Not Your Ordinary 'Bull Club' Bozo

The two major clubs in a mega-bubble... Not your ordinary 'Bull Club' bozo... A failed bet on bitcoin... Down, but not out... One of the most famous 'Bear Club' members... The one person who matters more than the Bull and Bear Clubs... [Stansberry Research Logo] Delivering World-Class Financial Research Since 1999 [Stansberry Digest] The two major clubs in a mega-bubble... Not your ordinary 'Bull Club' bozo... A failed bet on bitcoin... Down, but not out... One of the most famous 'Bear Club' members... The one person who matters more than the Bull and Bear Clubs... --------------------------------------------------------------- Two kinds of people matter to everyday investors in a mega-bubble... The first group is made up of folks who get you into it... and try hard to keep you there. They'll do anything to convince you to stay. And they'll do it even after their favorite asset has generated massive losses and clearly hasn't lived up to its exaggerated promise. The members of this group are hailed as geniuses on the way up. And they're deemed hucksters (or worse) on the way down. Let's call them the "Bull Club"... After all, they become famous during boom times. You'll recognize a few Bull Club members from my Digests in recent years. I've written several times about [Cathie Wood]( [Adam Neumann]( and [Bill Hwang](... Hwang blew up his overleveraged Archegos Capital Management hedge fund in March 2021. And he has virtually disappeared from the financial press since being arrested in April. Meanwhile, Wood and Neumann are both still making headlines despite losing billions for their investors. Now, we'll talk about the second group that matters in a mega-bubble in a bit. But before we get there, I (Dan Ferris) need to introduce you to another member of the Bull Club. You might think I'm just going to talk about another obvious bozo today... But really, how interesting would that be? It's much more exciting to tell you about a Bull Club member who does not have the same sticky, clown-makeup sheen as the others. So before I tell you who I'm talking about, I need to be clear on one thing... This individual is a real entrepreneur who set out to change the world – and succeeded. That's what sets this person apart from the other Bull Club members we've discussed... As far as I can tell with Neumann, changing the world is just a marketing ploy for attracting investment dollars from institutions like [Japanese holding company SoftBank]( and [venture-capital powerhouse Andreessen Horowitz](. Deep down, Neumann knows the truth – even when he looks in the mirror at 3 a.m. after a rum-fueled bender... He's not changing the world. He's just pretending to do it to get rich. The same thing is true with Wood's passionate devotion to "disruptive technologies." Does she really not know most of those companies are garbage? I can't believe it. Many of these companies lose money. They can only stay alive if they're able to sell securities... And at some point, that gets hard when they fail to generate good results. Maybe Wood didn't know it all along. But if she doesn't know it by now... I mean... wow! Talk about wearing blinders. Wood didn't even say those companies were a good speculation on new ideas. In December 2021 – roughly one month after the Nasdaq Composite Index peaked and about two weeks before the S&P 500 Index peaked – she doubled down on these companies in a note to investors. And incredibly, it was titled... Not in a bubble... in deep value territory. That's exactly what a diehard Bull Club member would say. It's the most absurd thing you could say about some of the worst, most overvalued garbage in stock market history. And Wood said it essentially right at the top of the biggest equity mega-bubble that has ever existed. Wood could've urged investors to be cautious. She could've told folks to build cash and wait for the right opportunity. She could've done anything but what she did. And frankly, it was obviously bonkers at the time. This isn't just great hindsight... Wood's flagship ARK Innovation Fund (ARKK) had peaked 10 months earlier. It had already lost roughly 38% by then. And now, it's down another 57%. Take a look... It's hard to believe anyone smart and driven enough to create a company like ARK Investment Management wouldn't know that the only thing most of those companies will ever disrupt is their poor shareholders' sleep. And yet, Wood is doing just that. In the same way, it's hard to fathom that anyone would believe their own exaggerated claims about an asset class – existing commercial and residential real estate properties – whose modest return qualities are all too well-known. And yet, Neumann is doing just that. Maybe I'm wrong about Wood and Neumann... Perhaps they truly believe what they say and are passionate about what they do. I mean... how could anyone get up in the morning, day after day, knowing it's all a lie? How could they soldier on, despite the nagging voices in their heads telling them it's all destined to end badly for them and many others? You know, just like... - Bernie Madoff, architect of the biggest Ponzi scheme in history, which went on for decades before it fell apart during the 2008 financial crisis. - The folks who pushed the accounting envelope for years at Enron as long as the dot-com bull market let them get away with it. - The folks at dot-com-era fraud WorldCom, which also hid improprieties behind a rising share price. - Any of the thousands of people behind the thousands of investment and corporate frauds over the past century. Look, I'm not saying Wood or Neumann are breaking any laws. I'm just saying they're loyal members of the Bull Club. And they'll do whatever it takes to keep the dream alive. That's not the vibe I get from Michael Saylor, though... Saylor co-founded business-intelligence software firm MicroStrategy (MSTR) in 1989. While he's most famous today for his passionate advocacy and relentless bullishness on bitcoin, he actually changed the game in terms of business intelligence decades ago. I believe Saylor is the real deal... But he's still in the Bull Club. And not for the first time, either... MicroStrategy was a huge dot-com boom stock. It went public in June 1998 at a split-adjusted $80 per share. And it hit a split-adjusted peak closing price of $3,130 per share on March 10, 2000. It was a 39-bagger in less than two years. But... Days after its March 2000 peak, MicroStrategy reported an overstatement of 1999 revenues and profits (which were really losses). The stock fell 62%, wiping out $6 billion of Saylor's wealth in a single day. At the time, it was the biggest one-day loss of wealth in history. POP! went the dot-com bubble. MicroStrategy's stock went pretty much sideways after the dot-com bust as the company struggled to compete with much larger software providers. That's why, as Saylor told the Wall Street Journal last month, he had no choice but to bet the company's future on bitcoin. And bet he has... It all started on August 11, 2020. On that day, MicroStrategy announced that it had bought 21,454 bitcoin for $250 million – roughly half of its corporate treasury at the time. But that was nothing... The company borrowed $2.4 billion and raised $1 billion in new equity... And it used every single American penny to buy bitcoin. In the end, MicroStrategy became the first company to put its entire corporate treasury into bitcoin... Saylor didn't just buy bitcoin, either. He went on a crusade to convince the rest of the world to buy it, too. And by doing that, he took a big step toward membership in the Bull Club... After betting MicroStrategy's entire treasury on bitcoin, Saylor styled himself as a crypto guru. He believes bitcoin will replace fiat currencies. He thinks everybody should put all their money and time into it. And he passionately advocates using leverage to do it as well. In a March 2021 interview, Saylor said... Once you know how it all ends, the only use of time is, "How do I buy more bitcoin?" Take all your money. Buy bitcoin. Then take all your time, figure out how to borrow money to buy more bitcoin, then take all your time and figure out what you can sell to buy bitcoin. Before we go on... DO. NOT. DO. THIS. Do not borrow money to buy bitcoin. Do not sell everything to buy bitcoin. It will likely end in disaster, as it already did for the unfortunate souls who took Saylor's advice 18 months ago. Sure, I've advocated buying a little bit of bitcoin in the past. And of course, my friend and colleague Eric Wade does the same in his newsletters. Buying bitcoin isn't the problem... the leverage is. Saylor is convinced that he knows "how it all ends." His conviction is absolutely unwavering, unsullied by the slightest doubt that bitcoin isn't the greatest investment anyone can make. In other words, Saylor seems like a perfect fit for this club... That's why the real-deal, world-changer Saylor is in the Bull Club with Wood, Neumann, and Hwang... I wouldn't be talking about Saylor if he hadn't advised everyone within the sound of his voice to use leverage and put all their money into bitcoin. And I wouldn't be talking about him if he didn't have such a deep conviction that he can't possibly be wrong. Nor would anybody