An update on the $6.2 million banana... At the other end of the respectability spectrum... Mom-and-pop investors are all-in on stocks... Another classic market-top signal... The drawdown may have already begun...
 An update on the duct-taped banana...
Two weeks ago, I (Dan Ferris) told you the story of Italian artist Maurizio Cattelan's popular piece titled "Comedian," which consists of a banana duct-taped to a wall. The artist sold three copies of the work for between $120,000 and $150,000 at its December 2019 debut in Miami. Each copy came with a certificate of authenticity so the owners could tape a banana to their own wall and call it "Comedian," the artwork by Cattelan. Last month, "Comedian" was back in the headlines after Hong Kong-based crypto billionaire Justin Sun bought a copy of it for $6.2 million at a Sotheby's auction in New York. Sun promised to eat the banana when he bought the work. I will personally eat the banana as part of this unique artistic experience, honoring its place in both art history and popular culture. Sure enough, Sun ate the banana a few days later in front of a gaggle of reporters at one of the most expensive hotels in Hong Kong, saying, "It's much better than other bananas. Indeed, quite good." In my original essay, I said it was poetic that a crypto billionaire was the one to spend $6.2 million for a banana taped to a wall. He bought funny art with funny money. I doubt anybody could appreciate the sale of a worthless object for millions more than a crypto entrepreneur. Online magazine Slate upped the ante on the banana story by publishing a piece saying that Sun is "actually a dangerous criminal." On its face, it's not illogical. Crypto and art both have reputations as great ways for criminals to move money around the world and keep it away from law enforcement. Meanwhile, in March 2023, the U.S. Securities and Exchange Commission ("SEC") charged Sun and related companies with marketing unregistered securities, fraudulently manipulating the market through wash sales (buying and selling to make it look like there's trading activity without any meaningful change in ownership), and paying celebrities to tout cryptos without disclosing their compensation. So you can understand why Sun's next act has raised some eyebrows... Sun has invested $30 million in a crypto project backed by President-elect Donald Trump. That's not illegal. But keep in mind, when Trump is sworn into office, he plans to replace outgoing SEC Chair Gary Gensler with a more crypto-friendly candidate. So the SEC's lawsuits against Sun could be dropped. At the other end of the respectability spectrum... Warren Buffett is well-known as one of the greatest investors who has ever lived. At age 94, he's still the chair and CEO of Berkshire Hathaway (BRK-B). Buffett started buying Berkshire's stock in 1962 at $7.50 per share, when the company traded at a discount to its liquid assets. He took over the company in 1965, eventually ditched its namesake textile operations, and turned Berkshire into an insurance-centered conglomerate with a market value of roughly $1 trillion. Its A shares recently hit an all-time high just shy of $742,000 – a near 100,000-bagger from Buffett's first purchase. But as we've reported on recently, Berkshire Hathaway has been selling large positions in Apple (AAPL) and Bank of America (BAC). Berkshire is now holding more cash as a percentage of assets than ever before. Berkshire is holding $325.2 billion in cash and Treasurys, which amounts to about 28.3% of assets totaling just shy of $1.2 trillion. Buffett's sales and his inability to find suitable replacements prompted one Bloomberg opinion writer to declare that: Buffett's $325 Billion Cash Hoard is an Early Warning Signal There's some precedent for this view. Berkshire's cash hoard last peaked at 24.5% in June 2005 when the housing bubble was topping out... and three years before the financial crisis. By the time Buffett finished taking advantage of bargains created during the crisis, Berkshire's cash stood at just 7.2% in March 2010. Overall, I don't think Buffett fancies himself in the predictions game. Berkshire is bigger than ever and there probably aren't 100 public companies worldwide that he could take a large enough stake in to generate meaningful results. And right now, it's a good bet that Buffett considers 100% of publicly traded companies in the U.S. to be unattractively expensive. But while Buffett waits for bargains, mom-and-pop investors are going all-in... According to data compiled by the Federal Reserve, stocks now account for 41.8% of household assets. The previous all-time high was 41.7% in October 2021. The Nasdaq Composite Index peaked a few weeks later before falling 36%. The S&P 500 Index and Dow Jones Industrials Average peaked two months later, before falling 25% and 22%, respectively. 
