Editor's note: We just endured one of the roughest weeks in the stock market in years...

The benchmark S&P 500 index officially entered into correction territory in only six days – the fastest that has ever happened. It has been downright ugly in the short term.

But here at Stansberry Research, we believe it's important to focus on the long term. And of course, we're always looking for ways to help our subscribers build generational wealth. These types of returns can make your children wealthy... and their children, too.

We've put together this weekend's Masters Series with that idea in mind...

It's an exclusive interview with Austin Root, our director of research and editor of American Moonshots. In the first installment, he discusses the basics about this product... explains why this opportunity exists today... and details why the recent volatility is a good thing...

Why It's an Ideal Time to Focus on Small-Cap U.S. Companies

An interview with Austin Root, editor, American Moonshots

Stansberry Research: We're here today with Austin Root, editor of American Moonshots. Austin, can you start by telling us a little bit about the idea behind this product?

Austin Root: Sure. For a while now, we've wanted to have a product that addresses a part of the market that we think is underrepresented across Wall Street and investment research. I'm talking about smaller companies. We have some products – Stansberry Venture Technology and Stansberry Venture Value – that address these, but they're more specialized to their specific niches of tech/biotech and value stocks.

In American Moonshots, we are, of course, looking for stocks that we think could potentially go "to the moon."

A couple of years ago, a study looked at the best-performing publicly traded stocks from 1980 to 2017. Warren Buffett's Berkshire Hathaway (BRK) was No. 15 on that list. That means that 14 other companies outperformed what some investors have called the stock market's greatest "investment miracle."

Interestingly, these 14 companies came from all different industries and parts of the economy. But 13 of the 14 companies ahead of Berkshire did have one thing in common: They were all small companies before their huge runs higher.

With American Moonshots, we've assembled a portfolio of companies that we think could become blue chips. We're looking for companies with great long-term runways that could eventually become huge companies. In doing so, these stocks can return thousands – and in some cases, hundreds of thousands – of percent over a long period of time.

SR: That sounds like how Amazon (AMZN) got its start. We now know of Amazon as the world's dominant retailer, but it wasn't always a blue chip. Amazon got its start as a small company selling books online.

Austin: Exactly. And we aren't saying these companies are going to become the next Amazon. Most of the companies in our portfolio are the market leaders in their respective niches. That's what we like. Some of them have a real opportunity over the long term to grow into an Amazon-like company. We want our subscribers to get in before the rest of the market finds them.

SR: Now, small-cap stocks and microcap stocks are notoriously volatile. Some folks may be a little apprehensive about investing in a group of stocks that will likely experience some wild swings. What would you say to those people?

Austin: That's a great question, and I want to touch on a couple of things...

First, this portfolio is not meant for your entire investment portfolio. We're talking about putting somewhere around 10% of your overall portfolio into this strategy... or maybe 20% at most, if you want to be aggressive. It's certainly not for your entire nest egg.

The second point I want to make is that this is a diversified portfolio of companies.

Of the 12 stocks we're recommending in the current Moonshots portfolio, a few are tech-focused companies that will benefit from powerful secular trends... like 5G data networks, cloud-based software platforms, and the increasing popularity of social media.

We also have a number of health care stocks that are involved in drug development and cutting-edge biotech research. We have an industrial recommendation... a financial stock... an asset-management firm with a focus on gold and other precious metals... and even a profitable, market-leading medical cannabis firm.

While any single position might be volatile, we believe this portfolio is diversified enough to withstand some volatility while also giving us the chance to generate huge returns.

SR: Are you worried you're going to get whipsawed out of some of these positions in a choppy market? What's your exit strategy on these stocks?

Austin: You know, given that this portfolio is so diversified, we've decided not to use stop losses in American Moonshots.

That might sound like we're throwing caution to the wind. But consider this... If you had invested in Amazon in its early days – and even if you had used a 50% stop loss – you would have been stopped out of your position more than 10 times over the course of its historic bull run.

We don't want that to happen to our subscribers. We're investing for the long haul, and that means we're willing to stomach a little volatility with these potential moonshots.

SR: On the bright side, given the recent spike in volatility amid the "coronavirus crisis" so far this year, will that give subscribers a much better entry point on some of these positions?

Austin: Exactly. We're excited that volatility has worked in our favor in that case. Some of these names have actually held up better in the market, and that's a testament to the quality of their businesses. But some have gone "on sale," and we're excited to recommend shares at a discount to where they were trading not long ago.

SR: Just because Wall Street overlooks these companies doesn't mean they're of a lower quality than Walmart (WMT), Amazon, or any other blue-chip company out there, right?

Austin: That's right. The thing is, Wall Street focuses on two types of companies: large companies and companies that need a lot of new capital.

Even though the companies in American Moonshots are smaller, some of their businesses are strong and rapidly growing. But because most of them don't need capital, they're flying under Wall Street's radar.

Make no mistake, though: These aren't lottery tickets. They're high-quality, world-class companies that fit well within Stansberry Research's investment tenets.

SR: Plus, if Steve Sjuggerud's "Melt Up" thesis plays out, these stocks in particular could really take off.

Austin: They absolutely could. We still believe in the Melt Up, despite the recent volatility.

But you know, I should note that we're investing in these companies for the long haul... We believe that they're going to be great long-term investments, whereas Steve's Melt Up is really more of a short- to intermediate-term market prediction.

SR: Around the office, you've mentioned that you see some similarities between President Donald Trump and former President Ronald Reagan, who was notoriously pro-small-business. Can you explain why you're seeing a similar setup with Trump in the White House?

Austin: You know, back in the 1980s, Reagan was focused on reducing bureaucracy and lowering tax rates. Those were both great tailwinds for small businesses, and we're seeing that again today...

In 2018, taxes were lowered for corporations and we've seen that flow through to higher net earnings last year. But the next phase will be to reinvest those earnings back into their businesses, and that should lead to a next leg of growth this year and beyond.

On top of that, coronavirus fears and the continued global trade conflicts should hurt larger companies with big international businesses more so than small U.S. businesses. That's one reason we believe right now is a great time to focus on small-cap American companies. That's why we're not just calling this product Moonshots – it's American Moonshots.

SR: Now, you're including suggested allocations for each position in American Moonshots, down to the exact number of shares you recommend buying based on someone's portfolio size.

In that way, it's similar to Stansberry Portfolio Solutions, where you give great advice on exactly how much of your portfolio to allocate on to any position. Did you intentionally design American Moonshots similarly because you want people to buy the whole thing, rather than picking their favorite stocks?

Austin: That's right. We want subscribers to buy the entire diversified portfolio as a way to manage risk. Again, some of these stocks will be volatile, so we don't want anyone cherry-picking a stock or two. The whole portfolio is well-balanced, and we carefully established the percentage allocations.

Plus, because they're small in nature, these stocks are illiquid. They might spike higher as folks buy in the short term. We're bullish on their long-term potential, but we want subscribers to get the best returns possible... So we want everyone to strictly adhere to the allocation guidelines.

Editor's note: With the coronavirus wreaking havoc on the markets, it's a great time to "buy the dip" with one of Austin's American Moonshots recommendations. Austin believes this tiny $5 stock is poised for a buyout that could send shares soaring 70% – or more – almost overnight. Before you do anything else, watch his special presentation right here.