else, for that matter. But that's nothing sinister... Guys like Saylor are natural attention-getters. They like to make big, bold moves and say big, bold things. It can look like grandstanding a lot of times. But in Saylor's case, I believe his conviction is sincere... Saylor posts about bitcoin on Twitter almost daily. And he often does so with poetic language. For example, his "pinned" tweet from September 2020 reads... Bitcoin is a swarm of cyber hornets serving the goddess of wisdom, feeding on the fire of truth, exponentially growing ever smarter, faster, and stronger behind a wall of encrypted energy. Another recent tweet says, "Bitcoin is a miracle happening right before our eyes." It all sounds... well... a tad on the religious side. It calls to mind the Bible study meetings both Hwang and Wood held at work. Except that there's nothing wrong with worshipping God – at work or anywhere else – as long as it doesn't detract from the working environment. Turning an asset like bitcoin into the object of worship is completely different – and very concerning... Like all members of the Bull Club, Saylor's strategy looked brilliant... until it didn't. Bitcoin traded for just less than $12,000 when Saylor started buying it for MicroStrategy in August 2020. It peaked at roughly $69,000 on November 9, 2021 – just 10 days before the Nasdaq peaked. Of course, MicroStrategy's stock thrived at first... It climbed from its August 11, 2020 close of $134.89 per share to an intraday high of $1,315 per share just six months later. That's an 875% gain. Take a look... But then, everything came crashing down for Saylor... By the time bitcoin peaked last November – nine months to the day after MicroStrategy's peak – his company's share price had already fallen to less than $900 per share. And now, MicroStrategy's stock trades for roughly 83% below its February 2021 intraday high... I wonder... why would Saylor take such a risk? Instead, MicroStrategy could've tried acquiring another business. Or maybe management could've sold the company to a competitor or a private-equity firm... MicroStrategy bills itself as "the world's largest independent business intelligence firm." It might not be a great standalone business, but it could still be valuable as a bolt-on acquisition for another company. I can't believe Saylor didn't consider these alternatives. I must conclude that he felt they were unworkable. He must've felt like his back was flat against the wall. So he did what a lot of folks do in that situation... He cranked the risk dial all the way up. I have to believe it was a matter of style, too. Given the choice between a conventional exit and the all-out, evangelical-like embrace of a new technology, a guy who says he wants to change the world will always go with option B. Bitcoin's fall has begun to take its toll on Saylor, though... He stepped down as CEO on August 2 after MicroStrategy reported a loss of $94.01 per share. The company cited "digital asset impairment charges" of $918 million as the reason – or, in other words, the losses from its bitcoin holdings. Believe it or not, that's not the end of Saylor's Bull Club membership... When he stepped down, Saylor became MicroStrategy's executive chairman. And Phong Le, the company's president, replaced him as CEO. The new CEO will focus on MicroStrategy's software business. And according to the press release announcing the changes, Saylor will focus on the company's... Bitcoin acquisition strategy and related bitcoin advocacy initiatives. In other words... Despite massive losses by leveraging deeply into bitcoin, which was very obviously a huge mistake... and despite bitcoin having nothing to do with the company's actual business... Like Wood and Neumann, Saylor is down – but he's not out... In a way, Saylor reminds me of Chesapeake Energy (CHK) founder Aubrey McClendon... As we discussed [in the April 29 Digest]( McClendon famously leveraged his holdings of Chesapeake's stock. And then, he had to sell them to pay off margin loans when it tanked. From that Digest... McClendon's story represents how blurred the line is between visionary genius and huckster. The fact that they're frequently the same people often makes the line impossible to see until it's all over. Like Saylor, McClendon was a real entrepreneur who did something great... McClendon and his partner co-founded Chesapeake in 1989 – coincidentally, the same year Saylor founded MicroStrategy. McClendon was a genuine pioneer of using hydraulic fracturing (or "fracking") to produce oil and gas. He gets a lot of credit for helping the world successfully use fracking to tap into