He describes why in the essay listed below. We need to discuss true financial madness. It's something you don't see very often. It can result in the most incredible gains of your investing life. porter stansberry american 2020. Or it can destroy all of your wealth if you're swept up in it. I have actually just seen 2 bona fide financial investment manias.
I'm speaking about genuine "one method" tradessituations that can only lead to disaster - porter stansberry american 2020. Yet for some reason, everyone comes to see the trade as a sure method to earn money, not lose it. *** Let me introduce the concept with a real story. It's about John Templeton. You may have become aware of him previously.
He developed a huge mutual-fund company, Templeton Investments, which he sold in 1992 and made $440 million - porter stansberry. His very first "huge trade" came right after Hitler invaded Poland in 1939. Stocks sold off, hard. There were 104 different stocks on the New York Stock Exchange that were trading for $1 or less (the american jubilee book porter stansberry).
His rationale was that throughout the Depression there was a surplus of everything, and therefore no earnings. Throughout a war, which was certainly coming, there would be a scarcity of everything and huge revenues - porter stansberry research. Within 3 years he 'd earned a profit on all however 4 of the stocks. Over a decade, the profits on this trade were more than 10,000%. porter stansberry book.
Technology stocks had been on a tear higher given that the mid-1990s, with business like Intel, Microsoft, Yahoo, and Qualcomm making big returns for financiers. Later on, though, the number and quality of the companies reaching the public markets started to decrease substantially. snopes porter stansberry. And by January of 2000, the situation reached a peak.
And so, en masse, investors started to believe a lie that could not perhaps be true. porter stansberry end of america. It was the best monetary mania the world had seen given that John Law's South Sea Bubble in the early 1700s. *** I enjoy to report that we did a good task cautioning individuals about what was actually taking place As Steve Sjuggerud composed in January 2000 (on the newsletter's front page): We are at the peak of a lot of likely the greatest financial mania that will ever be seen in our lifetimes and quite possibly the best ever experienced (porter stansberry).
If you remained in the marketplaces back then, you definitely remember a few of the most popular disastersPets.com, Webvan, and WorldCom. These firms were backed by reputable investor and had service strategies that were at least possible. However this wasn't just a bubble. It was a mania - porter stansberry gold report. Even the most undoubtedly worthless endeavors reached multibillion-dollar evaluations.
It made generic software for internet service suppliers, however never made an earnings. In 2002, Yahoo acquired the company for $235 million. It paid too much - porter stansberry review. In 2009, the Inktomi software was contributed to the general public under an open-source license. Everyone can use it today totally free. Boo.com spent $188 million of investors' money and deserved more than $1 billion (on paper) (porter stansberry predictions).
Pixelon was a digital-streaming business that released operations with a $16 million celebration, including The Who and the Dixie Chicks. It failed in less than a year. It never produced any income. And Lycos was a fourth-rate online search engine. Spanish telecom operator Telefonica purchased it for $12.5 billion. In 2004, it sold it for $95 million.
Its owners promise that "brand-new Lycos" is coming soon (porter stansberry research). It's traded in India, if you're interested. There were hundreds of IPOs like these. An index of dot-com companies tracked by TheStreet.com fell 75% in 2000. Many stocks fell by 99%including U.S. Interactive, Pacific Entrance Exchange, Foundation Web Solutions, and Worldwide Exceed Group.
Most of the disclosures stated plainly that these companies had couple of, if any, clients. The majority of them said they had no written contracts or agreements. The threat disclosures explained, in plain English, that these weren't genuine services and they had near no possibility of remaining in company. And it didn't matter.
It was a real mania (porter stansberry research). *** Templeton watched the market action silently from his retirement community in the Bahamas. Finally, on January 1, he understood that the mania could not go on a lot longer. The frauds were outnumbering the genuine IPOs by 10-to-1. He called his broker in New York and gave very easy guidelines: Brief as numerous shares as you can get of every technology IPO that lists.
(The lock-up avoids experts from selling shares up until some period after the IPO, usually 90 days.) In the very first half of 2000, Templeton ended up shorting 84 stocks, putting an average of $2.2 million into each of them. porter stansberry america 2020. He made more than $100 million on the trade, in about a year (porter stansberry predictions 2014).
Of the trade, Templeton told Forbes publication: This is the only time in my 88 years when I saw technology stocks go to 100 times incomes; or, when there were no incomes, 20 times sales - porter stansberry 2020 blueprint. It was insane, and I benefited from the short-term insanity (porter stansberry american 2020). I never believed I 'd see a mania like that take place once again in my life.
This was a scenario where financiers were totally neglecting the apparent reality that the frustrating majority of these companies would stop working and after that bidding them up to entirely insane rates. This wasn't overexuberance. It was madness. And over the next 24 months, financiers saw $5 trillion of market value vanish (porter stansberry wiki). porter stansberry review.
It's a mania that has been created (and is being sustained) by central banks and printing presses. Today, worldwide, something around $15 trillion in fixed income is trading at a rate that guarantees investors will lose money if they buy the bond and hold it till maturity. I wish to make certain you understand what's occurring since the bond market and bonds are a mystery to a lot of specific investors.
How can that happen? It occurs when financiers bid the current price of a bond up until now above par that the staying discount coupons to be paid will not cover the loss when the bond grows. So for example, you may see a bond trading at $130, when it just has $29 worth of interest left to be paid before it matures at $100.
Best Value Stocks | ||
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Price ($) | Market Cap ($B) | |
NRG Energy Inc. (NRG) | 33.74 | 8.2 |
Vornado Realty Trust (VNO) | 36.21 | 6.9 |
MGM Resorts International (MGM) | 15.41 | 7.6 |
Type | Publishing company |
---|---|
Founder | Bill Bonner |
Headquarters | Baltimore, MD |
Parent | The Agora |
Website | agorafinancial.com/ |
Obviously, all financiers believe that they will be active adequate to sell prior to that takes place. And all investors think that the federal governments will continue to buy these bonds or perhaps even stocks and do whatever it takes to keep the bubble growing. This circumstance is the meaning of a financial investment mania.
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