The Wall Street Journal got it wrong...

Why China won't replace the U.S...

Many people believe China will become the world's next superpower... But not Porter.

In today's Digest Premium, he explains why the giant Asian nation will be our competitor... but will never overtake us.

To subscribe to Digest Premium and access today's analysis risk-free, click here.

The Wall Street Journal got it wrong... What we see that the rest of the world doesn't... Frank Curzio in the New York Post... Asia is prepared to make a giant Canadian shale investment... Take the long view and ignore the hype...

"Sears has been selling off some of its best stores to raise cash, an unusual strategy that makes it harder for the struggling chain to improve its sales, even as it helps shore up its financial position..."

So begins the article "Sears Cashes Out of Prime Stores" in today's Wall Street Journal. The article explains how the retailer has sold almost a dozen outlet stores in the past year and a half. The author seems to think Sears is "burning the furniture to heat the house"... selling some of its best-performing assets to raise cash with disregard for the future lack of cash flow.

But we know better...

In the August issue of Stansberry's Investment Advisory, Porter told the story of hotshot hedge-fund manager Eddie Lampert, who is currently at Sears' helm. Lampert landed a job trading bonds for Goldman Sachs out of Yale. Four years later, in 1988, he started his own hedge fund.

By 2004, Lampert was the first hedge-fund manager to earn $1 billion in a single year. By 2006, he was the richest man in Connecticut, with a net worth of more than $3 billion.

In other words, Lampert is no dummy. Through a series of acquisitions, he merged K-Mart and Sears to form Sears Holdings in 2004, where he serves as the chairman and CEO.

Without getting into specifics, Sears' retail operation has continued to struggle under Lampert. Sales have fallen, and the company is burning cash. But Porter still recommended buying the stock...

Lampert is selling Sears' real estate because he's an expert in bankruptcies and distressed investing. He's not your average retail CEO. As Porter's subscribers know, Lampert is in the midst of launching a re-insurance business out of the remnants of Sears' retail assets... just like Warren Buffett did in the 1960s with dying textile giant Berkshire Hathaway.

At the time Porter recommended going long Sears, the company's market cap was less than $5 billion. (Two months later, it's $6.5 billion.) But its true liquidation value is likely much higher than that.

In the same issue, Porter and lead analyst Bryan Beach recommended shorting shares of struggling retailer J.C. Penney. (A short sale is a trade that profits as the share price declines.) The "pairs trade" is working out just as they expected... Sears shares are up more than 50%, while J.C. Penney shares are down more than 40%.

Switching gears a bit... Regular Digest readers know that Canada produces more than enough energy for its own needs... So it exports 55% of its natural gas to the United States. Canadian gas makes up 96% of U.S. natural gas imports.

But the shale boom currently underway in the U.S. is changing the global energy landscape. The massive amounts of oil and gas being extracted in Texas, North Dakota, and other areas around the country – thanks to a technology called hydraulic fracturing (or "fracking") – are making America more energy independent... And once the government gets out of the way, we will soon begin exporting that natural gas around the world (where they pay far more than the U.S. does).

While this is great news for the U.S., it could become a big problem for Canada. S&A Resource Report editor Matt Badiali sent around an e-mail last night explaining the situation. We've excerpted bits of that e-mail below...

Another day, another S&A analyst making headlines... Today, Small Stock Specialist editor Frank Curzio made the front page of the New York Post business section. He explained his favorite way to profit leading up to the government's debt ceiling. You can read the piece here.

We'll end today's Digest with another reminder to ignore the noise coming out of Washington D.C. Today's reminder comes courtesy of DailyWealth Trader co-editors Amber Lee Mason and Brian Hunt...

Every day the markets are open, Amber and Brian show their DailyWealth Trader subscribers the best short- and medium-term trading ideas in the market. That often includes ways to generate super-safe and regular income.

As we pointed out in yesterday's Digest, while volatility is on the rise, some of the world's greatest blue-chip stocks are trading at new lows. It's a great time to start selling put options.

In today's issue, they showed readers how to make 2% in just six weeks with one of the world's best retailers. That's a 19.2% annualized gain.

And given the low valuations on these companies, Amber and Brian are sure to have several more of these super-safe, high-income trades in the coming weeks.

To learn more about DailyWealth Trader – and to get started trading for more income – click here.

New 52-week highs (as of 10/8/13): Uranium One (UUU.TO).

In today's mailbag, one subscriber shares his own surfing story. Send your stories, thoughts, or vitriol to feedback@stansberryresearch.com.

"I grew up in a competitive swimming family. At 48 I still swim 3 miles most every day and have competed in several Ironman triathlons recently. From around 2000-2004 I lived and worked in Melbourne, FL where I decided to learn how to surf.

