Stansberry Radio Network Blog

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April 07, 2014

My Worst Investment Play Ever...

Was right in the middle of the dot bom runup.

Many may have followed along with me, but I hope not too many.  I proudly bought ATHome, the only REAL fast internet of its day.  Seemed like a great play, internet was booming and faster access... how could you lose?  You also got Randolph Hearst III as a free bonus.  (Almost like buying a pipeline today) I was "excited" that the broker knew even more about this stock than I did.... and it just continued to climb.... until it didn't....

So it just kept going down down down down.  I didn't double down... but I guess the company did. After it was on the way down as I recall, they hooked up with Excite! which was a worthy adversary of Lycos and a few other search engines.  These had been going great as well, Yahoo - was the true trendsetter.

What's a trailing stop?  Had never heard of one... And well, I rode it all the way to zero if you can believe it.  Once it gets to zero there really isn't even a dead cat bounce.  To sort of quote Ben Stein "Selling the stock would have been tantamount to admitting a> I didn't know what I was doing and b> I should have probably never bought/owned it in the first place"

Paid up Alliance Member

A chronicle of this (but I didn't get mentioned in the article) was written by Frank Rose, "The $7 Billion Delusion," Wired Magazine, Jan 2002.

April 03, 2014

Still Taking The Bait

Hi Porter and Aaron,
I really enjoy the no-nonsense radio broadcasts.  I never miss one and can say that I've learned quite a bit from them.  Since I derive pleasure and knowledge from them, I thought I could take a minute to give you the info you requested.
About 3 years ago I became an "accredited investor".  I don't even know how people found out, I suspect it was from my online brokerage account.  As soon as that happened, I got on some calling list and people were calling me weekly wanting me to invest in everything under the sun, including movies, oil wells, and gold mines in Peru.
I'm ashamed to say that I caved and invested in an oil well in TX about 2 years ago.  So far not a penny has come from that.  I also invested in a gold mine in Peru about 3 years ago.  So far no money back from that, but there has been progress.  That one may actually pan out, but I'm not holding my breath.  The latest one I invested in was a company that locates and qualifies plaintiffs for court cases where people have been harmed by medical devices or drugs and such.  I only put a little money into the last one.  Have I learned from my mistakes, maybe.  But the allure of big profits keeps drawing me in.
I earn quite a bit of money, and these little adventures have cost me some, but have not been devastating.  They're just a small part of my portfolio.  But they are, so far, the biggest investing mistakes I've made.
Thanks for all you guys do.
Alliance member,
T. S.

April 03, 2014

Real Estate Nightmare

The worst investing mistake I ever made was buying 21 houses in Metro Detroit using the "nothing down" techniques you learn on late night T.V.  It worked a little too good for me.  Then 2007 came and there were many months where only 5 or 6 tenants could pay.  I refused to face reality - partly because of ignorance and partly because of pride - and I poured in money to keep the mortgages current.  When my money ran out I used credit cards.  When those hit their limits I borrowed from family and friends.  In the end I ended up losing most of the properties anyway and I had roughly $150k in debt to friends, family, and credit cards.  I EVEN QUIT MY JOB before the crash to focus on acquiring properties full time.  Stupid, stupid, STUPID.  

So I've spent the last 7 years digging myself out of that hole.  Went back to work.  So I've paid off nearly all that debt with income from an hourly job.  That's a hard lesson to be reminded of every day, every hour that I'm trapped behind a desk.  It's one I will never forget. Instead of building up investment capital the last 7 years and putting it to work in a bull market, I've been paying off debts.  

Another big takeaway for me is that I should always have dry powder.  Because after the crash, I could have picked up DOZENS of nice rental properties in good areas for 2 to 3 times annual rents in Metro Detroit.  Seriously.  But I had to watch all that slip through my fingers as I dealt with my financial crisis.

That was my biggest mistake(s).  

Paid up long armer,


April 03, 2014

Averaging Down

My Worst Trade:

About Me. Male, 33 years old, Alliance Member, I'm an Internet marketer and habitual business starter.

