Our Annual Report Card Is Here

It's springtime for the nerds... We're all quants now... The five forces driving markets... The worst collapse in nearly two centuries of American finance... The resurrection of value... Our annual Report Card is here... [Stansberry Research Logo] Delivering World-Class Financial Research Since 1999 [Stansberry Digest] It's springtime for the nerds... We're all quants now... The five forces driving markets... The worst collapse in nearly two centuries of American finance... The resurrection of value... Our annual Report Card is here... --------------------------------------------------------------- Cliff Asness was one of Wall Street's biggest and quirkiest stars... until he wasn't... As recently as seven years ago, Asness was considered one of the smartest guys on Wall Street. A well-known comic-book aficionado and a late-night sharpshooter in multiplayer video games, he was a charismatic standard-bearer for a wave of like-minded quantitative analysts ("quants")... who use sophisticated computer algorithms to direct their investments. The hedge fund he co-founded – AQR Capital Management – was the world's largest, with $226 billion under management. As a recent Financial Times profile described Asness: At times he comes off as an avuncular finance professor popular with the students for being approachable, able to talk fluent geek and play Doom Eternal on Ultra-Nightmare mode. But he infamously has a short fuse and little-to-zero filter. Asness has copped to smashing a few computer screens during the financial crisis. He explained to the Times that the screens "deserved it." Of course, antics like that were only interesting because Asness and AQR seemed to have unlocked the secret to beating the market. Between 2013 and 2016, AQR's "Absolute Return" strategy enjoyed average annual returns of 11%... including returning about 15% in 2013 and 2015. But the good times for AQR and Asness' fellow quants ground to a halt starting around 2017. According to news reports, AQR's Absolute Return lost roughly 12% in 2018 and more than 5% in 2019. Investors headed for the doors, and AQR's assets under management fell by more than half. AQR was hardly alone. Most quantitative-driven investing houses suffered similar losses and similar outflows of investor capital. It was a four-year stretch that market observers have tagged the "quant winter." But now it seems spring has returned for the computer nerds... AQR's Absolute Return reportedly earned investors an eye-popping 43.5% in 2022 and about 20% last year. I (Brett Aitken) want to unpack what happened with Asness and AQR in today's Digest because it holds a lot of lessons for stock investors of all types. And as an introduction to our annual Report Card, the story of the "quant winter" offers a helpful perspective on how to use our best research... and explains why we think some of our most recent work represents a culmination of what we've built at Stansberry Research over the past 24 years. What you'll discover is that in some ways... We're all quant investors and always have been... To understand the AQR story, you need to know that the driver behind Asness and his fund's success is a style of quantitative investing called "factor" investing. When folks think of quantitative investing, if they do at all, they tend to picture high-frequency traders... These are the outfits that use powerful computers to scan huge volumes of transaction data in near real time, finding small price discrepancies that their algorithms can trade for small gains over and over. That's not factor investing... It also relies on computers to rapidly process massive amounts of data, but not to exploit milliseconds' worth of tiny price moves. Instead, factor investing involves using long-term data to identify the big, enduring forces – or factors – that cause some investments to outperform their markets over time, then pinpointing the investments that will benefit from those forces. A generation of quants has identified countless factors, but most folks agree on five basic ones... - Value: Cheap securities tend to outperform expensive ones. - Momentum: Securities that are rising tend to keep rising, and those that have fallen are likely to fall some more. - Quality: Reliably profitable companies do better than shaky, overly indebted businesses. - Volatility: Stable stocks tend to treat investors better over time. - Size: Small stocks tend to outperform big ones. We're betting those factors sound pretty familiar to most Stansberry Research subscribers... The key is that Asness and his fellow travelers use sophisticated computers to prove that these factors drive overperformance and then to find the best investments to take advantage. One thing to remember is... Factor investing only works if markets are NOT efficient... One irony of Asness' career is that he got his start down the path of factor investing in graduate school at the University of Chicago. His dissertation was on the effect of momentum on investments... an idea that contradicted the seminal work of his adviser, the famed Eugene Fama. As you may know, Fama was famous for the "efficient market hypothesis." Fama's idea was that stock prices already fully reflect all available information, so it's impossible for individual stock pickers to consistently beat the market. The efficient market hypothesis is the basis for index investing – just