The Secret Sauce of the World's Best Growth Stocks

Warren Buffett's best advice... The mistake 99% of investors make... Seven timeless investing 'truths'... What the highest-returning stocks of the past 30 years have in common... The secret sauce of the world's best growth stocks... [Stansberry Research Logo] Delivering World-Class Financial Research Since 1999 [Stansberry Digest] Warren Buffett's best advice... The mistake 99% of investors make... Seven timeless investing 'truths'... What the highest-returning stocks of the past 30 years have in common... The secret sauce of the world's best growth stocks... --------------------------------------------------------------- Editor's note: Today, we wrap up our "late-summer series" with a guest essay from Stansberry Asset Management ("SAM") Chief Investment Officer Austin Root. Longtime subscribers will recognize Austin from his time as our director of research and manager of our Portfolio Solutions products. He worked for Stansberry Research for five years until 2021, when he joined the staff at SAM – an investment advisory firm separate from our publishing business – which uses our research and other sources to help manage individual client portfolios. Today, in advance of an upcoming event he has planned next week, Austin writes to you about seven timeless investing "truths," starting with one inspired by his visit to Berkshire Hathaway's annual meeting earlier this year... --------------------------------------------------------------- 'You can always tell someone to go to hell tomorrow'... Of all the wise thoughts that legendary investor Warren Buffett provided at the Berkshire Hathaway (BRK-B) annual meeting that I (Austin Root) attended in May, that's the thought I keep coming back to most often. Not his rationale for owning so much Apple (AAPL) stock. Nor his outlook on the property-and-casualty insurance industry that he adores. I keep remembering this blunt life lesson. It's a reminder that during intense, critical moments in your life, it pays to take a deep breath, keep calm, and then try to make the best cool-headed decision you can. That's great advice for life... and investing. Throughout my career as an investor, I've always tried to take a "dispassionate view" of the data and situation before I make a decision. Too often, investors let emotions drive their investing. They fall in love with a company and won't sell, even when its stock becomes massively overvalued... Or they won't move on from a bad investment because they hate to admit they were wrong. That brings me to an important investment truth... Truth No. 1: When investing, it's best to check your emotions at the door... That's the first of seven investment truths that I'd like to share with you today. Now, I know that sounds like a lot. But Corey McLaughlin and Dan Ferris routinely provide you with loads of investment value, so I'm just trying to keep up. We can run through the first five quickly. That's in part because [I've previously shared these truths](. When I was portfolio manager for Stansberry Portfolio Solutions, I opened the April 2019 letter by sharing some of the lessons I'd learned from my two-decade career of working with some of the most skilled investors on the planet. These truths provide an invaluable foundation upon which you can build a successful investment plan and financial future. So let me review them with you now: Truth No. 2: A stock can always go lower, so honor your stops and other sell disciplines. Truth No. 3: Establish clear investment goals and then stick to your plan for how to achieve them. Truth No. 4: The only truly guaranteed way to grow your wealth long term is to spend less money than you make each year. Truth No. 5: Invest in what you know and understand, because you'll make better decisions when the unexpected happens. Throughout my career, I constantly revisit these guidelines. And I frequently share them in conversations with our clients at SAM. These truths fit into SAM's investment approach in several ways: - We honor our sell disciplines and embrace other risk-management tools... - How we invest starts and ends with our clients' investment goals, and we build investment plans around them... - While we encourage our clients to enjoy their lives and leave the investment stress to us, we remind them that investing provides no guarantees and is not without risks... - And finally, we believe – just as Stansberry Research believes – that well-informed investing will lead to better decisions and ultimately better investment outcomes. I was reminded of these truths when I read Brett Eversole's recent True Wealth issue titled "Avoiding the Trap of American Capitalism." (True Wealth subscribers can access the issue [here]( I believe Brett has come up with a sixth truth for my list. And it's one that is poorly understood by many investors today – especially the ones piling all their money into just a handful of the world's mega-cap companies. Specifically, Brett reminds us... Truth No. 6: The biggest companies rarely stay on top. Brett wrote in True Wealth... Historically, the largest stocks have struggled to maintain their dominance. It doesn't matter if the underlying business keeps chugging along... The biggest stocks almost always fall from the top of the heap. Now, Brett and his team at True Wealth