deposits trapped in shale rock deep under the ground. In 2011, Forbes added McClendon to its "CEO 20-20 Club" – the eight CEOs who had generated 20% annualized returns over 20 years or more. But that same year, the magazine also called him "America's Most Reckless Billionaire." Oil and gas prices were to McClendon what bitcoin's price has been to Saylor. Rising prices made them rich and famous... and tanking prices brutally punished the highly leveraged positions they had built. Given Saylor's advice that everyone should borrow all they can to buy bitcoin, we must assume he has done the same. (If not, what a hypocrite!) Like McClendon, Saylor looked like a visionary genius as the value of his risky bet climbed. And who knows... he might look like one again if bitcoin can make a new high soon enough. But throughout history, leverage has undone so many folks who took it on during a boom. I told you this wouldn't be like adding another bozo to the Bull Club – and I meant it... You now know why I added Saylor to this group. Next, let me tell you the real reason I still believe he's a cut above the others... Simply put, I'm rooting for the guy. I believe he's at least somewhat right... I hate the idea of fiat currency. I hate the idea of a central bank digital currency even more. And I believe bitcoin is a very attractive alternative to fiat currency – as long as it's really as private as the Saylors of the world would lead us to believe. But I can't turn away from Saylor's call to turn a software company into a bet on bitcoin... It smells too much like the failed mining companies that added ".com" to their names in the late 1990s... or those companies that added "blockchain" to their names more recently. The pivot into the fad is a tell... Even worse, you should never have all your money in anything. And borrowing all you can and putting it into a single asset – especially an untried one like bitcoin – strikes me as perhaps the single riskiest thing you can do with money and still call it an investment. While I hope Saylor is ultimately at least somewhat right, his general advice is awful. It should never be followed. And his deep conviction leaves no room for him to be wrong. That's simply not a prudent way to invest. Like I said, I'm rooting for Saylor. But like him or not, he's still in the Bull Club today. That brings us to the second kind of person who matters in a mega-bubble... And importantly, this is the club I want to be in... It's the "Bear Club." The members of the Bull Club look at nothing but the immense upside they believe they'll achieve since there's no way they could possibly be wrong. The Bear Club is worried much more about the preservation of capital. It knows history and believes that cycles can devastate investors. And at least some of its members believe they have a duty to warn investors about what's happening. In fact, loyal members of the Bear Club do all the stuff I've done... I've warned you that stocks and bonds trading at exorbitant valuations will likely generate horrible 10- and 12-year returns... I've warned you that inflation is a stickier phenomenon than most people understand... I've warned you that buying "meme stocks" like GameStop (GME) and AMC Entertainment (AMC) is a recipe for disaster... And I've warned you that the likelihood of a Japan-style, decade-or-two-long bear market is higher than most folks believe. Jeremy Grantham, co-founder of asset-management firm GMO, is one of the most famous Bear Club members... Grantham recently made a thorough study of a few dozen bubbles throughout history... In short, he defines "bubbles" as market moves of two standard deviations (2 sigma) above trend. Their larger, more dangerous cousins – "superbubbles" – occur when markets move 2.5 standard deviations or more (2.5+ sigma) above trend. In his latest note on Wednesday, Grantham explained that all bubbles end the same way... The first thing to remember here is that these superbubbles, as well as ordinary 2 sigma bubbles, have always – in developed equity markets – broken back to trend. The higher they go, therefore, the further they have to fall. In the note, Grantham also discussed the superbubbles in 1929, 1973, and 2000 – as well as the one in Japan in 1989 (the most important non-U.S. superbubble). Grantham has also previously separated superbubbles from all other bubbles and bull and bear cycles... According to his research, superbubbles have three defining traits. He listed them in a late-January piece called "Let the Wild Rumpus Begin"... - A speculative investor frenzy that generated stories for distant decades, which we have had for well