put your money in an S&P 500 fund and let the market do its magic... Author Scott Patterson described Asness presenting his idea to Professor Fama in his book The Quants: Asness knew that momentum was a direct challenge to Fama, and he expected a fight. He cleared his throat. "My paper is going to be pro-momentum," he said with a wince. Fama rubbed his cheek and nodded. Several seconds passed. He looked up at Asness, his massive forehead wrinkled in concentration. "If it's in the data," he said, "write the paper." It's worth noting that Fama moved away from the idea that markets are perfectly efficient later in his career. In 1992, Fama co-authored a paper with Kenneth French that showed how small and cheap stocks tend to outperform the market. But the question remains... What happened to the quants?... Anyone who tries to model their investments on the value principles of Benjamin Graham and Warren Buffett knows the answer well... The quant winter coincided with the worst period for value investments in modern history... maybe ever. As a group, value strategies were losers for 20 years, bottoming out in August 2020. As a group, strategies that relied on buying cheap stocks and shorting overpriced ones suffered a cumulative loss of 64% between 2000 and 2020, according to research by Mikhail Samonov, CEO of quant fund Two Centuries Investments. That's the worst collapse in nearly 200 years. Samonov inferred stock valuations based on data going back to 1825 and found four "crashes" in value of around 50%. But the recent drought was the only one exceeding 60%. In theory, factor investing should have led these quants to other successful investments based on, say, size or momentum. But in Asness' view, value was so colossally awful during the quant winter, it pulled down any strategy that considered that factor. As Asness told the Financial Times in December... It's admittedly a cop-out, but the best we've got is that value holistically lost. However, factor-investing quant funds have rebounded in recent years. And it's no surprise... The quant spring reflects the resurrection of value... As we pointed out... AQR has posted sensational results for investors over the past two years. That performance coincides with a strong performance of value investments. In a 2022 article, Samonov found that value strategies' performance rose 27% between the low of August 2020 and March 2022. By our calculations on the same data, from August 2020 through November 2023, value is still winning by 23.5%. To factor investors like Asness, the turnaround proves the long-term validity of their approach. Nothing works every time, but the fundamental forces that drive markets don't change. And they inevitably reassert themselves. As he told the Financial Times... Any strategy that's rational, done in a diversified way and that has historically done well and never causes you any pain probably has a lot of people rush in and make it go away. Today, we're publishing the first installment of our 18th annual Report Card. We believe it's critical for our company to pause at the start of each year, review our performance... and share the information with you. Our ongoing success as a business demands that we earn your trust, and being transparent in this way is vital to keeping that faith. We chose to open this year's Report Card with the Asness story because most investors have fought similar struggles at one time or another. And like the quant funds, some of our newsletters and other publications here at Stansberry Research have faced the same challenges. Notably, while our trading services have performed well over the past couple of years, our publications cover a wide range of strategies. Most of our more traditional newsletters and our Portfolio Solutions products incorporate some element of value. Now, as you'll see in our results... the fundamental market forces that we focus on are reasserting themselves... That's also why we've fully embraced our inner quant. For the past several years, we've been developing a system that quantified our strategies into a single metric... the Stansberry Score. And we've developed a system to build a portfolio of stocks using the best opportunities identified by the Stansberry Score. The result of that work is our newest service, The Quant Portfolio... More on that in a minute... In our annual Report Cards, we evaluate each of our publications against a benchmark like the S&P 500 Index. We will show a one-year and five-year track record with the numbers... and grade each publication's performance. Please keep in mind, the grade is mine and mine alone as the publisher of Stansberry Research. If you don't agree with my grade and wish to throw stones... you can aim at me (figuratively, of course). Just remember, we are providing you with all the numbers. You can make your own assessment and assign your own grade. Whether you agree or disagree, I'd love to hear from you at feedback@stansberryresearch.com. One last thing before we get to the grades... Even though I know many of our readers focus on the most recent year's performance... l believe one year is too short to judge a strategy or an editor. No one knows the future. And any portfolio can suffer a down year... The key is to manage risk. So while we are providing the one-year results for 2023... it's important to look at a longer time period. Again, this year's Report Card is