The Undeniable Key to a Great Investment

U.S. stocks are near all-time highs... Buffett's secret revealed... A conversation with our founder Porter Stansberry... This will keep happening in America... The whole game and the hardest thing in investing... [Stansberry Research Logo] Delivering World-Class Financial Research Since 1999 [Stansberry Digest] U.S. stocks are near all-time highs... Buffett's secret revealed... A conversation with our founder Porter Stansberry... This will keep happening in America... The whole game and the hardest thing in investing... --------------------------------------------------------------- Stocks are in all-time-high territory again... Yesterday, the benchmark S&P 500 Index closed at a new all-time high, following the tech-heavy Nasdaq Composite Index's lead a day earlier. The good ol' Dow Jones Industrial Average is trading near a new high too, and briefly topped 40,000 for the first time during intraday trading today, though it closed slightly lower. The laggard major U.S. index (at least on the surface) is the Russell 2000 Index, which was down about 0.7% today and last made a fresh high in November 2021. But the small-cap index is actually up nearly 30% since its lows last October. Overall, while it was a slightly down day for stocks, the market has a lot of bullish flavor – with the indexes recouping losses from April. Many investors are excited at the prospect of an "easier" financial environment because the Federal Reserve keeps saying it will happen... despite any evidence of still high(er) inflation sticking around. So it goes. In other news, a secret revealed... I (Corey McLaughlin) wrote about our takeaways from the annual Berkshire Hathaway meeting last week. If you missed it, you can find our May 6 issue [here]( where we shared highlights of the event, including remembrances of the late Charlie Munger and details of the big risk Berkshire chairman and CEO Warren Buffett sees for the economy today – debt. But one of the things Buffett didn't say during his multiple hours on stage in Omaha, Nebraska was the identity of a so-called "secret" investment that he's rumored to have been making lately. Berkshire even requested confidential treatment from the U.S. Securities and Exchange Commission ("SEC") as it built a position in this secret during the third and fourth quarters of last year. Late yesterday, the secret was revealed... In a quarterly 13F filing with the SEC, Berkshire said it ended the first quarter with nearly 26 million shares (valued at nearly $7 billion) of property and casualty (P&C) insurer Chubb (CB). It's not a surprise that Berkshire is adding more exposure to insurance. Insurance has been the heart of Berkshire's growth for decades. Buffett loves great insurance businesses – and our Stansberry Research team does too. As we wrote in our February 27 edition, titled "[The Beauty (and Money) in Selling Insurance](... Berkshire's insurance business set records in sales, float (which we'll get into in more detail momentarily), and underwriting profits in 2023... And, as Buffett noted, this business's volume has increased 5,000-fold, from $17 million to $83 billion, over the past 57 years. I get that insurance sounds boring... and you may hate the concept of paying ever-rising insurance premiums for your health care, home, or vehicle. The fact is, though, that's why (the right) insurance businesses can be terrific investments. As longtime Stansberry Research subscribers know, our team has long referred to the P&C insurance sector in particular as "the best business in the world." In P&C insurance, the insured event may happen today... or tomorrow... or in 20 years... or may never happen... So, for companies that sell this insurance, potential profits (and losses – which is why underwriting ability is essential) can be higher than those of any other form of insurance. Life insurance, for example, is based on the certainty of death, to put it in plain terms. On the other hand, while waiting for you to possibly crash your car or burn down your house, your P&C insurance company can invest the money you've paid it in your insurance premiums. In short, the best P&C businesses can be great investments, and Berkshire Hathaway, which is sitting on billions in cash, is putting some of its money to work in a leading insurance business. Identifying the best P&C businesses... While it's not an open recommendation in our publications today, Chubb holds the top spot in our Stansberry's Investment Advisory team's "Insurance Value Monitor," a proprietary list of the top P&C insurance companies. Existing subscribers to our Stansberry Data monitors can find the current ranking list and how we use it [here](. You can think of this monitor as a shopping list to gauge the top investment opportunities in the insurance sector. Our team likes to pounce on buy recommendations when shares of these companies fall to a large enough "discount" to a value measurement our team uses. As we wrote in February, for example... Fortunately, just this month, our team recommended another P&C insurance business. Its stock has gotten cheaper and cheaper in recent