The ultimate addition to the S&A Alliance...

The ultimate addition to the S&A Alliance... A 'dirty secret' about you, dear reader... More on the upcoming launch of DailyWealth Trader... How the service made money when others were losing…

Editor's note: In lieu of Porter Stansberry's Friday Digest, we've asked Amber Lee Mason to take the reins today. Amber is a longtime managing editor at S&A. And she's now co-editing our newest (and yet-to-be-released to the public) service, DailyWealth Trader, with our editor in chief, Brian Hunt. Brian discussed DailyWealth Trader in a previous Digest. In today's Digest, Amber covers an idea that generated an incredible amount of negative feedback when we first published it. But I think it's important for all our readers to understand.

 A few years back, we published one of the most controversial essays in our company's history...

It began with a warning:

The essay, from Porter, revealed one of the "dirtiest" secrets of the newsletter business. Here's how he explained it... 

From experience, we know advertising about super-risky options trading or super-risky penny stocks will sell far better than promises of sober, reasonable information on strategies that will actually make you money.

While you, personally, might not fit the profile of the average newsletter buyer, we know with 100% deadeye certainty that the newsletter-buying community is inclined toward self-destruction. The emotions that lead readers to be interested in newsletters (fear and greed) are the same emotions that will destroy their chances to succeed in the markets.

 Some publishers have responded to this problem by abandoning any responsibility for the quality of the investment advice they publish. As Porter reported, these publishers figure, "We can't know in advance whether or not any investment advice will work. And we don't warrant results. We let the readers tell us what kind of publications are 'good' and what kind of publications are 'bad.'"

That approach often leads to high sales... and poor investment results.

 The alternate tack – the one we take at S&A – is to figure out how to convince readers to take advice that's good for them. It turns out, that's much harder to do... but not impossible.

For example, a few of you (not many, but a few) listened when we said learning how to buy discounted corporate bonds would literally change your life. We've repeatedly used creative advertising to convince folks of the real fact that this knowledge will allow you to make stock market-like gains... while taking tiny risks.

 We've also had some success convincing people that once you really understand how selling a put works, you will simply never buy a stock again. You will always sell puts instead.

That's one of Doc Eifrig's main strategies in Retirement Trader. It's a strategy that has given readers a 100% win rate on the 61 positions Doc has closed since the service launched in July 2010. Again, we know the bulk of our readership isn't interested in learning something new, like how to sell puts. But we're proud that several thousand people have added put selling to their "tool box." And we've received an incredible amount of positive feedback over the years.

 Porter's Friday Digests are designed to give readers the tools they need to identify and take advantage of good, money-making advice. We hear from plenty of subscribers who aren't interested. As Porter has pointed out, Mondays are our busiest refund days by far.

But judging by the feedback, some readers do appreciate that we're pointing them in the right direction...

That's why we're "building" this idea into our latest project: DailyWealth Trader.

 As Digest readers know by now, we're developing a unique daily trading service... which we believe represents a breakthrough in the investment newsletter business.

In short, we're going to show readers trading strategies and insights from the best traders on our team... from the market's greatest hedge-fund managers... and from our extensive network of industry insiders.

Some people might subscribe to DailyWealth Trader to receive a "hot tip" every single day... a new trade to bet big on. And while we expect to introduce many successful trading ideas, a daily "hot tip" is not what DailyWealth Trader is about.

The real benefit is that our approach will allow us to point you toward the advice that will actually make you money.

Take late last summer, for example...

 In July, the benchmark S&P 500 stock index began a slide that would take it from about 1,350 down to 1,100 – a 17% loss. Simultaneously, the Volatility Index, which tracks the premiums on options, jumped as high as 48... and stayed elevated for about three months. The Volatility Index rises and falls with the price of options. The higher it is, the more money option sellers are collecting.

During that period, while stock investors were losing money and suffering incredible whipsaws, sellers of options were making a LOT of money.

From August through December, while we were testing DailyWealth Trader "in house," we published 22 put trades – far more than any other strategy. Twenty-one were profitable. The average gain was 15% on margin with an average holding period of 10 weeks.

The annualized gain surpassed 75%. And that gain was achieved during an incredibly volatile time... where most traders and investors were losing money.

We published several updates on the Volatility Index... and as many cautionary notes on stocks and commodities. We were adamant about the benefits of trading options on our favorite stocks... companies like Microsoft, 3M, and Intel.

 In short, we were pointing our internal "test" audience toward the best strategy for the current market conditions. In today's era of "Flash Crashes," sovereign debt panics, and bank failures, the market's "weather" can change in a matter of hours. Knowing exactly what strategy to use during a given market condition is far more important than receiving a daily stock tip.

 Late last year, as the Volatility Index started to decline and stocks started to rise – indicating it would be less profitable to sell options – we turned to the beaten-down commodity stocks.

Over the summer, stocks and commodities had fallen together. But while the S&P had climbed significantly by mid-December, commodities were still testing their lows…

We took this opportunity to open several commodity positions in DailyWealth Trader, including ones on copper giant Freeport-McMoRan (up 19%-plus), oil services giant Halliburton (up 9%-plus), and silver-royalty company Silver Wheaton (more than 26%). Many of these companies were setting up in classic "carve out" bottoms... just the kind we described last week.

We're off to a good start in these positions... and more gains will come. But new opportunities are opening up...

 Recently, we've issued a good deal of commentary on the blown out "junior" resource sector.

Juniors are the "bloodhounds" of the resource industry. They scour the world, looking for energy and mineral deposits. It's a hit-or-miss business, which means these stocks can lose 50% of their value in one year... and then soar 300%, 500%, or even 1,000% the next.