can make a lot of bold statements. (Brett's [latest big call]( is that we'll see the Dow hit 150,000, possibly by the end of the decade.) But they always support their ideas with significant amounts of data. Here is just one of many examples they provided. They showed the five largest companies by market capitalization in 2007 and their total investment returns since then as compared to the overall S&P 500 Index. As Brett explained... Tech stocks didn't dominate the 2007 market peak. Instead, the leaders were "old guard" giants in oil, manufacturing, banking, and telecommunications. Microsoft was the only tech stock of the bunch... And it was also the only one that generated big gains. ExxonMobil (XOM) and AT&T (T) have done OK since their days at the top of the market. But you'd have performed dramatically better by just buying an index fund. Then there's Citigroup (C) and General Electric (GE)... If you held on to these stocks thinking that they were big, safe plays, boy was that a mistake. Nearly 16 years later, you'd still be sitting on catastrophic losses... And it's hard to know if these companies will ever recapture their 2007 highs again. This is a recurring theme in U.S. market history. It's how American capitalism works... New companies come out of nowhere and create new markets or find ways to dominate old ones. And the established businesses – the ones many once thought would last forever – suffer a slow death. Brett provides other data points that also show that "the biggest companies rarely stay at the top." True, Microsoft (MSFT) is an exception to the rule. But the reality is that most of the world's biggest companies are unable to sustain their dominance in the same way over the long run. As a result, Brett is warning his subscribers to avoid the "big mistake 99% of investors will make in the years to come." They'll pile into the world's biggest stocks because they've done well in the past, "even though history says they'll likely do poorly from here." That's great advice... And it just makes sense too, right? To continue outperforming the market, the world's largest businesses will need to see their above-market valuations go even higher. Or they'll need to grow profits faster than the world they're already dominating. Or both. For how long can those things really go on? But knowing where not to invest is only part of the answer. The real trick, once you've eliminated some stocks from your shopping list, is to know where best to invest among the rest. This leads me to the final investing truth I want to share with you... For most investors, this seventh truth is the key to finding stocks that can grow at astounding rates for long periods of time. These are the stocks that can turn even a small amount of capital into a huge treasure. Let's look at the companies that have done just that – built themselves into large, successful companies over time and rewarded shareholders handsomely in the process. I've analyzed the largest companies in the U.S. today, all with more than $50 billion in current market capitalization. I ranked these blue chips based on how well their shares have performed over the past 30 years. (My analysis included some companies, like Tesla (TSLA), that were founded less than 30 years ago.) Below are the 10 best-performing stocks among that group... The first thing that struck me is that this is an eclectic list of companies. Sure, it contains some of the companies you probably expected, like Amazon (AMZN), Apple, and Microsoft. And a healthy number of them are technology companies. But beyond that, it's a broad and diverse set of companies. It includes ones that are consumer-oriented – like Monster Beverage (MNST) or O'Reilly Automotive (ORLY) – and some that are business-to-business focused – like KLA (KLAC) and Nvidia (NVDA). So outside of perhaps software or semiconductors, it's hard to say that the best-performing companies over the past 30 years tend to come from one particular industry. What else can we learn from this list? Two consistent themes run across these companies. And the combination of the two is what has made them home-run stocks. Now let's add one more column of data to the chart – the market capitalizations of these companies back in 1993 (or when they went public if it was after 1993)... None of these companies were among the largest in the U.S. in 1993... The biggest blue chips that year were General Electric (GE), Exxon, Walmart (WMT), and Coca-Cola (KO). With the exception of (again) Microsoft, all of the companies on the list were small. Even Apple was a $3 billion company in 1993. (It topped $3 trillion earlier this year.) The market cap of the best-performing company over the past 30 years – Monster Beverage – was only $20 million. (Back then it was called Hansen's and sold only juices and sodas.) This is just what Brett was talking about: It's hard for very large companies to continue to outperform. More specifically, the best-performing companies over the past 30 years tended to be smaller companies that were early in their growth phase when the period started. The second common theme among these market dominators can't be found in a chart or table. Instead, it required me and the rest of the team at SAM to conduct research on each of these businesses and see how they've progressed and succeeded