years as its insurance operations have gotten better and better... More recently, the market overreacted to this company's latest quarterly earnings report, according to our team. They said this move presents a terrific buying opportunity... in Buffett's favorite type of business. This sector has proved to be inflation-proof in the past several years... and has rewarded shareholders for decades, as our team expects it to for years to come. Five of the top eight P&C companies on this list are in [the Stansberry's Investment Advisory model portfolio](. As the Insurance Value Monitor shows, Chubb's premium is a little too rich today for the team to recommend it – and it might get richer now that we know about Berkshire Hathaway's holding (maybe that's why Buffett wanted to keep it secret). Today, Chubb shares were more than 4% higher on the news of Berkshire's investment. But kudos to our team for identifying great businesses like these. Speaking of which... A conversation with our founder Porter Stansberry... Last month, we shared [a guest essay]( from Stansberry Asset Management ("SAM") Chief Investment Officer Austin Root, who was about to sit down with our founder, Porter Stansberry, for a free live investment briefing in Baltimore. Longtime readers don't need an introduction to Porter and are likely familiar with Austin from his time as Stansberry Research's director of research. In 2021, Austin joined SAM, an investment firm that is completely separate from our publishing business but uses our research, plus other sources, to help manage individual client portfolios. As Austin explained in his essay, he was planning to discuss today's market and other topics with Porter during an unrehearsed "fireside chat," including, as Austin said, "drilling down on exactly how best to invest in this market – whether your goals are growing your wealth or protecting what you have." If you missed the livestream or weren't able to make it in person, you can now [get access to a replay of Porter and Austin's conversation here](. It was a great discussion, so we want to share a few highlights... starting with Porter pointing out how great ARK Invest founder Cathie Wood has been at destroying clients' wealth – $14 billion worth – in the past decade. What you can bank on... Early in the conversation, Austin laid out the backdrop of today's "macro" environment – from inflation to possible Federal Reserve policy, equity valuations, geopolitical concerns, and possible "Black Swan"-type events. There's a lot of uncertainty to consider, yet Porter sliced through it all with his top idea for protecting and growing your wealth over the long term today... and one surefire thing he's willing to bet on... The very best ways to protect your wealth and yourself is still through common stocks... and I will tell you that in this kind of environment, you can always count on the Fed to bail everybody out. They are not going to allow a deflationary collapse of our banks... A few recent examples have been the regional bank rescue last March... and another Fed-engineered "alphabet soup policy" that allowed banks to exchange bond holdings that were down double digits from their pre-2022 highs at a ratio that valued them at par. As Porter said... They bailed the banks out yet again. That is not going to stop in America. Porter says the next outcome is that we'll see "a slow-motion inflationary default," with higher prices eroding the value of dollars over time. That's why Porter suggests that the best way to protect yourself is to own stocks – and assets like gold and bitcoin, too. But as longtime readers know, you don't want to go buying just any old stock at any time. What makes a great investment... Porter and Austin discussed how to identify stocks that can best grow and protect your wealth over the long term (and how you can be more like Charlie Munger than Elon Musk, as Austin [wrote in the Digest last month](. For example, Porter shared the traits he looks for in the stocks he buys and recommends... what really makes for a high-quality business (like capital efficiency, attractive profit margins, return on investment, and a reasonable valuation)... and why owning these companies over the long run can be so powerful. As Porter said... All this macro stuff is scary, but if you've bought a great business at a reasonable price, just leave it alone. It'll be OK. Porter and Austin then compared the income statements of three different companies from the same industry that have all these qualities... but whose results and stock performance varied from 2001 to 2023 based on how the company operated and its leadership's goals. (Note: Austin said none of these companies are in any of SAM's client portfolios. He chose them for informational purposes only.) Without giving too much away, one of these companies should be familiar to longtime readers: auto-parts retailer AutoZone (AZO). The company is well known for its obsessive focus on using cash (not debt) to buy back shares, which has helped it return roughly 19% per year on average since 2001, outperforming the S&P 500. As Austin showed, AutoZone bought back roughly 