evaluating the one-year and five-year results. While the market is up roughly 85% since 2018... investors had to navigate two huge bear markets... the sell-off inflicted by the pandemic in early 2020 and the painful bear market of 2022. Those were both nasty drawdowns that can wreak havoc on a portfolio. And they can destroy your confidence if you're not prepared. Now, on to the grades... Let's start with our Portfolio Solutions... We manage the Portfolio Solutions products the same way that we would manage a fund. In other words, we allocate a specific position size for each portfolio down to the number of shares you should buy of each position. Because we manage these portfolios like a managed or index fund, they are fully allocated at a specific date. That makes it especially easy to gauge their performance against a benchmark. This is different from our traditional newsletters, which build a list of recommendations but not a fully allocated portfolio. At the Portfolio Solutions, our investment committee includes Dr. David "Doc" Eifrig, Matt Weinschenk, Brett Eversole, and Alan Gula. This year, they have been joined by Whitney Tilson on The Quant Portfolio. We'll also discuss our two allocated gold and silver portfolios... the Gold Stock Analyst Top 10 and Fave 5. The Capital Portfolio: F (1-year), B (5-year) Our most aggressive portfolio struggled in 2023. I'm sure our investment committee won't agree with my one-year grade for The Capital Portfolio... After all, we did register a positive return. And I am pleased that we achieved a small gain. But the overall result is disappointing compared with the benchmark S&P 500. Now, we have always declared this as our most aggressive portfolio. That cuts both ways... You can book some big wins in long-trending bullish markets like we saw in 2020 and 2021. The Capital Portfolio earned an A+ in both years. But those same aggressive positions will likely suffer in volatile markets. It's no secret that the market turbulence in 2023 was difficult to navigate. The stocks referred to as the Magnificent Seven (Apple, Microsoft, Alphabet, Amazon, Meta Platforms, Tesla, and Nvidia) make up roughly 30% of the S&P 500 and drove most of the returns in 2023. We did see some big returns on our own... like the 42% gain on the exchange operator CBOE Global Markets (CBOE) and a 39% gain in the $300 billion capital-efficient chipmaker ASML (ASML), plus several other positions that returned more than 20%. Unfortunately, these gains were offset by losses in Citizens Financial (CFG), PayPal (PYPL), and Dollar General (DG). And it's the total return that matters for the Report Card. I know the investment committee is disappointed with the 2023 results. While The Capital Portfolio did earn a small gain for the year, it dramatically underperformed its benchmark, which earns it an F for the one-year performance. However, as I like to point out... it's the longer-term performance that really matters. If you look over the five-year period, you will see that The Capital Portfolio performs much better in trending markets (as designed)... It effectively kept up with the benchmark... lagging by a mere 0.5% average annual returns. Some of its longer-held positions like Dow (DOW) and Home Depot (HD) have contributed to those results with 107% and 87% gains, respectively. The Capital Portfolio earns a B for the five-year period. The Defensive Portfolio: C (1-year), A+ (since inception) I know I'll get some heat for this grade... Last year proved a defensive approach wasn't effective... if you compare it with the S&P 500. But that's misleading. Most people will compare it to the result for The Capital Portfolio and ask how I could possibly award a higher grade for this portfolio when it had lower returns for the year. Well, let me explain... We launched the portfolio in May 2019 to combat times of volatility. The strategy meant building a diversified portfolio that included gold and cash-like securities. Then we filled out the portfolio with "forever" stock names – like investing legend Warren Buffett's Berkshire Hathaway (BRK-B), capital-efficient chocolate maker Hershey (HSY), and the soda behemoth Coca-Cola (KO). We sprinkled in some uncorrelated gems, like pharmaceutical giant AbbVie (ABBV) and the huge private contractor Booz Allen Hamilton (BAH). Finally, we complemented the list with some anti-fragile stocks like big-box retailer Walmart (WMT) and top property and casualty (P&C) insurance companies like W.R. Berkley (WRB). In other words, as the name suggests, the strategy of this portfolio was to be defensive. It's not comparable to the S&P 500 or The Capital Portfolio. That's why its benchmark is a 50/50 blend between the S&P 500 and Treasury securities, the latter measured by the SPDR Portfolio Short Term Treasury Fund (SPTS). As our Director of Research Matt Weinschenk pointed out in a private e-mail... The good thing with this strategy is that we were able to be defensive while still holding positions like Berkshire, Alphabet, and Booz Allen Hamilton that all soared. The key with being defensive is to not make missteps. In this case, only a few positions suffered notable declines, namely Bristol-Myers Squibb (BMY), which declined 30% in the face of expiring patents. While the portfolio only returned 2% for 2023 – earning itself a C for the one-year performance – its 47% total returns (10.2% average annualized) since its