The real secret to successful investing... Do this, then do nothing... Our founder Porter Stansberry's investing journey... The trouble with Easter-egg hunts... A timeless plan for building wealth...
Editor's note: Today, we're sharing another guest essay from our founder Porter Stansberry... As I (Corey McLaughlin) said yesterday, Porter is warning that the U.S. is facing huge economic risks right now... And a change in the way people think about the economy will soon catch most Americans completely off guard. Porter revealed more details in a new sit-down interview with our Dr. David "Doc" Eifrig, which you can watch for free here... I'd urge every investor to listen to this message... According to Porter, the U.S. is barreling toward a political and cultural divide that could shake the financial system to its core... and wipe out unprepared investors' portfolios. But importantly, Porter says that with just a few simple steps today, you can protect and grow your wealth despite the risks ahead. During the interview, he even shares four free recommendations. And in today's essay, adapted from the September 13 edition of Porter's Daily Journal from his boutique investment firm, Porter & Co., Porter shares more about one of the fundamental points from his survival strategy, including what he says is the only secret anyone needs to know about successful investing...
 In 1991, Warren Buffett began buying shares of American Express (AXP), putting $300 million into the company...
Talk about "Lindy's Law," which we wrote about yesterday: In short, it says that the longer something has existed, the more likely it is to continue to exist. Understanding Lindy's Law will lead you to own businesses that have long track records and thus provide the best odds of producing substantial wealth. American Express began its operations, under that brand name, in 1850. It's a business with incredible economics. It has high margins (charging the highest member and network fees), and it uses other people's capital by generating "float" through its merchant operations. The combination produces 35%-plus returns on equity, year after year. Throughout the 1990s, Buffett continued to buy Amex on every pullback in the share price. His operations in the stock were public: Everyone knew he was buying, everyone could easily understand why he was buying, and he kept buying. Over about seven years, he acquired 20% of the company, spending about $1.2 billion. Today, Buffett makes more money in dividends every year from his 20% interest in American Express than he invested in the stock. That is, every year, Buffett more than doubles his money in American Express. 
At the start... When I first became an investment analyst, my mentor, Dr. Steve Sjuggerud, taught me to find entire markets that had been badly mismanaged and to invest when, after a long period of suffering, these markets were "cheap, hated, and in an uptrend." For example, when Argentina had a huge crisis in 2002-2003, we took about 100 wealthy investors down there to shop in the midst of the rubble. I helped put together several huge real estate deals, where you could get productive properties for about 10% of their fair market price. Today, using that strategy, I'd probably be investing in Turkey, Argentina, Japan, and, maybe, China. Usually, in emerging markets, we'd buy the "banks and brewers." Or, taking a cue from legendary fund manager George Soros, we'd buy the highest-quality stock in the market and the lowest-quality stock in the market. This kind of investing was like a global Easter-egg hunt. We and our many friends – like Jim Rogers, Doug Casey, and Bill Bonner – had a lot of fun traveling around the world while doing this kind of investing. And it really worked. The last long-term audit we did of our track records (in 2018) showed Sjuggerud was the team leader at Stansberry Research, producing 15.9% returns annually for the previous decade. But there was something about that style of investing that didn't interest me after a while... I grew more and more interested in understanding individual businesses and the people behind them. After the bear market of 2001-2002, I started looking into deep-value stocks – because there were a lot of cheap businesses available. I partnered with Dan Ferris to create a new publication at Stansberry Research, Extreme Value. Our first recommendation there, Blair (acquired by Appleseed's in 2007), was the very cheapest stock on the Value Line Investment Analyzer and trading for, as I recall, about four times cash earnings. We made something like 118% in about a year. Once again, this was like an intellectual Easter-egg hunt. Always looking for the next hidden gold nugget. And, once again, this was a very satisfying and profitable way of investing that put us in touch with many of my intellectual heroes, like Jim Grant and Whitney Tilson. Saying "I'm a value investor" has its own cache, just like saying "I'm in global macro." But, again, after a few years of doing this, it occurred to me that most of these companies and the people involved in running them were often not the sharpest tools in the drawer (there was often a reason that their stocks had performed poorly). I was drawn, more and more, to great entrepreneurs and great businesses. And there was one other thing... These strategies were Easter-egg hunts. There was a lot of activity, a lot of brain power, a lot of work to figure out if an investment was really worth it. Even with the value stocks and their so-called "margin of safety," there was still a big risk of buying into a value trap. All of that running around and that risk is fun and exciting for a lot of people... but it occurred to me that if you simply owned a great business, you wouldn't have to go find another one every few months. And, as Buffett proved with Amex, when you own great businesses, all you have to do is nothing. That appealed to me, greatly. My recommendations of Budweiser (BUD) in 2006 and then, even more so, The Hershey Company (HSY) in 2007 were the beginning of my final evolution as an investor. What I figured out was, if you simply buy the world's best businesses at a fair price, you literally don't have to do anything else. You're done. Go do something more interesting with your life. Or, if you still want to trade global macro or deep value, go ahead – but put your profits back into your "forever stocks." If you do, then it's only a matter of time until you will become extremely, almost unbelievably, wealthy. Just remember... Don't be a bonehead, like us with homebuilder Hovnanian Enterprises (HOV), and sell a great business just because you're worried about a recession. Of all the mistakes in investing, selling a wonderful business is by far the most expensive. We recommended Hovnanian at $42.79 per share in June 2022 and noted that we would exit the position if 30-year mortgage rates rose above 6% (historically a major drag on the housing market and homebuilders). When that happened in September 2022, we sold Hovnanian from our The Big Secret model portfolio at $36.50 – for a 14.7% loss. But it turned out that high rates kept existing homeowners locked into their low-rate mortgages, so they didn't sell their homes and add inventory into the market. Building new homes – Hovnanian's business – became the only way to add inventory into the market, resulting in record profits despite high borrowing costs. Hovnanian today trades for nearly $200 per share... Selling it was an expensive mistake that we hope to never repeat. History shows what can happen when you hold on to great businesses through thick and thin.
