders... buybacks.

And when you factor in these share repurchases, yields more than double.

According to S&P Global, as of September 30, 2025, the S&P 500's yield of dividends plus buybacks was 2.95%. The dividend yield was just 1.19% at that time – less than half the total.

So the chart shows you something different than what you might think, just like earnings are different than what most folks might think (according to Joel's methods, at least).

Rising interest rates are another bearish sign – usually...

Within the past 10 days, the 30-year Treasury bond yield has risen to just above 5% for the first time since last July.

Higher interest rates along with extremely expensive-looking market valuations for stocks and the worst oil-market disruption in history... This seems like a pretty bearish combination.

We're all well aware of the effect of the Federal Reserve's unprecedented rate-hiking cycle in 2022. It took the S&P 500 down 25% and the Nasdaq Composite Index down 36%. You may also be aware of how poorly stocks performed in the 1970s during the first great oil shock.

But when I listen to folks like Josh and Joel, they tell me that reality isn't quite what it seems... And my own work on the Iran war and on the energy and commodity markets also suggests the market is mispricing a massive opportunity...

That's how investing works.

You don't just accept facts at their face value. You have to question them, because things are never quite as they seem in financial markets.

Such mismatches are where the best opportunities lie.

New 52-week highs (as of 5/14/26): Broadcom (AVGO), Alpha Architect 1-3 Month Box Fund (BOXX), British American Tobacco (BTI), Ciena (CIEN), Cisco Systems (CSCO), Ecovyst (ECVT), EnerSys (ENS), Cambria Foreign Shareholder Yield Fund (FYLD), W.W. Grainger (GWW), Hewlett Packard Enterprise (HPE), iShares Convertible Bond Fund (ICVT), Nvidia (NVDA), Ormat Technologies (ORA), Palo Alto Networks (PANW), Pembina Pipeline (PBA), ProShares Ultra Technology (ROM), State Street SPDR Portfolio S&P 500 Value Fund (SPYV), ProShares Ultra S&P 500 (SSO), and Texas Instruments (TXN).

In today's mailbag, thoughts on a take about inflation from yesterday's mail – that rising oil prices do not justify higher interest rates from the Federal Reserve. Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.

"Congrats to Mark P. for a good analysis of inflation vs supply/demand mechanisms. Words matter." – Stansberry Alliance member Jacqueline G.

"I agree with Mark P., but the impact on the economy if oil prices remain elevated for a long time will likely be bad. I see two alternatives here, neither of which is good. If consumers reduce their other spending due to the heightened cost of gasoline, that's bound to result in problems in other industries. Or, if consumers charge more rather than cut back on spending, we may end up seeing accelerated credit card defaults, and that also won't be good, nor will a combination of the two be good. And if you want to bet on gasoline prices dropping in the near term, well, I think you're better off playing a longshot in the Preakness on Saturday." – Subscriber Sherwin R.

Good investing,

Dan Ferris
Medford, Oregon
May 15, 2026