May 2019 inception trumped the benchmark's 41% (8.9% average annualized) gains. I'm thrilled with these long-term results... as reflected in the A+ grade for the "since inception" period of about four and a half years. The Income Portfolio: D (1-year), A (5-year) Our Income Portfolio kept pace in a year of rising interest rates. As the name suggests, the key focus here is income. So we fill this portfolio with dividend-paying stocks, high-yield bonds, and hybrid securities. Many of the positions are sourced from Retirement Millionaire, Stansberry's Investment Advisory, Income Intelligence, and Stansberry's Credit Opportunities. Some people misunderstand the concept and structure of this portfolio. For example, the portfolio has kept pace with the market over the long term thanks in part to positions you may think are outside of an income strategy... like Costco Wholesale (COST), up more than 30%, and JPMorgan Chase (JPM), which rose by around 33% in 2023. Importantly, the investment committee manages the portfolio conservatively. Only two positions they opened last year – Brookfield Infrastructure Partners (BIP), which they closed, and Franco-Nevada (FNV) – were down more than 10%. That's very low risk on a fully allocated portfolio. Now, the portfolio did make money last year... albeit a modest 2% gain. Due to the considerable underperformance compared with the benchmark Vanguard Balanced Index Fund, it earns a D for the 2023 year. However, like most of our portfolios, the longer five-year period proves this strategy can earn investors solid double-digit gains on average. Total returns for the five-year period came in at 51% (10.5% annualized) compared with 46% (9.4% annualized) for the benchmark. I'm awarding the investment committee an A for the five-year track record. The Total Portfolio: A+ (1-year), A+ (5-year) This is the best of the best... If you're looking for a hedge-fund-like strategy... this is it. We launched The Total Portfolio with the strategy of building a conservative portfolio that would be less volatile than the S&P 500... but would outperform it. Naturally, achieving that is easier said than done. To do that, our investment committee selects its favored stocks in various categories. For example, its core investments are blue-chip stocks like Coca-Cola and Apple (AAPL). Capital-efficient businesses make up another important weighting in the portfolio. Businesses like Alphabet (GOOGL) and Hershey are names you'll recognize. The investment committee sprinkles in some income plays, which can include high-yield bonds, dividend-paying stocks, and hybrid securities. Add in some small speculations, crisis hedges, and special situations... and the committee has built a robust portfolio prepared for almost any outcome in the markets. Because the portfolio typically holds around 35 to 40 positions, it's vital to know which stocks go best with what and what weighting to apply. As we told subscribers in our initial publication... Building a portfolio like this is something like putting an orchestra together. It matters less how good your horn players are... What matters is how well they sound when they're playing with the rest of the band. Over the years, the strategy has evolved to accommodate market conditions. And last year, its performance equaled our highest expectations. The investment committee caught big surges in Comfort Systems USA (FIX) at more than 70% for the year. And bitcoin (BTC) soared 83%. Of course, not everything went up. For example, Hershey declined by 21%. But because of the small allocation (1.8%), it didn't cause any material damage to the portfolio. Once again, risk management has proved critical to the success of this portfolio. Most important is that the portfolio keeps delivering steady and solid gains... With the 2023 portfolio locking in an 11.3% gain – more than tripling its benchmark, the Bloomberg Equity Long/Short Hedge Fund Index – it earns itself an A+ for the one-year period of this year's report card. The five-year period is even more impressive with total returns of 92% (18.8% annualized) compared with just 28% (5.8% annualized) for the benchmark. Congratulations are in order. The Total Portfolio earns an A+ for the five-year period as well. Stansberry's Forever Portfolio: A (1-year), B+ (since inception) It was a once-in-a-decade buying opportunity... The market had plunged more than 35%. And businesses that we always wanted to recommend were selling at fire-sale prices. For example, companies like Alphabet, Hershey, and Home Depot were trading at multiples not seen for the better part of a decade. And we knew these businesses would not only survive... but thrive as fear in the market faded. Investing legend Warren Buffett famously said that when he owns outstanding businesses with outstanding management teams, his favorite holding period is forever. We embraced Buffett's philosophy... and we were getting these great businesses at better than fair prices. Some were outright steals. We all know what happened next... The portfolio soared straight out of the gate. By the end of 2020, every stock in the portfolio was up – a 100% win rate. Four of those positions were up more than 75%, with Alphabet registering an 86% gain. It was an extraordinary time. Since then, of course, we have seen more volatility. Yet the portfolio has continued to perform well. We revisited the portfolio holdings last