Insight Investor
Porter Stansberry: predictions for the postmodern investor
Award-winning investigative reporter Brian Deer contemplates Stansberry & Associates and its distinctive investor counselling – that must make sense to somebody
“What are we to make of Porter Stansberry?” Judging by my mailbox, that’s a question that thousands, if not hundreds of thousands, of small investors wonder each week. It happens when they receive the latest of the blasts, storms and hurricanes to be emitted from the servers of Stansberry’s Baltimore, Maryland-based stock tip vehicle Stansberry & Associates Research Services.
It’s a question that I’ve been asking for more than a decade – so I my learning curve may be ahead of yours. I first heard the name of Porter Stansberry when I was carrying out an investigation for The Sunday Times of London into what was described as “the world’s first Aids vaccine”. If you really want to know, it was a product called “AidsVax” from a tiny South San Francisco start-up company called VaxGen Inc, which had been spun off by the DNA juggernaut Genentech (a child of Roche) and a group of former public health service employees.
No, you didn’t miss something. AidsVax didn’t work. This was obvious long before it was even tested. But, as I bashed out a huge report for The Sunday Times magazine, suddenly I heard about this guy Porter Stansberry, who had a somewhat different take to my own. Contrary to my scientific sources (who said things like the product “forgets a century of science”) Mr Stansberry predicted that VaxGen’s stock price would “soar”, and even as it crashed – losing more than $30 from its post-IPO high to rest at little more than three bucks – he declared to his followers (which in those days were not so numerous) that he had “stunningly good news to report”. He even proclaimed that this pharmaceutical you’ve never heard of should put an end to the worldwide Aids pandemic.
That was a long time ago, but since our paths crossed I’ve kept an eye on Mr Stansberry’s various forward-looking predictions and his rearview-mirror celebrations. So, I’ve seen what he’s said about, say, the future of gold prices, and of the difficulties of Freddie Mac and Fannie Mae. I’ve dipped into his thoughts on the prospects for US shale oil deposits, and on how to make money in a bear market. But, above all else, I’ve noted his boutique macro-predictions for (a) what he said will be the imminent “end of America” and, (b) Barack Obama’s “third term”.
To me, these suggest that Stansberry & Associates has a peculiarly postmodern take.
Stansberry’s end of America
So, first let’s skip back to the fall of 2010, when Stansberry & Associates banged out a video, backed with one of its traditional email blitzkriegs. The theme was the literal destruction of the United States. Its title was: “The End of America”. Here’s how his investment advice company captioned its opening, with a canny explicit content tease:
“The following presentation is controversial and may be offensive to some audiences. Viewer discretion is advised.”
What followed was frankly bizarre, and set my in-box groaning with visitors complaining to me.
“Like so many others, I decided to subscribe to Porter’s newsletter after watching his ‘End of America video’,” wrote, for example, Jim Tenney. “I knew it was a sales pitch when I got to the end, but my curiosity got the better of me. I had to know what all of his ‘secret’ solutions to the forthcoming dooms day scenario were.”
What grabbed Jim’s interest was Porter Stansberry’s argument that the nation he loved was finished. Conflating issues embracing the government’s quantitative easing strategy (printing money), soaring commodity prices, skyrocketing interest rates, home mortgage repayments of what he said could reach up to 15%, and stock prices which he said would tank 40% in just weeks, this investment advisor who counsels hundreds of thousands predicted that the Game Was Up.