The Conference Board survey of U.S. households also indicates that individual investors are more bullish on equities than ever before in history. A record 51.4% of those surveyed said they expect stock prices to go higher. In short, individual investors are in a frenzy. Many are convinced that Trump will usher in a new era of prosperity by cutting taxes and regulations and reducing government waste. In my November 15 Digest, I expressed hope at the prospect of a smaller government, but hope is never an investment strategy. And buying stocks when they're more expensive than ever and while bitcoin just hit $100,000 for the first time feels like a fear-of-missing-out-induced mistake. Another bear gored... In my November 19, 2021 Digest – the day the Nasdaq peaked in the 2022 bear market – I told the story of Warburg Dillion Read Chief Investment Strategist Gail Dudack, the "last bear gored," before the dot-com bubble burst. Dudack was fired from her spot on Wall Street Week with Louis Rukeyser in November 1999 for refusing to become bullish as the dot-com bubble went ballistic. But the last bear isn't usually gored by losing their TV gig. They usually gore themselves by turning bullish right near the market top. That's what economist David Rosenberg of Rosenberg Research did yesterday in a note he published called, "Lament of a Bear." The essay begins: It's high time for me to stop pontificating on all the reasons why the U.S. stock market is crazily overvalued and all the reasons to be bearish based on all the variables I have relied on in the past — from valuation, to sentiment, to overcrowded positioning... This is not about throwing in the towel as much as trying to get a grip on what is going on beyond just calling this a "bubble" every single day. In other words, Rosenberg is saying that he gives up, and he's tired of being wrong – while simultaneously denying it. Instead, there must be a sane, rational reason why stocks are more expensive than they've ever been in recorded history. It must be different this time. Rosenberg continues by trying to be self-aware. However, he fails... I do hate to ever use the term "new era" or "it's different this time," but we do not have a large sample size of data points historically on such major inflection points on the technology curve. But when they do occur, what you do find is what we have on our hands today, which, once again, is an investment community lengthening their investment horizons and rendering classic valuation metrics obsolete (at least for the environment we find ourselves in currently). I wish he'd just come out and admit that he's tired of being bearish and wants to join all the bulls so he doesn't feel wrong anymore. I wonder what he'll say if the market drops 20% in the next few months? That he was right all along? Or that he provided a classic sign of the top of a massive bubble? I'm betting on the former. And Rosenberg might not have to wait long... The drawdown may have already begun... Social platform X account Tier1 Alpha posted an interesting observation yesterday: The recent [S&P 500 Index] rally to [all-time highs] has been overwhelmingly driven by just a handful of stocks, while the broader index has [been] quietly selling off all week. It has been like this for at least the past two years. The SPDR S&P 500 Fund (SPY) – which tracks the S&P 500 – has risen about 54% during that time, while the Invesco S&P 500 Equal Weight Fund (RSP) – which tracks the equal-weighted S&P 500 – has risen just 28%... dragged down by the inferior performance of the other 493 stocks. 
The handful of stocks Tier1 Alpha mentions consists of the largest-cap companies in the S&P 500, including the Magnificent Seven – Apple, Alphabet (GOOGL), Amazon (AMZN), Meta Platforms (META), Microsoft (MSFT), Nvidia (NVDA), and Tesla (TSLA). Bloomberg's Magnificent 7 Index has hit more than 50 new highs so far this year and looks set to hit a few more by December 31... propelling the S&P 500 to do the same. Still, the Magnificent Seven have also caught value investor and New York University professor Aswath Damodoran's eye. He seems to agree with Rosenberg that it's different this time. Damodoran says the Magnificent Seven are such incredible, cash-gushing businesses that you should continue to buy them on the dips. Damodoran told Bloomberg Television in a recent interview: As a value investor, I have never seen cash machines as lucrative as these companies are. And I don't see the cash machine slowing down. Folks said the same sort of thing about the "Nifty Fifty" in the early 1970s. They were the Magnificent Seven of their time... the cash-gushing stocks everybody thought were the greatest businesses in recorded history, which would never stop growing. Many of them lost 60% to 90% of their value in the 1973 to 1974 bear market. I keep mentioning this because it's a massive lesson that folks seem to have unlearned. No business is ever as great as people think it is at the top of a mega-bubble... But at least one analyst thinks the Magnificent Seven cash machine is slowing down... Certified Financial Analyst and Bloomberg reporter Jonathan Levin recently wrote: Growth prospects for the group of companies dubbed the Magnificent 7 are still above average, but they're no longer magnificent. Levin says analysts expect the Magnificent Seven's net income to grow 20% in the coming year, not much faster than the other 493 S&P 500 stocks at 16%. Yet, the Magnificent Seven trade at 30 times blended forward earnings, compared with 19.5 times for the other 493 S&P stocks. Maybe we should start calling them "the somewhat-better-than-average seven which are priced like they're still magnificent." Regular Digest readers should know that I'm not suggesting you sell everything, own lots of Treasury bills like Buffett, and prepare for the worst. It just doesn't work that way. I'm not predicting a bear market... but we know bear markets happen every now and then, and that they tend to begin when everyone is hyperbullish, stocks are egregiously expensive, and both value investors and bears become permabulls. A crypto billionaire paying $6.2 million for a banana certainly shows you what type of moment we're in. There are no crypto billionaires of any kind at the beginning of bull markets... stocks aren't more expensive than ever... and folks won't pay more than a few bucks for an entire bunch of bananas. Once again, I'm warning you to be careful out there.
