The 'retest' is here...

As always, no one can know where the market is headed next. But one of the few "certainties" of the market is that it rarely does what most folks expect...

Regular readers know Porter believes further declines are likely... while our colleague Steve Sjuggerud thinks the bull market could have a little further to run before it finally ends.

Either way, proceeding with caution is your best strategy...

Given our negative long-term outlook on the U.S. dollar and other paper currencies, new readers may be surprised to hear us recommend holding cash.

But it's for good reason...

First, holding cash is one of the most important things you can do to ensure your long-term investment success. Extreme Value editor Dan Ferris explained this idea in a classic essay in the Stansberry Research Education Center...

Holding a large chunk of cash when stocks are expensive is one of the greediest, most opportunistic things you can do as an investor. It's vital to making large returns in stocks over the long run.

You see, nothing keeps an investor's options open like holding cash... Cash alone gives you the option to buy anything, anytime. If you find a cheap stock and you have cash, the stock is as good as yours. If you have stocks and no cash, you'll have to borrow cash against your stocks (usually at high rates) to buy other stocks.

As Porter explained in the September 4 Digest, the coming correction could create once-in-a-decade opportunities to pick up the world's greatest companies at discount prices. But if you don't have cash available, you won't be one of them...

This kind of binge lending, fueled by low interest rates, always ends badly. I'm sure it will end poorly again, and soon. Marty Fridson, the world's leading expert on the credit cycle in corporate bonds, predicts something around $1.6 trillion in defaults over the next four years.

That sounds bad. And it will be, for a lot of people.

But it doesn't have to be bad for you. This will be the largest legal exchange of wealth in U.S. history. Investors who have borrowed too much are going to be wiped out. But for investors with cash, this will be the best buying opportunity of the decade. You need to take action now, so that over the next 30-40 months, you're on the right side of these trades.

But having the opportunity to pick up bargains isn't the only reason to keep extra cash "on hand" today...

As we've discussed many times, we believe the U.S. is on course for a serious debt crisis. Even Steve Sjuggerud – who isn't as bearish today – believes a crisis is unavoidable in the long term... and recommends holding extra cash. And Steve means to have it literally on hand...

As the recent crisis in Greece shows, the time to prepare for a crisis is before it happens. Once the crisis there took hold, the Greek government enacted "capital controls" on its citizens...

No matter how much money they had in the bank, Greeks woke up one day to find they could only withdraw 60 euros a day from the ATM... if they could even find an ATM that still had money.

That's obviously not the case in the U.S. today... but Steve believes a similar situation is more likely than most folks would believe. He explained in the August issue of True Wealth...

Have you tried taking a large amount of money out of the bank recently? I took $5,000 cash out of the bank a couple weeks ago – and the bank struggled to find it. The tellers actually told me, "Sir, if you need to take this kind of cash out of the bank in the future, it'd be better if you'd give us a few days' notice."

Really? My local bank branch struggles to come up with $5,000 in cash? Yes – and that's not the first time that has happened to me at this bank branch. (It's a branch of one of the largest banks in America.)

What if I wasn't the only person that day who wanted a large amount of cash? What if there was a line to get cash, like in Greece [this summer]? How much of YOUR money do you really think the bank would give you on that day?

As Steve explained, even if you believe a similar situation is unlikely in the U.S., there is almost no downside to having extra cash immediately accessible (and not in the bank)...

1. You earn zero interest in the bank and zero outside of the bank... So why not hold some cash outside of the bank?

2. If the banks run out of cash (or shut down for a few days), then you'll have no cash. You are essentially broke at that point – like the people of Argentina and Greece were when their banks were closed.

The examples from Argentina and Greece are scary... One day the banks were open, the next day they were closed. While an extreme crisis like that is unlikely in the U.S. TODAY, the outlook down the road is grim. Meanwhile, there's little downside in holding extra cash outside of the bank today.

How much cash should you hold? As always, the answer will depend on your circumstances. But Steve thinks it should be more than you probably think...

The bottom line here is, you ought to hold way more cash than you think... Think of the number you believe is right... and then consider ADDING A ZERO TO IT!

If you've been with us for long, you already have a small portion of your savings in physical gold and silver. Make sure you have plenty in cash as well.

New 52-week highs (as of 9/21/15): Activision Blizzard (ATVI).

In today's mailbag, a subscriber lashes out at our "sick" and "greedy" advertising practices. What do you think? Send your thoughts to feedback@stansberryresearch.com.

"You folks are 'entrapment' junkies, and greedy to the max! Just look... or listen... to these diatribes that go on and ON AND ON... with MILES of examples after examples after examples!! Why aren't you sending out stories about all the social work and other good work they are doing with the money!