Editor's note: Porter is sharing what might be the most serious warning he has ever issued about the economy in his 30-year investment career... That's why he recently sat down with Doc to explain why our country has hit a "breaking point"... why the consequences will hit most Americans sooner than many realize... and, importantly, how you can protect and grow your portfolio from the chaos that could come. Finding and holding great businesses for the long term is just one part of the story. Click here for more details from Porter right now... And you'll also hear how none of the risks he's concerned about will matter if you follow his recommendations for your portfolio. | | | | In this week's episode of the Stansberry Investor Hour, Dan Ferris and I are joined by Andrew Walker of Rangeley Capital, who walked us through a handful of investment opportunities that are off most people's radars... 
Click here to watch the interview now... To hear the full audio version of this week's Stansberry Investor Hour, visit InvestorHour.com or find the show wherever you listen to your podcasts. | | | | |
| Recommended Links: | |  Until Tomorrow: Unlock the 'Holy Grail' of the Investment World A radical new way to potentially crush the stock market – with HALF the risk. No trading... no trailing stops... no worrying about the Federal Reserve, interest rates, or political chaos. Until tomorrow, see how it works... including the names of the four stock ticker symbols you need and the exact allocation percentages. Learn more here. | |
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New 52-week highs (as of 11/25/24): American Financial (AFG), Air Products and Chemicals (APD), American Express (AXP), Alpha Architect 1-3 Month Box Fund (BOXX), Consol Energy (CEIX), Compass (COMP), Pacer U.S. Cash Cows 100 Fund (COWZ), Copart (CPRT), Donaldson (DCI), Fair Isaac (FICO), Comfort Systems USA (FIX), Flutter Entertainment (FLUT), Fidelity National Financial (FNF), Home Depot (HD), Houlihan Lokey (HLI), iShares Convertible Bond Fund (ICVT), iShares Core S&P Small-Cap Fund (IJR), iShares Russell 2000 Value Fund (IWN), JPMorgan Chase (JPM), Kenvue (KVUE), Masimo (MASI), Markel (MKL), Altria (MO), VanEck Morningstar Wide Moat Fund (MOAT), Invesco High Yield Equity Dividend Achievers Fund (PEY), Packaging Corporation of America (PKG), PayPal (PYPL), Ryder System (R), Construction Partners (ROAD), Invesco S&P 500 Equal Weight Technology Fund (RSPT), Sprouts Farmers Market (SFM), Sherwin-Williams (SHW), SPDR S&P 600 Small Cap Value Fund (SLYV), Snap-on (SNA), Spotify Technology (SPOT), SPDR Portfolio S&P 500 Value Fund (SPYV), Cambria Shareholder Yield Fund (SYLD), Toast (TOST), T. Rowe Price (TROW), Twilio (TWLO), Tyler Technologies (TYL), ProShares Ultra Financials (UYG), Visa (V), W.R. Berkley (WRB), Industrial Select Sector SPDR Fund (XLI), and Zoom Video Communications (ZM). In today's mailbag, more feedback on the $6.2 million banana that Dan wrote about on Friday... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com. "Very important question about the banana duct taped to a wall... Does it rot? Is it plastic or real? Is it sealed with something to prevent it from
rotting?" – Stansberry Alliance member G.F. Regards, Porter Stansberry
Stevenson, Maryland
November 26, 2024
Stansberry Research Top 10 Open Recommendations Top 10 highest-returning open stock positions across all Stansberry Research portfolios. Returns represent the total return from the initial recommendation. | Investment | Buy Date | Return | Publication | Analyst | MSFT
Microsoft | 11/11/10 | 1,373.6% | Retirement Millionaire | Doc | MSFT
Microsoft | 02/10/12 | 1,338.1% | Stansberry's Investment Advisory | Porter | ADP
Automatic Data Processing | 10/09/08 | 1,094.1% | Extreme Value | Ferris | BRK.B
Berkshire Hathaway | 04/01/09 | 746.5% | Retirement Millionaire | Doc | WRB
W.R. Berkley | 03/15/12 | 560.9% | Stansberry's Investment Advisory | Porter | TT
Trane Technologies | 04/12/18 | 556.9% | Retirement Millionaire | Doc | AFG
American Financial | 10/11/12 | 517.1% | Stansberry's Investment Advisory | Porter | SFM
Sprouts Farmers Market | 04/08/21 | 469.6% | Extreme Value | Ferris | TTD
The Trade Desk | 10/17/19 | 453.1% | Stansberry Innovations Report | Engel | HSY
Hershey | 12/07/07 | 440.8% | Stansberry's Investment Advisory | Porter | 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 Stansberry Research 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.
