He describes why in the essay below. We need to discuss true financial madness. It's something you don't see extremely often. It can cause the most incredible gains of your investing life. porter stansberry 2020. Or it can ruin all of your wealth if you're swept up in it. I've just seen two authentic financial investment manias.
I'm speaking about genuine "one method" tradessituations that can just cause disaster - porter stansberry america 2020. Yet for some factor, everyone pertains to see the trade as a sure way to generate income, not lose it. *** Let me introduce the idea with a real story. It's about John Templeton. You might have become aware of him before.
He developed a big mutual-fund company, Templeton Investments, which he sold in 1992 and made $440 million - porter stansberry review. His first "big trade" came right after Hitler invaded Poland in 1939. Stocks offered off, hard. There were 104 different stocks on the New York Stock Exchange that were trading for $1 or less (porter stansberry prediction 2018).
His rationale was that throughout the Depression there was a surplus of everything, and for that reason no profits. Throughout a war, which was undoubtedly coming, there would be a lack of everything and big profits - porter stansberry america 2020. Within three years he 'd earned a profit on all however four of the stocks. Over a years, the profits on this trade were more than 10,000%. porter stansberry sec.
Technology stocks had been on a tear higher because the mid-1990s, with business like Intel, Microsoft, Yahoo, and Qualcomm making huge returns for investors. Later on, though, the number and quality of the business reaching the public markets started to decrease substantially. porter stansberry america 2020 review. And by January of 2000, the scenario reached a peak.
Therefore, en masse, financiers started to believe a lie that could not perhaps be real. who is porter stansberry?. It was the greatest financial mania the world had actually seen considering that John Law's South Sea Bubble in the early 1700s. *** I more than happy to report that we did a great task cautioning individuals about what was really taking place As Steve Sjuggerud wrote in January 2000 (on the newsletter's front page): We are at the peak of probably the best financial mania that will ever be seen in our lifetimes and quite possibly the biggest ever seen (porter stansberry debt jubilee).
If you were in the marketplaces back then, you surely remember a few of the most famous disastersPets.com, Webvan, and WorldCom. These firms were backed by respected investor and had business plans that were at least possible. But this wasn't just a bubble. It was a mania - porter stansberry 2012. Even the most clearly useless ventures reached multibillion-dollar valuations.
It made generic software application for internet service providers, but never ever earned a profit. In 2002, Yahoo bought the company for $235 million. It overpaid - porter stansberry debt jubilee. In 2009, the Inktomi software was contributed to the general public under an open-source license. Everybody can utilize it today free of charge. Boo.com invested $188 million of financiers' cash and deserved more than $1 billion (on paper) (porter stansberry fraud).
Pixelon was a digital-streaming business that released operations with a $16 million party, including The Who and the Dixie Chicks. It stopped working in less than a year. It never ever produced any income. And Lycos was a fourth-rate online search engine. Spanish telecom operator Telefonica bought it for $12.5 billion. In 2004, it offered it for $95 million.
Its owners guarantee that "brand-new Lycos" is coming soon (porter stansberry debt jubilee). 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. Numerous stocks fell by 99%including U.S. Interactive, Pacific Gateway Exchange, Cornerstone Web Solutions, and Worldwide Exceed Group.
The majority of the disclosures stated clearly that these business had few, if any, customers. Most of them said they had no written agreements or contracts. The threat disclosures explained, in plain English, that these weren't genuine businesses and they had near to no chance of staying in business. And it didn't matter.
It was a real mania (porter stansberry american 2020). *** Templeton enjoyed the marketplace action silently from his retirement community in the Bahamas. Lastly, on January 1, he knew that the mania could not go on a lot longer. The frauds were surpassing the legitimate IPOs by 10-to-1. He called his broker in New York and gave extremely easy directions: Short as many shares as you can get of every innovation IPO that notes.
(The lock-up prevents insiders from offering shares until some period after the IPO, normally 90 days.) In the very first half of 2000, Templeton wound up shorting 84 stocks, putting approximately $2.2 million into each of them. porter stansberry american 2020. He made more than $100 million on the trade, in about a year (porter stansberry ron paul scam).
Of the trade, Templeton told Forbes magazine: This is the only time in my 88 years when I saw technology stocks go to 100 times incomes; or, when there were no profits, 20 times sales - porter stansberry email address. It was crazy, and I benefited from the short-term madness (porter stansberry review). I never thought I 'd see a mania like that occur once again in my life.
This was a scenario where financiers were completely disregarding the obvious reality that the overwhelming bulk of these companies would fail and after that bidding them as much as totally insane costs. This wasn't overexuberance. It was insanity. And over the next 24 months, financiers saw $5 trillion of market worth vanish (porter stansberry obama 3rd term). porter stansberry.
It's a mania that has been developed (and is being sustained) by reserve banks and printing presses. Today, worldwide, something around $15 trillion in fixed earnings is trading at a price that guarantees investors will lose money if they buy the bond and hold it till maturity. I want to make sure you understand what's taking place since the bond market and bonds are a mystery to a great deal of specific financiers.
How can that occur? It takes place when financiers bid the present rate of a bond up until now above par that the remaining coupons to be paid will not cover the loss when the bond matures. So for example, you might see a bond trading at $130, when it just has $29 worth of interest left to be paid before it develops 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 nimble sufficient to sell before that happens. And all financiers believe that the governments will continue to buy these bonds or maybe even stocks and do whatever it takes to keep the bubble growing. This circumstance is the definition of a financial investment mania.
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