October – and decided to rebalance, pare down the risks, and ensure it held the best high-quality businesses to prepare for a possible recession. Recession fears have since abated... and the stock market has risen dramatically. Still, the portfolio has continued outpacing the market. Despite a slightly more conservative approach since October, it has participated in the rally thanks to solid double-digit gains through year-end in e-commerce giant Amazon (AMZN) – up 49%... software maker Salesforce (CRM) – up 34%... and capital-efficient homebuilder NVR (NVR) – which was up 36% as the year ended. These are all great businesses that are rewarding investors. For 2023, Stansberry's Forever Portfolio outperformed with 18.6% gains compared with 17.6% for the benchmark S&P 500. And it earns an A for the 2023 report card. Since inception – March 25, 2020 – the portfolio has produced 88% total gains (23.4% annualized), slightly underperforming the benchmark's gains of 102% (27.1% annualized). Even though these are still fantastic returns that most investors would relish... due to lagging the benchmark, it earns a B+ for the five-year period. The Quant Portfolio: A (1-year) It's the culmination of our company's work. And its origins date back to 2007 when our founder – Porter Stansberry – recommended chocolate manufacturer Hershey in our flagship publication: Stansberry's Investment Advisory. He called it "Our Best 'No Risk' Opportunity Ever" and introduced the concept of capital efficiency. He wrote... I have come to believe evaluating capital efficiency gives us a permanent edge in the market, as almost everyone else ignores this crucial variable... Few people even understand the concept. The quants in the firm squirm when I simplify their hard work and complex calculations. But simply put, capital-efficient businesses are companies that have wide operating margins, generate large amounts of cash as a percentage of sales, can scale the business, and require very little capital to maintain operations. It sounds easy. But the data analysis (not to mention volume) is far more complex than my simplified explanation. Our team of talented analysts has developed a proprietary system that evaluates and ranks – every day – the most capital-efficient businesses in America. If you've been with us awhile, you will know that capital efficiency has been the cornerstone strategy of our flagship publication for more than 15 years. Financial well-being is another important factor. As with capital efficiency, we analyze every company in America looking for quality earnings and cash flow, with robust balance sheets. Equally important is knowing when to buy these stocks. Remember, picking great businesses is only one part of the investing equation. Buying them at the right price is what determines your returns. And, of course, we want the trend in our favor. In other words, we've taken the wisdom gleaned during more than 20 years of our company's history... and applied a quantitative approach by putting actual numbers to these factors to create a proprietary metric. We call it the Stansberry Score. It's a measure of capital efficiency... financial health... value... and trends. If these traits sound a lot like the five fundamental factors used by Asness and his fellow quants... well, we told you you'd recognize them. Our system rates around 4,750 companies every day and assigns a score between 0 and 100, with 100 being the highest quality. The Quant Portfolio takes the highest-ranked companies – with a score of more than 85. It then runs an optimization algorithm (with more than 160 trillion potential outcomes) to predict which stocks will provide the highest returns in the future... assembling the best-suited combination of those stocks with low risk into a carefully allocated portfolio of 15 to 20 stocks. It's extraordinary stuff. Before taking this portfolio live, we performed years of back testing – applying various factors to determine performance and risk. We then ran the portfolio live (for our internal team) in 2022 with outstanding results... rising during a period in which the S&P 500 was down by double digits. That's exactly what we designed it to do. We were so impressed with the results that we decided to release it to our Alliance partners last June. They've enjoyed the experience. I know its track record only covers a little more than six months of 2023... But as you can see in the chart that we shared with subscribers this week... it has already experienced a period of volatility in the market... In August, the benchmark S&P 500 dropped by more than 1%. Yet The Quant Portfolio was up more than 3%. When the S&P 500 dropped by 5% in September... our portfolio fell less. This is exactly what we designed it to do... outperform the market with lower risk. Since inception – June last year – through the end of 2023, The Quant Portfolio produced 14.4% gains compared with 12.5% for the S&P 500. We don't normally grade publications based on less than a year's track record. But because this is a new product with a fully allocated portfolio, we considered it appropriate to share the results with you. Congratulations to the investment committee and the entire team behind the development of this impressive new product. The Quant Portfolio earns an A for its inaugural year in the Stansberry Report Card. Before we move on... When former hedge-fund manager Whitney