| Top 10 Totals | | 4 | Stansberry's Investment Advisory | Porter | | 3 | Retirement Millionaire | Doc | | 2 | Extreme Value | Ferris | | 1 | Stansberry Innovations Report | Engel |
Top 5 Crypto Capital Open Recommendations Top 5 highest-returning open positions in the Crypto Capital model portfolio | Investment | Buy Date | Return | Publication | Analyst | BTC/USD
Bitcoin | 11/27/18 | 2,374.6% | Crypto Capital | Wade | wstETH
Wrapped Staked Ethereum | 12/07/18 | 2,291.8% | Crypto Capital | Wade | ONE/USD
Harmony | 12/16/19 | 1,280.7% | Crypto Capital | Wade | POL/USD
Polygon | 02/25/21 | 766.8% | Crypto Capital | Wade | CVC/USD
Civic | 01/21/20 | 376.6% | Crypto Capital | Wade | Please note: Securities appearing in the Top 5 are not necessarily recommended buys at current prices. The list reflects the best-performing positions currently in the Crypto Capital model portfolio. The buy date reflects when the recommendation was made, and the return shows its performance since that date. To learn if it's still a recommended buy today, you must be a subscriber and refer to the most recent portfolio.
Stansberry Research Hall of Fame Top 10 all-time, highest-returning closed positions across all Stansberry portfolios | Investment | Symbol | Duration | Gain | Publication | Analyst | | Nvidia^* | NVDA | 5.96 years | 1,466% | Venture Tech. | Lashmet | | Microsoft^ | MSFT | 12.74 years | 1,185% | Retirement Millionaire | Doc | | Inovio Pharma.^ | INO | 1.01 years | 1,139% | Venture Tech. | Lashmet | | Seabridge Gold^ | SA | 4.20 years | 995% | Sjug Conf. | Sjuggerud | | Nvidia^* | NVDA | 4.12 years | 777% | Venture Tech. | Lashmet | | Intellia Therapeutics | NTLA | 1.95 years | 775% | Amer. Moonshots | Root | | Rite Aid 8.5% bond | | 4.97 years | 773% | True Income | Williams | | PNC Warrants | PNC-WS | 6.16 years | 706% | True Wealth Systems | Sjuggerud | | Maxar Technologies^ | MAXR | 1.90 years | 691% | Venture Tech. | Lashmet | | Silvergate Capital | SI | 1.95 years | 681% | Amer. Moonshots | Root | ^ These gains occurred with a partial position in the respective stocks.
* The two partial positions in Nvidia were part of a single recommendation. Editor Dave Lashmet closed the first leg of the position in November 2016 for a gain of about 108%. Then, he closed the second leg in July 2020 for a 777% return. And finally, in May 2022, he booked a 1,466% return on the final leg. Subscribers who followed his advice on Nvidia could've recorded a total weighted average gain of more than 600%.
Stansberry Research Crypto Hall of Fame Top 5 highest-returning closed positions in the Crypto Capital model portfolio | Investment | Symbol | Duration | Gain | Publication | Analyst | | Band Protocol | BAND/USD | 0.31 years | 1,169% | Crypto Capital | Wade | | Terra | LUNA/USD | 0.41 years | 1,166% | Crypto Capital | Wade | | Polymesh | POLYX/USD | 3.84 years | 1,157% | Crypto Capital | Wade | | Frontier | FRONT/USD | 0.09 years | 979% | Crypto Capital | Wade | | Binance Coin | BNB/USD | 1.78 years | 963% | Crypto Capital | Wade | | 
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