Dr Sjuggerud S Research Papers


StansberryResearch.com

 

StansberryResearch.com, home of Stansberry & Associates Investment Research, is a publication website used by independent writers to publish their own personal investment newsletters.

Though Stansberry Research works hard to seem like an investment company, the reality is that they are simply an umbrella website that draws internet traffic to a single site and then sells subscriptions for a variety of people who use them for publishing purposes.

Porter Stansberry, who runs Stansberry & Associates Investment Research, is perhaps best known for his devoutly anti-government stance and his use of viral videos and essays on topics like “The End of America” to bring interest and clientele to his company.

While working for Agora Financial, another financial newsletter publishing company, Stansberry and Pirate Investment were successfully sued by the SEC for defrauding subscribers of a newsletter Stansberry wrote under the name ‘Jay McDaniel.’

The judge found Stansberry guilty of intentionally defrauding his clients by falsely claiming to have the ‘inside track’ on government deals and charging his clients $1,000 each for access to this ‘inside’ information. In addition, Stansberry used the rising price of the stock he was promoting as proof of his knowledge and reliability to convince further clients to purchase the stock.  Since the stock price was only rising due to the purchases of his earlier clients, who were purchasing based on the fraudulent information given to them, Stansberry was additionally found guilty of price manipulation.

Stansberry appealed the court’s decision in 2001 but the guilty verdict was upheld.  A further effort to appeal the ruling was denied.

Stansberry likes to point to his conviction as “persecution by the federal government” who are denying him his First Amendment rights to free speech in order to stop him from revealing the evil truth about America.  It’s an interesting theory, but last time I looked over the SEC’s case against Stansberry, the federal government received no injury from Stansberry’s actions.  Rather, the people who were hurt were the clients who paid a subscription to his newsletter and then had their money taken by Stansberry and Pirate Investment.

A handful of subscribers to Stansberry & Associates Investment Research do say good things about one or two of the newsletters published there, but in general I would recommend looking elsewhere for investment advice.  Knowingly putting your trust in a company run by a man who has already been convicted of fraud, who is known to write newsletters under false names, and has already been found guilty of stock price manipulation just doesn’t seem the smartest thing to do with your money.

From Dr. Steve Sjuggerud, Editor, True Wealth Systems:

The conventional wisdom says stocks have historically made for the best long-term investments.

But a new academic paper written by a number of economics professors titled “The Rate of Return on Everything, 1870-2015” reached a surprising conclusion.

Let me explain…

“Residential real estate, not equity, has been the best long-run investment over the course of modern history,” the authors concluded.

In all my decades in finance, nobody has seriously challenged the notion that stocks are always the outperformers over the long run – until this paper.

The academics studied data from 16 advanced economies (not just the U.S.), going back to 1870, building new data sets as necessary.

Here’s what they found:

In terms of total returns, residential real estate and equities have shown very similar and high real total gains, on average about 7.5% per year.

Housing outperformed equity before WW1. Since WW2, equities have slightly outperformed housing on average, but only at the cost of much higher volatility and cyclicality.

The last part is the really important part… housing has delivered similar returns, but with much less volatility.

The researchers also point out that for the highest gains and the lowest risk, you REALLY want to own both assets. That’s because they’re uncorrelated, meaning one when zigs, the other doesn’t necessarily zig or zag.

Specifically, the returns on housing and the returns on stocks have not been that correlated since World War II, the academics tell us. Therefore, you get “significant aggregate diversification gains from holding the two asset classes.”

A few caveats…

  • It’s hard to put their study into practice. You and I can’t easily own residential real estate portfolios in 16 countries.         
  • The total returns on housing INCLUDE rent, which historically makes up about half of the total return in housing.
  • This doesn’t assume a mortgage… But most people have a mortgage, which changes the risk/reward profile dramatically.

I could go on with the caveats. And I have to admit I haven’t spent a long time dissecting the paper yet. But doing that misses the point…

The big story out of this paper, to me at least, is that housing (including rent) might actually be a much better performing asset class than we ever thought.

It’s also nice to see that it’s been somewhat uncorrelated to the stock market since World War II.

Someday, the stock market will finally turn over and start to head down. The fall in stocks could ultimately be serious and long-lasting, as stocks are pretty darn expensive right now.

If the academics are right, housing could be a good alternative when stocks start to falter… delivering solid total returns, regardless of the stock market.

Good investing,

Steve

P.S. For the last few weeks, I’ve been secretly working on something I’m calling the “Melt Up Millionaire” Project. I can’t share all of the details here just yet… But on Wednesday night, I’m hosting a free live event where I’ll explain everything you need to know to make the biggest gains possible. Reserve your seat here.

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