Tilson joined us last November... he loved the strategy. He embraced the opportunity to get involved and urged me to make this available to all our subscribers as soon as possible. If you've not yet seen it, you can see Whitney's presentation on The Quant Portfolio [right here](. Everyone should watch it. We also have another portfolio service that's outside of our Portfolio Solutions but that we evaluate the same way... the overall performance of the entire portfolio, rather than the average of different holdings. That's our Gold Stock Analyst, which has two portfolios of precious metals stocks: the Top 10 (gold) and the Fave 5 (silver). Gold Stock Analyst Top 10 Portfolio: C+ (1-year), B (5-year) Last year saw a return to profit for GSA Top 10 investors. I know John Doody – now editor emeritus for GSA – is a long-term gold investor. He is not bothered by the short-term volatility in the market. He is confident gold will outperform over time... and that it's about to start its next leg higher. As you know, John's track record over the long term is impressive. Since 2001, the GSA Top 10 portfolio is up 779%... beating the S&P 500, which was up only 463%. Likewise, John has crushed the benchmark VanEck Gold Miners Fund (GDX), which launched in 2006... racking up a 26% gain compared with the fund's 12% loss including dividends over the same period. While the precious metal climbed modestly in 2023... the benchmark GDX finished up roughly 10% for the year. The GSA Top 10 portfolio was also up... albeit lagging the benchmark slightly at 8.9%. As every gold investor knows, buying gold stocks provides leverage to the price of gold. If gold can break through resistance – like it has threatened to do over the past few years – and stay north of $2,100 an ounce... history has shown that the GSA Top 10 portfolio will outperform over the long run. It wouldn't be fair to paying subscribers to give away the name of any stocks in the portfolio. But as Alliance members and GSA subscribers know, John added a new stock to the portfolio in December. As with all stocks that make the cut for the Top 10 model portfolio, John applied his proprietary analysis to evaluate the quality of the company's mine, production, management, and economics to arrive at a target price. If the share price reaches his target... investors will triple their money. While we're more interested in how gold and the GSA portfolio perform over a much longer time period... this year's Report Card is about 2023. Naturally, we're happy to see a positive return for the GSA Top 10 portfolio. However, given the portfolio lagged the benchmark slightly, it earns a C+ for 2023. For the longer five-year period, the GSA Top 10 portfolio slightly outperformed on the average gains yet underperformed in total gains, and earns a B for the longer five-year period for this year's Report Card. Gold Stock Analyst Fave 5 Portfolio: F (1-year), A+ (5-year) As subscribers know, the GSA publication also offers insights to the silver market and manages a portfolio of five of the best silver miners on the planet. While silver prices generally move in lockstep with gold... last year saw the spot price remaining flat (down 0.3%). With a lackluster year for the metal... the Fave 5 portfolio struggled. It dipped 12.4% even as its benchmark, the Global X Silver Miners Fund (SIL), registered a tiny 1.3% gain. However, keep in mind... while silver is often referred to as the poor man's gold... the moves in the spot price are normally far more dramatic than its more expensive cousin. For example, during the 1980s boom, gold soared more than 700% to its high of more than $800 an ounce. Silver skyrocketed more than 1,000%. We saw a similar scenario in the 2000s when gold climbed 600% to its high in 2011... yet silver soared more than 960%. And the results for silver miners can be even more explosive. But it cuts both ways. Yes, silver can outperform in a bull market. But when gold drops... silver can plummet even further. You must be mindful of the relationship and invest accordingly. Over the longer five-year period, though, the Fave 5 achieved a 49% total return – more than double its benchmark's 21% total return. While it was a disappointing 2023 for silver, the Fave 5 portfolio earns an A+ for the five-year period. Now let's cover our trading services... Since we don't use fully allocated portfolios in our trading services, we look first at each position's average gain versus how the benchmark S&P 500 performed during the same holding period. Next, we average the annualized performance of each individual position – a number that shows what would happen if you were to repeat a trade's performance for one full year. Because most trades in these services are held for days and weeks rather than years, it allows us to compare expected results over a longer period. Lastly, we evaluate our services' win percentages to see how consistently they're making money for subscribers. Our three trading services are Ten Stock Trader, Retirement Trader, and DailyWealth Trader. Here's how they scored... Ten Stock Trader: A- (1-year), A+ (5-year) He called it almost to the day... Get ready to be a contrarian and capitalize on the other side of this fear with call options. Ten Stock Trader editor Greg Diamond sent that note to his subscribers on October 23 – just four days before the summer market decline stopped... and shot up 16% to end 