over a year; - A penultimate blow-off phase where stock gains accelerate, as we had in 2020; - And the ultimate narrowing phase – unique to these few superbubbles – where a decreasing number of very large blue chips go up as riskier and more speculative stocks underperform or even decline, as they did in 1929 and 2000 and as they have done since February 2021. In other words... we're living through the latest superbubble today. With these conditions in place, Grantham told investors that someone could light the fuse and "retire to a safe distance." I don't need to spend any more time on the Bear Club. As regular Digest readers know, I've written a ton about this club and these types of things over the past couple of years. Let's finish up with the person who matters more than both the Bull Club and the Bear Club in a mega-bubble... You. It doesn't matter what Wood, Neumann, Hwang, Saylor, or anyone else says. Only your actions will make or break you financially when it's all said and done. And the thing is... This absolutely, positively is the biggest investing event of your lifetime. If my suspicions are correct, the really hard part is only just getting started... According to Grantham's research, markets behave normally 85% of the time. There's no need to worry during those periods. But as he also pointed out in his latest note... It is only the other 15% of the time that matters, when investors get carried away and become irrational... These times of euphoria and panic are the most important for portfolios and the most dangerous for careers. The truly important 15% of the time that matters is here. And now you know all about the two crucial clubs in the mega-bubble. So we've arrived back at our perennial question... It's the question that justifies this Digest and all the people at Stansberry Research who get out of bed every day with the single goal of serving you. And that question... What the heck do you do now? The answer is the exact opposite of what Saylor and other Bull Club members say... Don't just do one thing. Make sure you're prepared for a wide range of potential outcomes. That's why I repeat the same thing time and again in the Digest... Own stocks, plenty of cash, gold, silver, and yes, maybe even a little bit of bitcoin if you can stomach the volatility. Above all else, keep this in mind... Now isn't the time to double down and leverage up. It's the time to shrink your risk profile and be careful about adding any new positions. And the best way to do that is with a knowledgeable guide... Marc Chaikin is the founder of our corporate affiliate Chaikin Analytics. And in at least one way, he's a lot like me... You see, Marc believes a historic shift is underway in the markets. His innovative Power Gauge system is picking up on this shift. And according to Marc, the window of opportunity to take advantage – and protect yourself – is rapidly closing. And Marc agrees with me in another way, too... You don't need to be blindsided. Instead, you can get a clear picture of what's coming – and get ready for it. That's why he recently released a critical market update... Marc believes this market shift could ultimately lead to multiple 300% to 500% winners. But he also urges folks to be careful... What's coming could also have disastrous consequences on your wealth if you ignore it. [Get the full message directly from Marc right here](. --------------------------------------------------------------- Recommended Links: [Major Announcement From Dr. Steve Sjuggerud]( "This is what I'm doing with my own money right now. I recommend you do the same," says Steve, founding partner of Stansberry Research. In a brand-new update, he explains his No. 1 recommended sector that could reliably make you hundreds-of-percent gains in the coming months, no matter what the market does next. Plus, you'll learn why today is such a watershed moment... the setup of a lifetime. [See Steve's urgent new message right here](. --------------------------------------------------------------- ['SELL THIS DOOMED STOCK IMMEDIATELY']( Wall Street legend Marc Chaikin just released brand-new details on his top five "best of the best" industry stocks – little-known opportunities poised to potentially return 3 to 5 times gains while most stocks continue crashing. At least today, you can get the name and ticker of one of these stocks, 100% free. Plus, you'll discover Marc's No. 1 stock to SELL immediately... before it goes bankrupt. [Click here for details](. --------------------------------------------------------------- New 52-week highs (as of 9/1/22): None. The mailbag is quiet heading into the