- Review of: Stansberry Research
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Stansberry’s Investment Advisory monthly newsletter is chock full of great detailed investing analysis. Each newsletter presents a compelling point backed up by date and is an entertaining read. However, we question their marketing practices, and a run-in with the SEC has put a tarnish on the company's image.
For this review, I subscribed to the Stansberry & Associates Investment Research’s most popular and flagship newsletter — Stansberry’s Investment Advisory. Stansberry Research is the largest independent investment newsletter publication in the world with a reported 500,000 plus subscribers.
They are a part of the newsletter conglomerate Agora Inc, which owns most of the investment newsletters out there.
You may have heard of Porter Stansberry, the founder, and head writer of Stansberry Research. He created the controversial “End of America” promotion.
Recently Stansberry Research released a video with the former senator Ron Paul of the Coming Currency Crisis.
I’m not going to get into too much detail about the videos because you can watch them yourself from the links above.
What I will say is the promotions appear to be all hype, but they do have a lot of solid economics and facts within the video. The conclusions, of course, are Porter’s opinion though.
What You Get When You Sign Up
Once you sign up for the newsletter, you gain access to a member’s only section. This grants you access to all sorts of information, where you can see all of Porter’s monthly reports going back to the founding of his business in 1999.
This is a nice feature and lends transparency to previous calls on how great/poorly they did. I’ve seen many newsletters not do this, and only give you access to the most current newsletter.
You also have access Stansberry’s special reports. Reports such as:
- The Gold Investor’s Manual
- America’s Big Power Shift
- The World’s Most Valuable Asset in a Time of Crisis
I’ll say from the start, I have mixed feelings about this review. In all honesty, when I purchased the Stansberry’s Investment Advisory to review, I was expecting complete garbage analysis.
This is based upon the way the material like the “End of America” promotes it. Meaning I was expecting all sizzle, and no steak research. What I found was quite different, and very good.
Details of the Newsletter Analysis
For the monthly newsletter, Porter and his editors tell a great story, with detailed analysis of the investments in question. If you haven’t read any other financial newsletters, let me state many are about as exciting as reading a phone book.
Porter makes reading each newsletter interesting and has the financial, and economic data to back up his position. All of this makes a very compelling argument for the investments he recommends. The newsletter appears to only focus on large cap stocks.
Porter’s investment style is by means of value investing. If you are going to do your own active investing, I believe value investing is really the only method you have any chance of succeeding. So the recommendations he and his staff make are not by some technical indicators.
Is it Worth the Price?
The monthly report is very cheap, with the annual price of $199! I’ve read other research reports that weren’t nearly as detailed in their analysis and were for hundreds of dollars more per year. The monthly reports offer a summary of the macroeconomic conditions and one-to-three specific stock recommendations. Also included is any update to the current portfolio of stocks.
While Stansberry’s monthly newsletters are very good, the free special reports he offers are, in my opinion, complete garbage. They don’t contain enough actionable information to be usable for a novice, and an advanced investor would more than likely have enough information on such subjects, or you can find more information available on the web for free.
These are the positive aspects of Stansberry’s newsletter. For the negatives, keep on reading below.
The Problem With Predictions
One of the issues I have is the way the material is marketed. While the “End of America” appears to be very well researched and everything Stansberry presents is factual — more than likely the outcome is a black swan event. Or even worse, it’s an event that’s impossible to time.
This wherein lies the problem with any prediction — financial or otherwise. So more than likely this is a marketing technique to gain attention and attract new subscribers. After all if America weren’t ending, would you sign up?
That isn’t to say you shouldn’t prepare for black swan events, you most certainly should. Without question, I recommend some portion of your portfolio to outlier events. That’s not to say I believe the world is going to end tomorrow, and from what I can gather neither does Porter.
A Run-in With the SEC
The other issue was Stansberry’s run-in with the SEC in 2003. I’ve read both Porter’s stance (Editor’s Note: The old web site is no longer active. You can visit archive.org’s copy of the rebuttal from Stansberry) and the SEC ruling. Though the case is somewhat perplexing — and actually previously unheard of about a financial newsletter — the SEC stated he performed insider trading, yet never owned the stock, nor did he ever profit directly from the stock.
In addition, the stock did go up in price, and the information was correct, just not the timing of it. So directly Stansberry never profited from this information, and only reported this information to it’s subscribers. So take this issue however you see it. Either way, it should be known that the firm has had a run-in with the SEC, and if anything likes to push the legal edge in some of its research.
Though this is to say Stansberry’s, or any other investment newsletter for that matter, should be taken with a grain of salt — no one can predict the future, and unexpected forces can change the future. So while Porter might be eventually correct in his predictions, the timing can be hard to predict.
As the famous economist John Maynard Keynes once said: “Markets can remain irrational longer than you can remain solvent.”
Don’t Blindly Take Investment Advice
If you do subscribe to this newsletter, do what I do — for this newsletter or any other financial advice — caveat emptor. I only use an investment newsletter’s recommendations as a starting point for picking my investments. I don’t accept what’s recommended blindly, nor should you.
Specifically read up on the trends the author believes is happening, and at the same time find counterpoints to their argument. What you should understand with any investment advice is it’s an opinion and nothing more or less.
As an investment newsletter, Stansberry and his team’s goal are to sell you newsletter subscriptions. Since that is where their bread and butter lie, they are going to attempt to hook you in via some controversial marketing tactic. Although Stansberry’s research is independent from any traditional bank or investment house, and their analysts are not allowed to own any of the securities they recommend.
Investment performance of Porter’s newsletter has been hard to find. Unfortunately, Hulbert Financial Digest doesn’t track any of Stansberry’s newsletters. The newsletter is cheap enough to purchase annually and should be a no-brainer in terms of cost. If you do get only one investing nugget annually from the newsletter, it’s well worth the subscription.
A No Obligation Way to Get Stansberry’s Advice
If you are on the fence with Stansberry’s research, you do have a completely no obligation way to get some investment ideas — listen to Porter’s podcast. Stansberry Investment Hour podcast I enjoy listening to, and it’s one of the best out-of-the-box financial podcasts out there today.
The free subscription is a no holds barred on any subject — even some of the traditionally taboo subjects in investing and economics. I personally have no issue with it, but I can see how others could be offended by this podcast.
Though listening to the podcast I have a much different opinion of Porter than previously. I guess you can say I’m a fan — at least listening to his opinion. Acting on his opinion, through his podcast or his newsletter, is another story.
Readers: If you purchased any of Stansberry’s newsletters, what did you think of them?