"But no, all we see is A BUNCH OF GREEDY MILLLIONAIRES/BILLIONAIRES, who now, just like the gov't, want to suck money out of the everyday people who don't have such millions and billions! YOU PEOPLE ARE SICK, AND SHOULD BE ASHAMED OF YOURSELVES, for hammering us daily with your greedy emails, entrapping someone for soooooo long on those stupid emails, example after example after example... and then tell us to buy your reports so we can do the same!

"If you had any heart, compassion, genuine caring for humanity... you'd give the info free and easy, and NOT in an hour long entrapment video! Is it not enough that you've made big money off big companies and more money than anyone needs in a lifetime ... that you now need to suck our blood AND TIME? Mahatma Gandhi said it better than you folks: There's enough for everyone's need, but not for everyone's greed!" – Paid-up subscriber Francis L.

Porter comment: In regards to our sales videos, we – like most businesses – are rewarded for using advertising media that works. While you may not care for this particular form of advertising, we've tested it relentlessly and found that using a video sales letter (in which the sales letter is essentially read to you on the screen, out loud) increases our response rates by up to three or four times. So if the point of your feedback was to criticize that particular kind of advertising, I would have to plead guilty as charged.

Interestingly, I didn't like video sales letters either – at first. But over the years I've actually come to look forward to sitting down and having things read to me. It allows me to do other things at the same time. Perhaps they will grow on you, too.

The more interesting part of your comments, though, revolves around why businesses tend to focus on advertising that works... and how this relates to "greed."

Businesses use advertising that works – advertising that brings in more value (in the form of paying customers) than it costs – because businesses exist to earn profits. In your mind, being dedicated to profit is "greedy." But actually, that's rarely the case.

It does happen, though. I have met some greedy business people. For example, we were considering doing a major business deal several years ago with a very famous newsletter writer. He charges a lot of money for his newsletter – more than $300 a year, as I recall. I asked him why he insisted on charging so much. I tried to explain that it usually makes far better business sense to charge a lot less. And I'll never forget, he replied that he'd never "cheapen" himself by selling to anyone who couldn't afford at least $300 for his newsletter.

I thought that was greedy. And I know it's stupid. I've done enough testing to know that the lifetime value of a $99 newsletter buyer is the same as the lifetime value of a $300 newsletter buyer. But if you sell your newsletter for $49, $79, or $99, you're going to end up with far, far, far more subscribers than if you sell for $300.

In this way, capitalism encourages moderate prices: It helps to ensure that there's tremendous "utility" in our marketplaces. Entrepreneurs are rewarded for serving the most people at the best possible price.

If I could teach one thing about the free market to folks who believe that profit is evil, it's the idea that prices (and profit margins) convey critical information and provide incentives. Prices (and profit margins) are the way information gets immediately distributed throughout our vast and complex economy.

How else could entrepreneurs and other producers know there's a shortage or an unmet need? Prices for those goods and services will rise and the profit margins in those areas will be robust.

But... trust me... market-beating profit margins don't last for long – not unless a businessman can innovate something that's truly better than the competition and/or build up a brand through many years of dedicated, loyal, and reliable performance. All of these factors encourage business people to do more and do better for their customers.

That's why capitalism works. Sure, it's frustrating when you can't afford something great. But without the profit incentive, that good or service wouldn't exist at all.

Gandhi was dead wrong: There isn't enough to satisfy everyone. The central truth of economics is scarcity. There is never enough of anything to satisfy everyone. Only price (and profit) allows scarce resources to be distributed in a free society.

Just study the serious famines India has suffered over the years. Socialism and other political efforts to circumvent the profit motive don't work. People prefer freedom. They prefer choice. And they prefer the ability to work hard to improve their standing in society.

Our newsletters are dedicated to helping people improve their lives. We offer useful and valuable advice about making good investments. There's no question that our products are worth far more (to most investors) than what we charge for them.

And so, I never apologize for our advertising. And I don't believe there's anything greedy about the way we do business.

Our advertising allows us to serve more people at a lower total cost. It allows us to invest more in other areas of our business – like recruiting more and better analysts, and building a better (and far more searchable) website. And our profits allow us to do things for free that help to serve our community, too. For example, check out the quality of the completely free investor Education Center on our website. Or consider reading one of our three completely free daily e-letters.

Believe me, producing this much high-quality content isn't cheap or easy. We do it because we hope to reach a large number of people who may one day become paying subscribers. But it's not purely a business decision (or else we wouldn't do it – it's not very efficient). We also believe we have an obligation to give back something to those who are young or who, for other reasons, can't afford our subscription products. We benefited from used book stores... and free websites...

If you want to do real good in life, here's a tip: Do well first, so you can afford to do good later.

Regards,

Justin Brill
Baltimore, Maryland
September 22, 2015