8% of its shares per year over 22 years, going from 109 million shares outstanding to 18 million as of 2023. That is one effective way to put cash to work and deliver shareholder returns consistently. And it makes AutoZone, as our Stansberry's Investment Advisory team once called it, a "government-proof, inflation-proof, crisis-proof, bear-market-proof 'super stock.'" But another company in the same industry did even better over the same time period. The winner returned almost 21% per year. It bought back shares over the same time period, but not nearly as many as AutoZone. Its strength was better sales and net income growth. Its result came from a strategy of making key acquisitions during times of distress and correctly acting on shifting trends about how people maintain their cars (or don't). As Austin explained... They saw where we're all going with our cars. We are no longer repairing our own cars. They [moved] away from do-it-yourself to do-it-for-me. Austin said that more than half of this business's revenue today comes from selling parts to auto-body shops rather than directly to consumers. The point is that capital-allocation decisions (like buying back shares) matter, but leadership also matters when separating out the very best businesses from good, average, or worse. The whole game... Finally, the conversation turned to a part of the investing "game" that confuses a lot of people but is critically important to building a successful long-term investing portfolio. I'm talking about "allocation," or how much money you put into a particular investment at a given time. Subscribers to our Portfolio Solutions services know all about this. As Porter said... We're always looking for great businesses, but the key to a great investment is pairing a great business with an attractive price... What you've got to wait for is when those premium businesses are trading at the same price as the industry. For example, in the midst of the March 2020 pandemic panic, Porter joined Austin for an urgent broadcast for Stansberry Research readers and pounded the table on a "once in a generation" opportunity to buy stocks. As Porter said [back then](... This is a rare opportunity like the Great Depression, like 2008 or 2009 [in the financial crisis]. This is the opportunity that you've been waiting for. I never thought ever in my career that I would get a chance to buy these stocks at the kind of prices we saw in '08 and '09. I thought that was gone forever. At the time, the three major U.S. stock indexes had fallen about 30% in a month, but Porter said he "wouldn't be surprised to see stocks at new highs by the end of this year." It was largely because of the government's response to the pandemic – including the flood of liquidity headed into the market. By June, a massive bull run was underway... and it lasted throughout 2021. The market was hitting new highs, and then some. We even saw things like "meme stock" mania before the Federal Reserve finally determined high inflation was a problem and signaled that higher interest rates were ahead, along with "tighter" financial conditions... which was the catalyst for the 2022 bear market. Now, the lesson here is that the March 2020 panic presented a great opportunity to buy high-quality businesses that you could hold "forever." It's why we launched our Forever Portfolio, a fully allocated collection of world-class businesses, many of which had fallen to attractive prices (which Porter considers around a price-to-earnings ratio of 15). But in this new video with Austin, Porter acknowledges that knowing when to spot these kinds of buying opportunities and act on them – or when to sell stocks – isn't necessarily easy, especially when emotions are running high. As Porter says... Those are the hardest things... The only real way to do it is to have an understanding of the very best liquidity barometer. What are financial conditions today? If financial conditions today are easing and liquidity is plentiful, then stocks are going to go up. If financial conditions are tightening or are very tight, stocks are going to go down. If you can get good at it, what you'll learn to do is to have more cash as liquidity rises, so that when liquidity collapses, you can buy stocks... We suggest checking out Porter and Austin's whole conversation. You'll hear more valuable insight from Porter, get all the details on the three-stock comparison we mentioned, and have the chance to learn more about what Austin and the team at SAM are up to. You can get access to the replay [here](. --------------------------------------------------------------- Recommended Links: ['A New Wave of Crashes Will Rock the U.S. Stock Market']( We're about to witness a historic stock market shake-up that could soon create devastating losses for some investors... while potentially sending a specific group of stocks up 100% or more in six weeks or less. Until midnight Eastern time tonight, [click here to learn more (includes two free tickers)](. --------------------------------------------------------------- [The Sneaky (Yet 100% Legal) Way for Obama to Return to Power]( The ONLY way Democrats