Thanks, Janet... Why it pays to think for yourself... A warning for this earnings season... Expect punishment rather than forgiveness... One analyst's 'No. 1 AI stock'...
 Four years later, the truth almost comes out...
Here's a face-palm moment: Today, in an interview on CNBC, Treasury Secretary Janet Yellen said the $1.9 trillion pandemic stimulus bill signed into law under President Joe Biden in 2021 may have contributed "a little bit" to inflation... You think? You may recall that the "American Rescue Plan" included direct payments for those making less than $75,000 per year, $350 billion to state and local governments, $300 billion to extend unemployment benefits, and an expanded child tax credit. It built on the trillions of stimulus dollars that Congress approved in the spring of 2020, in the final year of President Donald Trump's first term... and the ultra-easy monetary policy from the Federal Reserve at the same time... Inflation was already picking up somewhat when the stimulus under Biden passed in March 2021, but it really took off afterward to a 40-year high. The consumer price index ("CPI") peaked above 9% in June 2022. If that's "a little bit" of impact, we'd hate to see what it would take for her to say "a lot"... We don't doubt the extra stimulus in 2021 was inflation fuel... And this analysis isn't coming only in hindsight, either. As I (Corey McLaughlin) wrote in the March 10, 2021 Digest, the day the American Rescue Plan passed through the House of Representatives... After listening to the House of Representatives debate the idea of the now-passed $1.9 trillion COVID-19 relief/stimulus/whatever-you-want-to-call-it bill for about 30 minutes this afternoon, we were again reminded why so many Americans want change from our government... One side said the bill is "the right thing to do at the right time." And in general, that side believes more direct payments and more additional unemployment benefits to the American people will boom the economy... and single-handedly lift children from poverty. And while quoting former British Prime Minister Margaret Thatcher, the other side said, "The problem with socialism is you'll eventually run out of other people's money." That side lamented the excesses in the bill, the tax burden, and the one-party nature of the legislation. So... which one is it? In the short term, another round of stimulus is probably a boon for stocks and more fuel for the ongoing "Melt Up" in the months ahead... Yet it's also more kindling for inflation fears... And it's another sign of "kicking the debt can down the road" at grand scale, too. Nobody today seems to care about the long run... But we'll surely see unintended consequences of the government's actions at some point in the future. Even folks enjoying the government support today will be caught up in these consequences in the years ahead. We weren't saying people didn't need help to pay bills and support businesses at the time. But as we observed, there was waste in this bill and there would be consequences, like more inflation. It was overkill. The problem wasn't this latest spending alone, but the amount in addition to what had already been done and given the context. In just one example of the time, remember that this was back when Reddit users were taking down Wall Street hedge funds by wildly speculating with options on heavily shorted companies like GameStop (GME)... with at least some of them using the cash from stimulus checks to trade. Longtime readers might recall weeks of discussion in our mailbag on the subject, too. Ultimately, the entire country was indeed caught up in the consequences in the years that followed... By the end of 2021 and the start of 2022, as inflation kept on rising, it became clear that interest rates were likely to go much higher than "everyone" was expecting because of the pace of high(er) inflation, which would be a huge tailwind for stocks and bonds. It was. And the story is still going. This is a prime example of why we always preach thinking for yourself... or at least valuing the independent thoughts of our editors and analysts. In investing, at least, it gives you a chance to better position a portfolio than the "crowd." These guys might need four years to hear even part of the truth from people like Janet Yellen. So thanks, Janet, for allowing us to share that healthy reminder today on your way out. An early warning about this earnings season... For those tired of me going on about inflation, interest rates, and macroeconomic matters, here's some good news: Another quarterly corporate earnings season is about to get going. That means we'll put more of a focus on how companies are performing, what executives are saying about what's happening with the economy and what they expect ahead, and how the market is taking it all in... and adjusting expectations. Things get going in earnest on Friday when big banks report their results for the final quarter of 2024. Broadly, analysts and companies are expecting fourth-quarter earnings for the S&P 500 Index to grow by almost 12% year over year. That would be the highest year-over-year growth for a fourth quarter in three years. This is also prime time for companies to deliver 2025 guidance. Heading into this earnings season, 48% of S&P 500 companies have already forecast lower earnings than the previous consensus estimate. But that means more potential downside ahead for the other half of companies if they also get less optimistic – especially those that might be "priced for perfection" right