2023. If you've been following his work for any period, you will know that Greg has been on a tear for a few years now. He crushed the market in 2022 with a staggering 23% average gain while his benchmark tanked more than 25%. His track record showed a modest 3.2% average gain for 2023 – about flat with the benchmark at 22.4% annualized. But if you caught one of his hot streaks... you should have booked huge gains. And he had a couple of long winning stretches last year... Over a single month-and-a-half stretch starting in mid-April, Greg put on 11 trades. He booked gains on every one of them. And five of the 11 were triple-digit winners, including a 197% gain on a Tesla (TSLA) call option. The average gain on these 11 trades was 88%. If you thought that was a fluke, consider this: From August 28 through the end of the year, Greg placed another 20 trades... this time booking 19 winners for an incredible 95% win rate. The average gain across all 20 positions was 18%. Now, I know I'm highlighting the hot streaks. Don't worry, I look at the losses too. The key, of course, is managing risk. Greg worked at a $3 billion hedge fund and a $35 billion pension fund before joining Stansberry... so he is well aware of risk. In 2023, Greg's winners far outweighed the losers. A 68% win rate trading options in a choppy market is no easy task. The only reason I don't award a higher grade than A- for his 2023 results is that I'd like to see the average gains a little higher. As you can see, his longer-term (five-year) track record is outstanding. And earns him an A+ for this year's report card. One final comment on Greg's service... I understand people sign up to receive Greg's trades in Ten Stock Trader. And based on the subscriber feedback I receive, they seem as thrilled as I am with his track record over the past few years. But it's worth highlighting something that is as valuable as the trades themselves. Greg's weekly market commentary provides invaluable insights for investors. Each Monday, he shows subscribers what he is looking at in the markets. It could be an industry sector... bonds... stocks... currencies... sentiment... technical indicators... or time analysis. And he explains what it means for the market. He has made some contrarian, even controversial, calls over the past couple of years that have proven timely and accurate. The note he sent in October telling subscribers to get greedy is a prime example. Even if you're not interested in trading options... anyone serious about investing should be reading his publication. Retirement Trader: A- (1-year), B- (5-year) Doc's done it again... Every year I shake my head at the consistency he achieves in the options market. I know options scare most people. They consider them too risky. But I wish more people would take the time to understand Doc's strategy. Because I'm certain many people looking for income in their retirement would benefit from following Doc and his team in Retirement Trader. We have lots of letters from Doc's subscribers who are delighted with the results they achieve year in and year out... like this one from paid-up subscriber R.D.: I signed up for Retirement Trader about 6 months ago, watched the training videos about 5 times till I fully understood what I was doing and how to execute an options trade in my account. I started slow until I built my confidence, made a couple of small mistakes along the way. But now I have the confidence to make the trades and look forward to having the $ dropped in my account. I almost feel guilty over this. I'm in my mid 50's and plan on retiring earlier than I originally had planned. I wish I would have learned this 30 years ago. I look forward to teaching my kids about this to help them with their financial future. Kudos to Doc, keep up the great work. We love to hear feedback like this. It affirms how Doc is making a difference in subscribers' lives by educating them and keeping them safe with this income-generating strategy. You see, Doc isn't buying options in the market hoping for big gains. He takes the other side of the trade... He sells options on some of the biggest, safest blue-chip companies in America. He likes to call it "selling portfolio insurance" on stocks that aren't likely to need much protection. He's not swinging for the fences. Instead... Doc and his team are booking small and steady winners like a gain of less than 6% in JPMorgan Chase... or 3.6% on Walmart. He generally holds these trades for only a few weeks... meaning you can rack up annualized gains of closer to 10%, like Doc did in 2023. As for the 90% win rate... there is simply nothing else that I'm aware of in the options market that comes anywhere close. What's more, our metrics for the Report Card count positions as losers if they're down at the close of 2023. As Doc often reminds his subscribers, using his strategy, many newly opened trades show temporary losses... but they reliably rise in value as options approach their expiration dates. Based only on closed positions, Doc's win rate stands at 100% going all the way back to March 2020... nearly four years, and 193 trades, without booking a single loss. It's an impressive performance... especially given the past couple years' volatility in the markets. Doc gets an A- for 2023. The only thing holding me back from awarding higher than an A- for 2023 is I would like to see a higher average (and annualized) gain. At