can keep the White House is to bring back Barack Obama. And there's a sneaky (yet 100% legal) way to achieve this. In fact, this disaster scenario is already underway. See what they're up to and how you can get ready today. [Here's the full video exposé](. --------------------------------------------------------------- New 52-week highs (as of 5/15/24): ABB (ABBNY), Agnico Eagle Mines (AEM), Alamos Gold (AGI), Applied Materials (AMAT), Broadcom (AVGO), Brown & Brown (BRO), Constellation Energy (CEG), Commvault Systems (CVLT), Dell Technologies (DELL), Dimensional International Small Cap Value Fund (DISV), iShares MSCI Emerging ex China Fund (EMXC), iShares MSCI Spain Fund (EWP), Cambria Emerging Shareholder Yield Fund (EYLD), Freeport-McMoRan (FCX), SPDR Euro STOXX 50 Fund (FEZ), VanEck Gold Miners Fund (GDX), Alphabet (GOOGL), iShares Core S&P Small-Cap Fund (IJR), JPMorgan Chase (JPM), Kinross Gold (KGC), Kinder Morgan (KMI), Motorola Solutions (MSI), Mettler-Toledo (MTD), PulteGroup (PHM), Sprott Physical Silver Trust (PSLV), ProShares Ultra QQQ (QLD), Ryder System (R), RadNet (RDNT), Royal Gold (RGLD), Rithm Capital (RITM), Sprouts Farmers Market (SFM), Sprott (SII), SilverCrest Metals (SILV), iShares Silver Trust (SLV), ProShares Ultra S&P 500 (SSO), Teradyne (TER), Toast (TOST), Texas Instruments (TXN), Tyler Technologies (TYL), Veralto (VLTO), Vanguard S&P 500 Fund (VOO), Vertiv (VRT), Vistra (VST), Vanguard Short-Term Inflation-Protected Securities Index Fund (VTIP), Advanced Drainage Systems (WMS), Wheaton Precious Metals (WPM), Utilities Select Sector SPDR Fund (XLU), and Zebra Technologies (ZBRA). In today's mailbag, your feedback on our recent [Stansberry Investor Hour interview with macroeconomic analyst Lyn Alden](... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com. "Great interview and discussion. I have followed Lyn online [for] a few years now and she is always spot on. Highly intelligent and articulate. Her writing is excellent as well. Thanks for sharing this interview. "Lyn excels at sharing her ideas and 'understanding' in a clear and concise way. Very informative while revealing connections not always thought of as relevant per other sources of investment information/advice. Again, thanks for sharing this." – Subscriber David G. All the best, Corey McLaughlin Baltimore, Maryland May 16, 2024 --------------------------------------------------------------- Disclosure: Stansberry Asset Management ("SAM") is a Registered Investment Adviser with the United States Securities and Exchange Commission. File number: 801-107061. Such registration does not imply any level of skill or training. For more information on SAM, please visit [here](. Stansberry & Associates Investment Research, LLC ("Stansberry Research") is not a current client or investor of SAM. SAM provides cash compensation to Stansberry Research for Stansberry Research's advisory client solicitation services for the benefit of SAM. Material conflicts of interest may exist due to Stansberry Research's economic interest in soliciting clients for SAM. Certain Stansberry Research personnel may also have limited rights and interests relating to one or more parent entities of SAM. For important information about Stansberry Research's relationship with SAM, [click here](. --------------------------------------------------------------- Stansberry Research Top 10 Open Recommendations Top 10 highest-returning open stock positions across all Stansberry Research portfolios Investment Buy Date Return Publication Analyst MSFT Microsoft 11/11/10 1,378.7% Retirement Millionaire Doc MSFT Microsoft 02/10/12 1,346.9% Stansberry's Investment Advisory Porter ADP Automatic Data Processing 10/09/08 894.8% Extreme Value Ferris WRB W.R. Berkley 03/16/12 714.1% Stansberry's Investment Advisory Porter BRK.B Berkshire Hathaway 04/01/09 631.8% Retirement Millionaire Doc HSY Hershey 12/07/07 504.3% Stansberry's Investment Advisory Porter AFG American Financial 10/12/12 455.6% Stansberry's Investment Advisory Porter TT Trane Technologies 04/12/18 430.5% Retirement Millionaire Doc NVO Novo Nordisk 12/05/19 386.4% Stansberry's Investment Advisory Gula TTD The Trade Desk 10/17/19 356.1% Stansberry Innovations Report Engel 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 5 Stansberry's Investment Advisory Porter/Gula 3 Retirement Millionaire Doc 1 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 wstETH Wrapped Staked Ethereum 12/07/18 2,291.8% Crypto Capital Wade BTC/USD Bitcoin 11/27/18 1,662.0% Crypto Capital Wade ONE/USD Harmony 12/16/19 1,227.7% Crypto Capital Wade MATIC/USD Polygon 02/25/21 804.9% Crypto Capital Wade AGI/USD Delysium AI 01/16/24 439.9% 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 You have received this e-mail as part of your subscription to Stansberry Digest. If you no longer want to receive e-mails from Stansberry Digest [click here](. Published by Stansberry Research. You’re receiving this e-mail at {EMAIL}. Stansberry Research welcomes comments or suggestions at feedback@stansberryresearch.com. This address is for feedback only. 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