over time. And after doing that work, we struck gold... Every one of these best-performing companies continued to adapt and improve the business to embrace trends in either consumer demand, technological innovation, or both. Monster Beverage was early to identifying the energy-drink craze and shifted the main thrust of its business from selling natural juices to high-caffeine beverages... Amazon went from selling books to selling everything to creating a whole new business to capitalize on the hypergrowth of cloud computing... Apple never rested on the success of its desktop Mac computers and saw the future in handheld computing. It developed the iPhone, which has become the single most successful and profitable consumer product of all time... As automobiles became more sophisticated and harder to repair on one's own, O'Reilly was the first to aggressively embrace partnering with local mechanics rather than seeing them as a competitor. O'Reilly's do-it-for-me business is now larger than its do-it-yourself business. These are just a few examples. As these companies grew revenues and continued to innovate, they did so profitably. That means they were also well run. Put this all together and you get our seventh and final investment truth... Truth No. 7: To produce truly life-changing investment returns, identify well-run companies that embrace trends in consumer demand and technology... and invest in them early and for as long as they continue to innovate over the long term. If the type of investing that I've just described interests you... there is a way you can do it... You see, shortly after becoming chief investment officer at SAM, I created an investment strategy that focuses on owning fast-growing, well-run, highly innovative companies. It's called Venture Growth, and it's chock full of what I view as many of the best growth companies on the planet. And we're pleased to provide this strategy for our SAM clients. As you might expect, Venture Growth has a large allocation to small and microcap companies that are earlier in their life cycles. These are just the kinds of companies that I recommended when I ran the publication American Moonshots at Stansberry Research. One data point illustrates how well companies in that publication performed: Investors who followed all our recommendations over the time I was running American Moonshots (from 2019 through the first half of 2021) could have produced gains of more than 250%. The S&P Small Cap 600 Index gained just 80% over the same period. (Note, this is a hypothetical return based on published data in American Moonshots.) If you like the sound of the Venture Growth strategy as a tool to help manage your capital, well, you're in luck... On Monday, August 28, at 7 p.m. Eastern time, I'm excited to offer a completely LIVE event for the first time ever. I'll be sharing more about how we at SAM identify innovative companies with long-run growth potential and some of our favorite ideas. The event is called "Building Generational Wealth Through Long-Term Investing," and you can [sign up for it here for free](. I hope to see you there, but before I go, let's wrap things up... Here is my list of seven investment truths... - When investing, it's best to check your emotions at the door. - A stock can always go lower, so honor your stops and other sell disciplines. - Establish clear investment goals and then stick to your plan for how to achieve them. - The only truly guaranteed way to grow your wealth long term is to spend less money than you make each year. - Invest in what you know and understand, because you'll make better decisions when the unexpected happens. - The biggest companies rarely stay on top. - To produce truly life-changing investment returns, identify well-run companies that embrace trends in consumer demand and technology... and invest in them early and for as long as they continue to innovate over the long term. I hope you find value in this list and that it can help guide your investing. I'm highly confident that over time, these truths will help you generate better investment returns and find greater success in your financial journey. And again, I hope you join me for [our webinar on Monday](. --------------------------------------------------------------- Recommended Links: [Must See: New Bank Crisis Update]( Marc Chaikin's system flashed "sell" on Silicon Valley Bank, First Republic Bank, Silvergate Bank, and Signature Bank as much as a year BEFORE the first wave of bank failures hit in March. And last November, he correctly predicted we'd witness a "RUN on the banks" in 2023. Now, Marc is back with an important five-minute update explaining exactly what he thinks is coming next for U.S. banks and the overall market. [Click here for the new update](. --------------------------------------------------------------- ['Federal Bitcoin' Is Coming to a Bank Near You NOW]( Last month, the U.S. government took the first step toward creating its own cryptocurrency... a "federal bitcoin." The U.S. Treasury and 120 banks have already signed up for it. If you get positioned before the wider rollout, you could make 3,050%. [Click here to learn more](. --------------------------------------------------------------- New 52-week highs (as of 8/23/23): Brown & Brown (BRO), Comfort Systems USA (FIX), Novo Nordisk (NVO), and Sprott Physical Uranium Trust (U-U.TO). In today's mailbag, feedback on Stansberry NewsWire editor Kevin Sanford's [Monday essay]( about the U.S. workforce... a take on [yesterday's guest essay by Morgan Housel]( who is among the presenters at our annual Stansberry Conference in October... and thoughts on the markets and our mailbag... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com. "Your article on the current employment system reminded me of a situation my daughter recently experienced when she tried to check into her hotel room. "She'd reserved a room for herself and my granddaughters when they traveled to attend a family funeral. When they entered the hotel there wasn't one employee in sight, even at the desk. She knocked on all the doors marked 'employees only' but received no response. It was late, the girls were tired, and my daughter finally called the corporate customer service line after a wait of close to 30 minutes. They seemed confused but said they'd look into it. "About a minute later the hotel desk phone line rang. But since there was no employee there to answer, another customer who'd come in after my daughter went behind the desk and took the call. It was the hotel's corporate customer service rep who had to listen to another customer explain that there appeared to be not one employee in the building. By that point, a rather long line of tired and unhappy customers had formed in the lobby. After almost an hour a gentleman did show up to check everyone in. My daughter never received an explanation. "This property was part of a large and well-known chain of hotels, the name of which would be instantly recognizable to most travelers. I've traveled extensively and stayed at many hotels over the years. So has my daughter, who travels frequently for work. And neither of us has ever arrived at the hotel where we'd reserved a room and found not a single employee on the property." – Subscriber Suzanne P. "I love what Morgan says about 5- to 10-year books. Choose wisdom over current events... "For those interested in this type of growth, The Road Less Traveled by Scott Peck is definitely a book I'd recommend. This is a 10-year book as referenced in the Digest. "And for those interested in an outright rebuke of that metaphorical lumber in your attic known as Darwinian Theory, please look up Phillip Johnson's Darwin on Trial. "These books don't have anything to do with markets, but they both will make you rich." – Subscriber Tim C. "Everyone was waiting on [Nvidia's earnings report] and [Jerome Powell's speech at the Jackson Hole, Wyoming central-bankers meeting] (Wed and Friday). NVDA knocked it out of the Park. And if JPowell signals the end is in or near on Friday, then even more money will flow into Equities. Oh, and your mailbag will fill up again." – Stansberry Alliance member Bill B. Good investing, Austin Root Towson, Maryland August 24, 2023 --------------------------------------------------------------- About Stansberry Research and SAM. Stansberry Asset Management ("SAM") is a Registered Investment Advisor with the United States Securities and Exchange Commission. File number: 801-107061. Such registration does not imply any level of skill or training. This presentation has been prepared by SAM and is for informational purposes only. Under no circumstances should this report or any information herein be construed as investment advice, or as an offer to sell or the solicitation of an offer to buy any securities or other financial instruments. 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Neither the writers and/or editors at Stansberry Research nor Porter Stansberry are personally involved in the day-to-day management of SAM or its investment advisory services, but some of them may choose to become clients of SAM. --------------------------------------------------------------- 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 1,194.4% Retirement Millionaire Doc MSFT Microsoft 02/10/12 1,027.3% Stansberry's Investment Advisory Porter ADP Automatic Data Processing 10/09/08 895.6% Extreme Value Ferris wstETH Wrapped Staked Ethereum 02/21/20 683.4% Stansberry Innovations Report Wade WRB W.R. Berkley 03/16/12 537.8% Stansberry's Investment Advisory Porter BRK.B Berkshire Hathaway 04/01/09 528.1% Retirement Millionaire Doc HSY Hershey 12/07/07 522.5% Stansberry's Investment Advisory Porter AFG American Financial 10/12/12 393.8% Stansberry's Investment Advisory Porter TTD The Trade Desk 10/17/19 324.9% Stansberry Innovations Report Engel ALS-T Altius Minerals 02/16/09 307.9% Extreme Value Ferris 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 4 Stansberry's Investment Advisory Porter 2 Extreme Value Ferris 2 Retirement Millionaire Doc 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 wstETH Wrapped Staked Ethereum 12/07/18 1,572.4% Crypto Capital Wade ONE-USD Harmony 12/16/19 1,052.1% Crypto Capital Wade POLY/USD Polymath 05/19/20 1,033.4% Crypto Capital Wade MATIC/USD Polygon 02/25/21 769.6% Crypto Capital Wade BTC/USD Bitcoin 11/27/18 603.9% 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 Microsoft^ MSFT 12.74 years 1,185% Retirement Millionaire Doc 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 ^ 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}. 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