now. As Stansberry Research senior analyst Mike Barrett wrote this morning to his Select Value Opportunities readers, "investors got a sneak peek at the upcoming earnings season" last month with a sell-off in one of Mike's top positions, rental-uniform provider Cintas (CTAS). Last month, the company beat quarterly expectations and actually raised its full-year guidance, but the next day shares still sold off by more than 10%. What gives? As Mike explained... The first catalyst was a slight reduction in the company's revenue-growth outlook. On September 25, the expectation for "organic" growth, which excludes acquisitions, ranged from 7% to 8.1%. But on December 19, this dipped to between 7% and 7.7%. Such small changes aren't usually a big deal, except when shares are priced to perfection... That means they're trading near or above their intrinsic value, like CTAS shares were before the company released second-quarter results. This was the second catalyst that spurred Cintas' surprising sell-off. During 2024, Mike's research and value ratings showed that of the 100 elite stocks he tracks, overvalued stocks outnumbered undervalued stocks – often by as much as a ratio of 3 to 1. The ratio has become more normalized within the past month, Mike said, but the "pendulum" from extreme optimism hasn't swung to extreme pessimism yet for the overvalued stocks. Mike's subscribers can read more details on that analysis here. But just know that Cintas' performance after its previous earnings report last month was a warning, Mike says. Other richly valued companies' shortcomings, however slight, might also tend to be punished first rather than forgiven. It's the 'golden opportunity for American AI'... At least that's how Microsoft (MSFT) executive Brad Smith described the ongoing artificial-intelligence frenzy in a post on the company's blog late last week. And he is betting big on the future impact of AI. From the blog post... In many ways, artificial intelligence is the electricity of our age, and the next four years can build a foundation for America's economic success for the next quarter century. To make sure Microsoft is at the forefront of the trend, Smith said Microsoft plans $80 billion in AI capital expenditures for the 2025 fiscal year (which ends June 30). Half of that investment is coming straight into the U.S. And that's just for AI-focused data centers. Other Magnificent Seven companies are making similar moves... Through August 2024, Amazon (AMZN), Alphabet (GOOGL), Meta Platforms (META), and Microsoft had spent a combined $125 billion on AI data centers. But the investment in this space isn't done yet. The money will keep flowing to AI and data centers. Even the government is now getting involved... President-elect Donald Trump just yesterday announced $20 billion in foreign investment to build data centers in the U.S., with more potentially on the way. It's not just the big tech companies that are set to benefit. As Smith explained... The massive datacenters that make all this possible are being built by construction firms, steel and other manufacturers, and innovative advances in electricity and liquid cooling. One analyst's 'No. 1 AI' pick... We've been telling you our team of editors and analysts will be looking into all things AI this year, and the truth is they have been for a while... Bullishness on data centers was part of a big AI discussion a group of Stansberry Research editors and colleagues had around this time last year... Some folks are getting together next week to discuss the megatrend of AI again... In the meantime, if you want to learn some more about how and why data centers figure into the AI story, Stansberry Innovations Report subscribers and Stansberry Alliance members can check out this special report published last week by analyst John Engel. In this report, John revealed his "No. 1 AI stock." It's a company that will thrive in this era of heavy data-center investment. You see, as John explained, data centers use up a lot of energy... Bill Vass, the former vice president of engineering at Amazon Web Services ("AWS") said in March 2024 that the world builds a new data center every three days. That's equivalent to 9.7 million new households' worth of annual energy consumption. But just like any electronics, the more energy they use, the more they heat up. You see, data-center chips are under so much stress that they generally operate at more than 176 degrees Fahrenheit. Running at temperatures higher than that can be a real problem. As John continues... Data centers, packed with servers and tech gear, generate an incredible amount of heat. Without proper cooling, this heat buildup can lead to equipment failures and costly downtime. So companies that can help maintain temperatures, and thereby keep the data centers running efficiently, are going to be incredibly important for the AI trend... And John has identified a company he says "will become a critical supplier in this field." Again, Innovations Report subscribers and Alliance members can read John's report with his favorite AI stock right here. | | | | In this week's Stansberry Investor Hour, Dan Ferris and I deliver our annual "Top 10 Potential Surprises" for the year ahead – our thoughts on a list of market developments that not many investors are expecting in 2025. This year, the topics include bitcoin's possible price action... what might come of Elon Musk and Vivek Ramaswamy's Department of Government Efficiency... potentially drastic moves in the S&P 500... and a lot more... 