| Recommended Links: | |  Here's What You Missed Yesterday For the first time ever, Stansberry Research, Chaikin Analytics, and Altimetry have joined forces to announce a new lead analyst joining their ranks. You can't afford to miss this historic announcement, including this expert's newest market prediction and his No. 1 recommendation you MUST move your money into before the end of 2024. Click here to watch – before it goes offline. | |
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New 52-week highs (as of 12/5/24): Amazon (AMZN), Alpha Architect 1-3 Month Box Fund (BOXX), Cameco (CCJ), Clorox (CLX), CME Group (CME), Cisco Systems (CSCO), Expedia (EXPE), Cheniere Energy (LNG), London Stock Exchange Group (LNSTY), Torex Gold Resources (TORXF), T. Rowe Price (TROW), Twilio (TWLO), United States Commodity Index Fund (USCI), and Westlake Chemical Partners (WLKP). We received a few comments from people looking to watch yesterday's presentation from the "Mar-a-Lago man," a former adviser to President-elect Donald Trump, who saw him at his Florida estate as recently as a few months ago. So in today's mailbag, we're sharing how you can still catch this presentation… As we explained in yesterday's edition, this man revealed his identity and his story in a live event for our readers... He shared secrets he has learned from a network of nearly 30 billionaire and multimillionaire friends like Trump... explained how they helped him build a fortune – twice... and detailed how anyone can use the same insights to build lasting wealth. During the event, this man took viewers to the U.S. towns and projects where he got his start in business... and showed folks one of the most storied buildings in the South, where the kind of deals he has used to build his fortune have been going on for more than a century. He even shares the sector of the market he's most excited about today, and his top portfolio move to make before Trump takes over the White House next month. If you missed the debut of the event yesterday and still looking to watch, good news: You can view a replay of it, for free, here and watch at your convenience... and stay tuned for our Masters Series essays this weekend, where you'll hear more from the man himself. Good investing, Dan Ferris
Eagle Point, Oregon
December 6, 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 | 1,418.3% | Retirement Millionaire | Doc | MSFT
Microsoft | 02/10/12 | 1,415.5% | Stansberry's Investment Advisory | Porter | ADP
Automatic Data Processing | 10/09/08 | 1,084.7% | Extreme Value | Ferris | BRK.B
Berkshire Hathaway | 04/01/09 | 734.3% | Retirement Millionaire | Doc | WRB
W.R. Berkley | 03/15/12 | 566.1% | Stansberry's Investment Advisory | Porter | TT
Trane Technologies | 04/12/18 | 559.6% | Retirement Millionaire | Doc | AFG
American Financial | 10/11/12 | 504.8% | Stansberry's Investment Advisory | Porter | SFM
Sprouts Farmers Market | 04/08/21 | 483.9% | Extreme Value | Ferris | TTD
The Trade Desk | 10/17/19 | 470.5% | Stansberry Innovations Report | Engel | HSY
Hershey | 12/07/07 | 438.2% | 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 | 2,486.3% | Crypto Capital | Wade | wstETH
Wrapped Staked Ethereum | 12/07/18 | 2,291.8% | Crypto Capital | Wade | ONE/USD
Harmony | 12/16/19 | 1,371.2% | Crypto Capital | Wade | POL/USD
Polygon | 02/25/21 | 804.3% | Crypto Capital | Wade | VET/USD
VeChain | 05/17/19 | 578.9% | 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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