He explains why in the essay below. We need to talk about real financial insanity. It's something you don't see extremely typically. It can lead to the most unbelievable gains of your investing life. porter stansberry video youtube. Or it can damage all of your wealth if you're swept up in it. I've only seen 2 authentic financial investment manias.
I'm discussing genuine "one method" tradessituations that can only cause catastrophe - porter stansberry research. Yet for some reason, everyone comes to see the trade as a sure way to generate income, not lose it. *** Let me introduce the idea with a real story. It has to do with John Templeton. You may have become aware of him previously.
He developed a big mutual-fund company, Templeton Investments, which he sold in 1992 and made $440 million - porter stansberry review. His very first "huge trade" came right after Hitler invaded Poland in 1939. Stocks sold, hard. There were 104 different stocks on the New York Stock Exchange that were trading for $1 or less (porter stansberry 2020 blueprint).
His rationale was that during the Anxiety there was a surplus of whatever, and therefore no revenues. Throughout a war, which was undoubtedly coming, there would be a shortage of everything and big profits - porter stansberry research. Within 3 years he 'd earned a profit on all but 4 of the stocks. Over a years, the revenues on this trade were more than 10,000%. porter stansberry jubilee book.
Technology stocks had actually been on a tear higher because the mid-1990s, with companies like Intel, Microsoft, Yahoo, and Qualcomm making big returns for financiers. Later, though, the number and quality of the business reaching the general public markets began to decrease significantly. porter stansberry prediction 2018. And by January of 2000, the scenario reached a peak.
And so, en masse, financiers began to believe a lie that couldn't potentially hold true. end of america by porter stansberry. It was the biggest financial mania the world had seen since John Law's South Sea Bubble in the early 1700s. *** I more than happy to report that we did a great task warning people about what was really occurring As Steve Sjuggerud wrote in January 2000 (on the newsletter's front page): We are at the peak of probably the biggest financial mania that will ever be seen in our life times and rather possibly the best ever experienced (porter stansberry review).
If you were in the markets back then, you certainly keep in mind a few of the most popular disastersPets.com, Webvan, and WorldCom. These companies were backed by highly regarded investor and had company strategies that were at least possible. But this wasn't simply a bubble. It was a mania - porter stansberry books. Even the most obviously useless endeavors reached multibillion-dollar appraisals.
It made generic software for web service providers, however never earned a profit. In 2002, Yahoo purchased the business for $235 million. It overpaid - porter stansberry debt jubilee. In 2009, the Inktomi software was contributed to the public under an open-source license. Everybody can use it today free of charge. Boo.com spent $188 countless financiers' money and was worth more than $1 billion (on paper) (porter stansberry predictions).
Pixelon was a digital-streaming company that introduced operations with a $16 million party, featuring The Who and the Dixie Chicks. It failed in less than a year. It never produced any earnings. 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 guarantee that "new Lycos" is coming quickly (porter stansberry review). It's sold India, if you're interested. There were numerous IPOs like these. An index of dot-com business tracked by TheStreet.com fell 75% in 2000. Lots of stocks fell by 99%including U.S. Interactive, Pacific Entrance Exchange, Foundation Internet Solutions, and Worldwide Exceed Group.
Most of the disclosures stated clearly that these companies had couple of, if any, customers. Many of them said they had no written arrangements or contracts. The threat disclosures discussed, in plain English, that these weren't genuine businesses and they had near to zero possibility of remaining in service. And it didn't matter.
It was a real mania (porter stansberry american 2020). *** Templeton viewed the market action quietly from his retirement community in the Bahamas. Lastly, on January 1, he understood that the mania couldn't go on much longer. The frauds were outnumbering the genuine IPOs by 10-to-1. He called his broker in New York and gave extremely basic directions: Brief as many shares as you can get of every innovation IPO that lists.
(The lock-up avoids experts from selling shares until some period after the IPO, typically 90 days.) In the first half of 2000, Templeton wound 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 wiki).
Of the trade, Templeton informed Forbes magazine: This is the only time in my 88 years when I saw technology stocks go to 100 times earnings; or, when there were no profits, 20 times sales - hr 2847 porter stansberry. It was crazy, and I benefited from the momentary madness (porter stansberry american 2020). I never believed I 'd see a mania like that happen once again in my life.
This was a situation where financiers were entirely disregarding the apparent truth that the overwhelming bulk of these companies would fail and then bidding them approximately completely insane rates. This wasn't overexuberance. It was insanity. And over the next 24 months, financiers saw $5 trillion of market value disappear (porter stansberry 2020 blueprint). porter stansberry debt jubilee.
It's a mania that has actually been produced (and is being sustained) by main banks and printing presses. Today, worldwide, something around $15 trillion in fixed earnings is trading at a cost that guarantees investors will lose cash if they purchase the bond and hold it until maturity. I wish to make sure you understand what's occurring because the bond market and bonds are a mystery to a great deal of private investors.
How can that occur? It takes place when financiers bid the current price of a bond up until now above par that the remaining vouchers to be paid will not cover the loss when the bond matures. So for instance, you may see a bond trading at $130, when it only has $29 worth of interest left to be paid before it develops at $100.
Best Value Stocks | ||
---|---|---|
Price ($) | 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/ |
Of course, all financiers think that they will be nimble enough to sell prior to that takes place. And all investors believe that the governments will continue to buy these bonds or possibly even stocks and do whatever it takes to keep the bubble growing. This situation is the definition of a financial investment mania.
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