long holiday weekend. Speaking of that, a quick housekeeping note... The U.S. markets and our offices will be closed Monday for Labor Day. So after this weekend's Masters Series essays, we'll return Tuesday with our usual Digest fare. In the meantime, send your comments and questions to feedback@stansberryresearch.com. Good investing, Dan Ferris Eagle Point, Oregon September 2, 2022 --------------------------------------------------------------- Stansberry Research Top 10 Open Recommendations Top 10 highest-returning open positions across all Stansberry Research portfolios Stock Buy Date Return Publication Analyst MSFT Microsoft 11/11/10 933.4% Retirement Millionaire Doc ADP Automatic Data 10/09/08 863.7% Extreme Value Ferris MSFT Microsoft 02/10/12 802.0% Stansberry's Investment Advisory Porter ETH/USD Ethereum 02/21/20 562.0% Stansberry Innovations Report Wade HSY Hershey 12/07/07 542.0% Stansberry's Investment Advisory Porter AFG American Financial 10/12/12 410.1% Stansberry's Investment Advisory Porter BRK.B Berkshire Hathaway 04/01/09 400.8% Retirement Millionaire Doc WRB W.R. Berkley 03/16/12 361.1% Stansberry's Investment Advisory Porter NTLA Intellia Therapeutics 12/19/19 295.9% Stansberry Innovations Report Engel FSMEX Fidelity Sel Med 09/03/08 291.4% Retirement Millionaire Doc Please note: Securities appearing in the Top 10 are not necessarily recommended buys at current prices. The list reflects the best-performing positions currently in the model portfolio of any Stansberry Research publication. The buy date reflects when the editor recommended the investment in the listed publication, and the return shows its performance since that date. To learn if a security is still a recommended buy today, you must be a subscriber to that publication and refer to the most recent portfolio. --------------------------------------------------------------- Top 10 Totals 3 Retirement Millionaire Doc 1 Extreme Value Ferris 4 Stansberry's Investment Advisory Porter 2 Stansberry Innovations Report Engel/Wade --------------------------------------------------------------- Top 5 Crypto Capital Open Recommendations Top 5 highest-returning open positions in the Crypto Capital model portfolio Stock Buy Date Return Publication Analyst ETH/USD Ethereum 12/07/18 1,296.5% Crypto Capital Wade ONE-USD Harmony 12/16/19 1,173.7% Crypto Capital Wade POLY/USD Polymath 05/19/20 1,057.9% Crypto Capital Wade MATIC/USD Polygon 02/25/21 859.9% Crypto Capital Wade BTC/USD Bitcoin 11/27/18 435.5% Crypto Capital Wade Please note: Securities appearing in the Top 5 are not necessarily recommended buys at current prices. The list reflects the best-performing positions currently in the Crypto Capital model portfolio. The buy date reflects when the recommendation was made, and the return shows its performance since that date. To learn if it's still a recommended buy today, you must be a subscriber and refer to the most recent portfolio. --------------------------------------------------------------- Stansberry Research Hall of Fame Top 10 all-time, highest-returning closed positions across all Stansberry portfolios Investment Symbol Duration Gain Publication Analyst Nvidia^* NVDA 5.96 years 1,466% Venture Tech. Lashmet Band Protocol crypto 0.32 years 1,169% Crypto Capital Wade Terra crypto 0.41 years 1,164% Crypto Capital Wade Inovio Pharma.^ INO 1.01 years 1,139% Venture Tech. Lashmet Seabridge Gold^ SA 4.20 years 995% Sjug Conf. Sjuggerud Frontier crypto 0.08 years 978% Crypto Capital Wade Binance Coin crypto 1.78 years 963% Crypto Capital Wade Nvidia^* NVDA 4.12 years 777% Venture Tech. Lashmet Intellia Therapeutics NTLA 1.95 years 775% Amer. Moonshots Root Rite Aid 8.5% bond 4.97 years 773% True Income Williams ^ These gains occurred with a partial position in the respective stocks. * The two partial positions in Nvidia were part of a single recommendation. Editor Dave Lashmet closed the first leg of the position in November 2016 for a gain of about 108%. Then, he closed the second leg in July 2020 for a 777% return. And finally, in May 2022, he booked a 1,466% return on the final leg. Subscribers who followed his advice on Nvidia could've recorded a total weighted average gain of more than 600%. You have received this e-mail as part of your subscription to Stansberry Digest. If you no longer want to receive e-mails from Stansberry Digest [click here](. Published by Stansberry Research. You’re receiving this e-mail at {EMAIL}. Stansberry Research welcomes comments or suggestions at feedback@stansberryresearch.com. This address is for feedback only. 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