We track the trend in juniors with the TSX Venture Index. The Venture is like the "Dow Jones of small resource stocks." It's the benchmark index for these junior commodity stocks. In its 2008 bust, the Venture dropped 75%. In 2009 and 2010, it moved into boom mode and rose about 250%. Then in 2011, it busted down 45%.

Today, it looks like the Venture may be headed back into a boom. It's up 25% off its 2011 lows... And it just broke out to a fresh five-month high...

We're already up 20% in a month on a platinum producer. We're up 40% on a position in a small gold explorer. We're up 8% on a Canadian "junior."

Since we've started our beta-testing program with Alliance members, we've shared details on five small resource stocks. If this new uptrend becomes a certifiable mania, the gains could be extraordinary. That's why we're pointing them in this direction right now. This is the advice we believe will actually make you money over the next six to 12 months.

 When it comes to focusing on the right advice for the moment, Alliance members have a harder job than anyone. They see everything. How to choose?

So far, we're hearing they're happy to have a hand...

 Even if you only subscribe to one newsletter, this is valuable analysis. We can show you which techniques you can use to safely leverage your investments – like selling puts last fall. And we can show you where to focus your capital – like beaten-up resource stocks this winter.

Because DailyWealth Trader is following a dozen different strategies at a time, we can find the best way to make money, no matter what the market is doing.

 The "dirty" secret of our industry is that publishers often publish letters that are bad for their readers... because readers want to buy bad advice. Once you understand that, you can train yourself to focus only on the advice that's likely to make you rich. And we're going to help you do that in DailyWealth Trader. More on this product to come...

 New 52-Week Highs (as of 02/23/2012): Guggenheim BulletShares USD High Yield Corporate Bond 2015 Fund (BSJF), BlackRock Corporate High Yield Fund (HYV), Anheuser-Busch InBev (BUD), Prestige Brand Holdings (PBH), Yamana Gold (AUY), Chart Industries (GTLS), and BLADEX (BLX).

 In today's mailbag... subscribers write in on protecting themselves from taxes and their outlook for Sears. And one describes what can happen when you try to talk sense about the national debt? Send us e-mail at feedback@stansberryresearch.com.

 "I have voted with my feet. Two years ago, I moved from California to Singapore (even before ever hearing of Jim Rogers), started a new company (unbelievably easy to do in Spore), and am paying myself a modest salary to optimize the foreign income exemption. By keeping net income in my company as retained earnings, I reduce my current USA taxes to near zero. Singapore personal and corporate tax rates are little more than California's income tax rate.

"I am very fortunate as my work affords me this opportunity. I am doing my best to keep everything 'above board' and not complicate life with illegal activities. The proposed tripling of taxes on dividends would force me to alter my strategy, but I'm optimistic that closing one door will open others. Would I renounce my USA citizenship to stop paying confiscatory USA taxes? I don't intend to, nor would I want to... but one can never be sure given the disruptive, irrational, and just plain stupid actions of Komrade Obama's administration." – Paid-up subscriber Jorge

 "Thank you for the excellent information you provide daily to my inbox. Regarding Sears: I believe your assessment is correct in that Sears will not be around in a few years... About 30-plus years ago, I worked my way through pharmacy school employed by Sears in its automotive repair shop. I was presented with numerous examples in the auto shop and on occasion when I had to go to the main store on how to NOT manage and run a business. I have not been in Sears at the mall in probably 20 years. I used to occasionally stop in K-Mart. On the past three occasions I tried to shop in K-Mart, I left in frustration over the lack of merchandise, customer service and/or general poor appearance of the store.

"Have you or your readers been in either store in the past three years? My bet is they are staying out of Sears' Holdings properties and concentrating on shopping in World Dominator stores such as you wisely suggest in your newsletters. Keep up the great work!" – Paid-up subscriber John Brislin

 "Hello Mr. Potter. I am 26 yrs old and working at an engineering consultant firm from the past 3.5 yrs. I am a foreign national working here in the US on a Visa. I am really interested in finance and was searching for a platform where I could learn a lot about the markets and the economy of U.S. When I expressed this desire to a colleague at work he introduced me to S&A more than two yrs ago. Off the bat, I wanted to let you know that S&A taught me a lot about the finance and the present economy of the country and by extension the world. I really take your comments and views about the economy seriously because I completely agree that numbers don't lie. The best ideas from S&A that I followed and made huge gains on are gold and 'World Dominating Dividend Growers.' The latest trading secret that I successfully adopted was selling puts on safe stocks, which by the way is the safest way to trade and make huge gains.

"I also wanted to share an interesting incident that happened at work. I tried to test your advice about gold and also the End of America scenario. I tried to explain to my colleague, who sits right beside my cubicle, why USA has to take drastic measures to cut its deficit. I told him that the annual deficit that US runs is $15 trillion, equal to the annual GDP (I know that the deficit actually is close to $56 trillion, but I wanted to start with a smaller number) and that a reduction of $4 trillion in 10 yrs would not save the country. The next thing that happened was totally unexpected! He called me a foreign national and that I should either take it or leave it and that I was a negative person and so on. I could not believe the reaction. I tried to tell him that the present economy is connected globally, and since US has the world reserve currency status it would be better to take control or else it would lead to destroying the world economy.

"This incident made me understand why people bad mouth you even though you tell them the truth. Also when I start to talk about gold to such people, they look at me like a madman! God help them!" – Paid-up subscriber Tarun G

Regards,

Amber Lee Mason

Delray Beach, Florida

February 24, 2012