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. | | | | |
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New 52-week highs (as of 1/7/25): Antero Resources (AR), EQT (EQT), Kellanova (K), Summit Materials (SUM), and United States Commodity Index Fund (USCI). One quick note, so you're not surprised when you don't see stocks trading tomorrow... The U.S. stock exchanges will be closed Thursday, January 9 in observance of a National Day of Mourning for former President Jimmy Carter, who passed away on December 29 at the age of 100. The bond market will be open but will close early. In today's mailbag, more thoughts on the AI boom, or bubble (which we wrote about on Monday)... in response to a reply in yesterday's mailbag... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com. "Corey, I enjoyed subscriber Earl's comment in [Tuesday's] piece. His advice is probably quite good. "We were using LISP and C++ in the 80's to go beyond the then current rage in AI, which was mostly just tables of data including symptoms and potential causes. Most solutions lacked recursiveness, the ability for the program itself to learn, and of course the processing power and data available today. The value of such (not really) AI systems dropped rapidly. "Enter the dot-com era, when everyone was attaching a dot-com moniker to their product, company, and/or process. Similar result but of course more catastrophic. "Today there is indeed a mad rush to attach AI to anything that could have value, if indeed it did truthfully exhibit real AI capabilities. Worse? Few have the ability, if they ever did, to migrate to the next generation of AI. Earl is probably correct with his implication that the AI bubble is once again ahead of itself." – Stansberry Alliance member Bill B. "Exactly! AI is misnamed. It is 'A' but not 'I'. It's great for sorting data, but it can't think." – Subscriber Tim P. All the best, Corey McLaughlin with Nick Koziol
Baltimore, Maryland
January 8, 2025
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 | 1,380.3% | Retirement Millionaire | Doc | MSFT
Microsoft | 02/10/12 | 1,349.7% | Stansberry's Investment Advisory | Porter | ADP
Automatic Data Processing | 10/09/08 | 1,045.9% | Extreme Value | Ferris | BRK.B
Berkshire Hathaway | 04/01/09 | 703.0% | Retirement Millionaire | Doc | WRB
W.R. Berkley | 03/15/12 | 514.1% | Stansberry's Investment Advisory | Porter | TT
Trane Technologies | 04/12/18 | 507.2% | Retirement Millionaire | Doc | AFG
American Financial | 10/11/12 | 472.7% | Stansberry's Investment Advisory | Porter | SFM
Sprouts Farmers Market | 04/08/21 | 434.8% | Extreme Value | Ferris | TTD
The Trade Desk | 10/17/19 | 433.4% | Stansberry Innovations Report | Engel | HSY
Hershey | 12/07/07 | 416.1% | 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 | 2,479.6% | Crypto Capital | Wade | wstETH
Wrapped Staked Ethereum | 12/07/18 | 2,291.8% | Crypto Capital | Wade | ONE/USD
Harmony | 12/16/19 | 1,300.8% | Crypto Capital | Wade | POL/USD
Polygon | 02/25/21 | 745.5% | Crypto Capital | Wade | HBAR/USD
Hedera | 09/19/23 | 472.8% | 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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