"I bought a big fat Ricky Carroll board that was on consignment in Cocoa Beach... and at the time had no idea who he was. It was later when I was surfing the break at PAFB and Pineda causeway that another dude told me how important RC was to surfing history. Truth be told I only learned how to stand up on the board maybe 25% of the time... straight with no turns.

"In 2003 when we were getting all those hurricanes, I decided to go see what it was like to paddle out to real 10-12 foot surfing conditions. I'm a good swimmer right... what could go wrong? What went wrong was that I had no idea nor respect for the power. And this coming from a guy that took a fluid dynamics course because I was interested.

"So I paddled out and fought my way to a resting spot and preceded to catch a wave. I did and rode it to shore on my stomach. Wow what a ride. I said let's do this again. On the next lineup I caught one and attempted to stand up, the nose of the board knifed vertically into the front of the wave and I fell a good 10 feet to the trough where the rest of the wave crashed on me. I know you understand that helpless feeling.

"A year before this I was at the radar and telemetry site in Half Moon Bay, California ... the facility that's out on the edge of the cliff. We went into the HMB board shop where I bought a sticker, a T-shirt, and a local surf magazine. In the magazine was a piece about being caught in the impact zone. So at that moment where I was being thrashed about with no control of my limbs, I remembered what the article said to do in order to survive.

"Thinking that I was going to die I managed to surface only to see the next curl upon me. I took a breath and dove down as far as I could and released the leash... all the time being rolled by the turbulence. I surfaced again and again only to get a breath and swim for the bottom. My only thought was to survive. Eventually I washed out of the impact zone and the suds. Me reading that training article may well have saved my life. I think there is a lesson to be learned here with such life events. It's what makes you and S&A unique and why I became a lifetime customer.

"On another note as I have told you about previously... I should be going offshore soon as a BOP and emergency safety Systems and Controls compliance surveyor. You would totally get off on the Helicopter Underwater Escape Training (HUET) I went through at the NBL in Houston." – Paid-up subscriber Gary Milam

Porter comment: Small world… My grandfather was a colonel in the Air Force and retired to Satellite Beach to be close to the base. I've surfed RC's break there – a deep water reef – during many big swells. One of the few real big wave spots in Florida.

Be safe.

"Porter, Spot on re. incisive points to deal with idiotic socialist devolution. Logically, the next step is to replace the idiots

"The trick here is to let the downtrodden middle class be shown tools so they can be empowered, to recapture the American Dream, this will be AWESOME!!" – Paid-up subscriber Dr. Adams

Goldsmith comment: Sounds like someone has been reading Jim Rogers... He makes some great points.

Regards,

Stansberry & Associates Hall of Fame
(Top 10 all-time, highest-returning closed positions across all S&A portfolios)

Why China won't replace the U.S...

Many market participants, including legendary investor Jim Rogers, believe China will emerge as the new world power.

But as I (Porter) explained in my previous two Digest Premiums (here and here), the U.S. won't lose that title.

China will be a very good competitor to the U.S. It will become an economic powerhouse.

China is already the world's largest buyer of cars. General Motors estimates annual car sales in China will reach 35 million by 2022 – more than the U.S. and Europe combined. And our carmakers are already dominating in the region.

I do think eventually, China will be a good trading partner for us. It just won't be a constant source of competition.

Most large Chinese corporations – from the banks to the oil companies – are controlled by the government. They allocate capital as the government sees fit. As long as China maintains a centrally planned economy, it will never be innovative or efficient enough to overtake us.

In addition, who knows what will happen with China's trillion-dollar-plus "shadow banking" sector. These are off-balance-sheet loans that make up more than 20% of new financings, according to Barclays. China skeptics say these loans mask a large amount of bad loans.

And the government is projecting 7.5% GDP growth for 2013 – the slowest rate in years.

Over a very long period of time, China will be our largest economic rival. But I don't believe in my lifetime that China will eclipse us.

People who believe China can continue to grow at its current rates are just wrong. I'm not picking on Jim Rogers, by the way. I believe he thinks the growth rate will be moderate.

But if China becomes wealthier, it will become a consumer of Western goods – not just a manufacturer to Western countries. That will be great for the world's economy... and it will be great for America.

– Porter Stansberry with Sean Goldsmith

Why China won't replace the U.S...

Many people believe China will become the world's next superpower... But not Porter.

In today's Digest Premium, he explains why the giant Asian nation will be our competitor... but will never overtake us.

To continue reading, scroll down or click here.

Stansberry & Associates Top 10 Open Recommendations
(Top 10 highest-returning open positions across all S&A portfolios)

As of 10/08/2013

Please note: Securities appearing in the Top 10 are not necessarily recommended buys at current prices. The list reflects the best-performing positions currently in the model portfolio of any S&A publication. The buy date reflects when the editor recommended the investment in the listed publication, and the return shows its performance since that date. To learn if a security is still a recommended buy today, you must be a subscriber to that publication and refer to the most recent portfolio.