more than 40 trades for the year, it's a lot of activity for a small average gain. Likewise, for that same reason, Doc earns a B- for the five-year period in this year's Report Card. DailyWealth Trader: A (1-year), B- (5-year) Editor Chris Igou is two for two. Chris took over the reins on DailyWealth Trader in April 2022 and earned himself an A in his first Report Card last year. That was no mean feat given the volatility we saw in 2022. With a 65% win rate, Chris booked a small average gain for the year while the overall market tanked. His benchmark lost 4% for the year. In 2023, 67% of his trades ended up winners. And Chris booked average gains of 4.3% (29% annualized) and edged out his benchmark by 130 basis points (1.3 percentage points). Chris has navigated the volatility over the past couple of years exercising both long and short trades. When volatility hit the markets last summer, he booked a quick 68% win on the short side with homebuilder PulteGroup (PHM)... and another 58% on consumer-goods behemoth Procter & Gamble (PG). And when the market turned bullish in October, he went long, with several positions showing double-digit gains as we closed out the year. One thing I've admired about Chris' strategy is how selective he is with his trades. I've mentioned this before in these pages... but it's worth a gentle reminder again here. It is my view that most people simply make too many trades. Trading is a difficult enough endeavor... made harder by people who think they will simply trade more to earn more. But that's a fallacy. Traders would do far better if they put more time into their analysis... and exercised more patience to be more selective. This stacks the odds of success in their favor before pulling the trigger. Chris made 36 trades last year... and 37 the year before. That is plenty. And when you consider the tremendous value he adds with his educational material each day... that alone is worth the price of admission. Chris earns himself an A for 2023. The five-year period also proved successful with an impressive 71% win rate. But because the average gain came in slightly under the benchmark, the publication earns a B- for the five-year period. These are all the publications we'll cover in this first part of our 2023 annual Report Card... Look for our Report Card to continue with more grades next week. Again, I welcome your feedback on our performance and my grades... I'll read every e-mail. --------------------------------------------------------------- Recommended Links: ['This Is How I'd Invest $1 Million']( "This is how I'd invest $1 million right now," says legendary investor Whitney Tilson. He's posting a new portfolio of stock picks for 2024. He isn't buying the Magnificent Seven... or putting an equal amount of cash into each. Instead, he's using the Monte Carlo method to see which of 4,817 stocks could double your money. [Click here for the full details](. --------------------------------------------------------------- ['I Found the Answer to Retirement']( A subscriber from New York came forward with his unique story of how he retired early and worry-free WITHOUT stocks... thanks to ONE single idea that anyone can use. Now he sees 16%-plus annual returns with legal protections... and he NEVER has to worry about another market crash again. [Get the full story right here](. --------------------------------------------------------------- New 52-week highs (as of 1/31/24): Ciena (CIEN), Cencora (COR), Commvault Systems (CVLT), Eli Lilly (LLY), Novo Nordisk (NVO), Phillips 66 (PSX), RenaissanceRe (RNR), Construction Partners (ROAD), and Stryker (SYK). The Report Card always makes for a long Digest. So we'll forgo the mailbag today. But tell us what you think of Part I of our annual review with a note to feedback@stansberryresearch.com. And stay tuned next week for more of our grades. If you didn't see a publication covered today, don't worry – it's coming. Good investing, Brett Aitken Publisher Baltimore, Maryland February 1, 2024 --------------------------------------------------------------- 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 1,328.1% Retirement Millionaire Doc MSFT Microsoft 02/10/12 1,259.1% Stansberry's Investment Advisory Porter wstETH Wrapped Staked Ethereum 02/21/20 1,011.3% Stansberry Innovations Report Wade ADP Automatic Data Processing 10/09/08 887.5% Extreme Value Ferris WRB W.R. Berkley 03/16/12 746.1% Stansberry's Investment Advisory Porter BRK.B Berkshire Hathaway 04/01/09 580.4% Retirement Millionaire Doc HSY Hershey 12/07/07 471.7% Stansberry's Investment Advisory Porter AFG American Financial 10/12/12 418.9% Stansberry's Investment Advisory Porter BTC/USD Bitcoin 01/16/20 375.3% Stansberry Innovations Report Wade PANW Palo Alto Networks 04/16/20 358.6% Stansberry Innovations Report Engel 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 3 Stansberry Innovations Report Engel/Wade 2 Retirement Millionaire Doc 1 Extreme Value Ferris --------------------------------------------------------------- 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 2,053.7% Crypto Capital Wade ONE/USD Harmony 12/16/19 1,095.1% Crypto Capital Wade POLYX/USD Polymesh 05/19/20 1,038.8% Crypto Capital Wade BTC/USD Bitcoin 11/27/18 1,034.8% Crypto Capital Wade MATIC/USD Polygon 02/25/21 833.2% 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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