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Stansberry & Associates

Porter Stansberry & Associates:

controversy is our investment

Porter's pitch must be familiar to anyone who has the interest to have stayed with me till now. "Porter Stansberry founded Stansberry & Associates Investment Research in 1999 with the firm's flagship newsletter, Stansberry's Investment Advisory," the company's official website blurb begins - or at least it did when I recently looked. "He is also the host of Stansberry Radio, a weekly broadcast that has quickly become one of the most popular online financial radio shows."

He goes on:

Since he launched Stansberry's Investment Advisory, his string of accurate forecasts has made his advisory one of the most widely read in the world, and has helped his readers both avoid catastrophe and make incredible gains... no matter what's happening in the markets.

And:

Every month in his Investment Advisory newsletter, Stansberry & Associates Investment Research founder Stansberry alerts his subscribers to several types of investments: 1) “No Risk” stocks that represent ultra-safe, long-term investments 2) “Next Boom” recommendations that feature undervalued stocks poised for growth, and 3) “Forever” stocks that are cheap blue-chips which will provide excellent returns… forever.

But how good an advisor is the accomplished copywriter? Is his bite as sharp as his bark? This is the heart of the issue for thousands of small investors - and, from public comments, many of which are sent to me you just can't tell about this. You could troll around the web for hours or days, but, as everyone knows, the Internet is perilous. As I say, you just can't tell.

How, for example, do you evaluate specific claims? I'll pick a recent one, at random.

Nevertheless, my core trading idea – to be long gold and short US Treasury bonds – has continued to be profitable.

Well, it all depends on when you buy and sell. How often is he right on those?

Of course, Stansberry & Associates trumpets "some spectacular gains", but a stopped clock is accurate twice a day. Has anybody checked - or at least attempted to check - whether Porter's many predictions come true? We know that America isn't "ending", and Obama won't become king. Such forecasts are plainly marketing hyperbole. But what about the chopped liver? The day-in-day-out tips? Has anybody had a peek?

Uhm, yes.

Porter's 2008 research position

Peter Schiff is a well-known broker and market analyst. I should say, I've never met him, or had any contact. I'm not touting another pundit to compare with Mr Stansberry. But this Schiff man has done some valuable leg-work, and gone public with his conclusions. Specifically, he asked Stansberry & Associates Investment Research for its evidence of its positions on 2008.

In case you slept through it, this was the year of the big one - often timed to 15 September, when in the early hours Eastern Time, Lehmen Brothers filed for Chapter 11 bankruptcy protection, bringing down a long-tottering house of cards. Some saw it coming, but plainly most didn't. So what did Schiff find in the writings of Porter Stansberry?

Schiff got the materials downloaded and commendably went through them. He summarized his findings year-by-year. In 2006, there was nothing - not a single article - which he characterized as Porter going "negative". Schiff found the same story for 2007. Mr Stansberry was short nowhere in his portfolio. Schiff reported. Even in April 2008 - after Bear Stearns was revealed to be bankrupt - he says the master copywriter was 90% long.

"I have read now all of the newsletters that Porter wrote and sent out to his clients," Schiff says. "And I can say, in no uncertain terms, that there is nothing in there that indicates that Porter Stansberry saw this crisis looming, even when he was right on the cusp of it."

One of Mr Stansberry's favorite claims is that he predicted the collapse of Fannie and Freddie. But Schiff, who's chief exec of Euro Pacific Capital Inc, of Westport, Connecticut, finds little of substance in that. By his reckoning, the home lenders had already dropped 70% before the Baltimore dealer made that call. "It wasn't like he forecast it in advance," Schiff says. "Just a few months earlier he was recommending buying a house builder."

Schiff reckons Stansberry was 88% long in June 2008 and, even the month before Lehman Brothers sank below the waves, Schiff reckons that Stansberry was still blindside. "He recommends buying a financial in August 2008. Does that sound like a guy who thinks there's a financial crisis coming right around the corner?"

But I'm just a journalist. I'm not deciding who's right and who's wrong in modern history. And that makes me a different kind of writer to Porter Stansberry, whose mission is to sell more than his words. He aim's to draw you in to some particular course of action, like an Amsterdam model in her window. Then he hopes that, if you're satisfied, you might come back for more.

So, do they come back, or not? I don't know.

That, perhaps will be a mission for 2013: I'll check Porter Stansberry for myself. Tie a knot in your cellphone and see me again next year. In the meantime, check the Porter Poll first results. It's exclusive feedback from this website's visitors. Then cast a vote of your own.

Watch Peter Schiff's video on Porter Stansberry

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