Total portfolio value was around 60K.  I came across a stock from someone I knew called YLWPF a phone book company that had a nice looking dividend. Here are the exact trade dates and something I should consider framing to ensure I never repeat the stupidity.
03/29/2011  14:32:10        Bought 871 YLWPF @ 5.635
06/07/2011  09:50:23        Bought 1800 YLWPF @ 3.623

06/29/2011  09:31:22         Bought 4730 YLWPF @ 2.4985

10/28/2011  09:30:00         Bought 22500 YLWPF @ 0.3575

09/13/2012  15:50:56         Sold 5000 YLWPF @ 0.072

09/14/2012  11:31:58         Sold 26000 YLWPF @ 0.072

10/08/2012  13:18:30         Sold 265 YLWPF @ 0.051

10/08/2012  21:52:30         Sold 0.405 YLWPF @ 0.05
During the time I also reinvested the dividends using drip.

What I did wrong

1.    Purchased a company without doing do diligence.  I did read a single annual report and listened to a conference call but did no comparisons to other companies in the industry.  Basically I did not understand the industry or the company.

2.    Purchased a company that was no longer relevant.  As a young person I already knew the only time I touched a phone book was to pick it up from the front porch to move it to the trash can. This is just like Kodak.

3.    I not only double dipped but triple dipped.  I dissevered to lose my money

4.    I did not have a stop in place

5.    I was emotionally tied into the investment

6.    I was WAY  over allocated funds to this investment.  If I was older and had no new income to invest I basically just screwed up my retirement
I have several other trades that I did dumb things with.  However this is the trade that has taught me the most lessons.  I’m fortunate enough to of learned these valuable lessons while I’m young.
I'm sharing this in hopes others can learn.

All The Best,

April 03, 2014

My Worst Investment

#11 on your not what to do list - Never buy a "hot stock tip" from a friend. 
 I bought Solucorp (SLUP) a company that specializes in preventing pollution from heavy metals and a host of other environmental "concerns".  I bought it (prior to discovering your newsletters) when environmentalism was all the rage, broke the rule about buying stocks under $10, then broke the stop loss rule to watch it melt away.  It currently sits in my portfolio with a 99.3% loss as a constant reminder to ALWAYS follow the stop loss rule.
 Fortunately I kept my investment to a minimum and it's been one of my best learning tool -  G.

April 02, 2014

Black Label - My worst investing mistake story

Porter asked for our worst investing mistakes in the Black Label Show.  Mine's a doozy.
My worst investing mistake blends a triumvirate of classic investing "nevers" into one idea.
I was following the Direct Line, and particularly the story about Gold and GDX was of interest to me.
Back in April it was likely the market was going to correct downwards and it was a certainty that GDX was oversold. 
The BPDM was at zero on April 12, 2013!  It couldn't get worse, or so I thought!
I got excited about "the story" that I created in my head - and which I wanted to believe -of a reversion to the mean.  Even a small bounce would have led to huge gains after such emotional selling.  
Error #1: I got emotional.  I can still remember how excited I felt.  I felt like I had to sell other positions in order to have a huge chunk of cash to use.  I felt like I had to place the order right now.  It felt incredibly urgent, my heart was beating fast.  I was excited and enjoying the adrenaline rush as I thought about the profits - if I could just get my position in before everyone else.
Error #2:  I bought Calls.  Yup, betting with options; classic mistake. 
Error #3:  My position was not sized appropriately.  Half of that trading account's value was in GDX Calls.  It was a lot of money.
I felt physically ill in the days that followed as so much of my money vanished.
But I had not yet learned; I did the exact same thing to myself in June.
Looking back it was the greatest lesson I have ever learned.  
I'm just really grateful that the money, though it was a large sum, was not significant to my life or lifestyle.  Losing it did not have an effect.
I have since made all of that money back, and then some in that account.  But I'll never forget my painful lesson.
Now I'm less emotional and I will not make a trade if I feel a sense of urgency about it.
Now I'm a net seller of options.
Now my position-sizing is correct for normal positions and very, very small for speculations.
--A guy who's still hoping his wife never finds out (at least I made it all back!)
Name withheld (Just in case his wife reads this)

April 02, 2014

Don't Be A Gambler

OK, Porter, this probably won't do you much good, but my greatest mistake was 33 years ago.  I had inherited a bunch of cash and stocks from my mother's estate.  
I had a broker contact me, and I listened to him.  Throughout 1979 and 1980, I bought options (and actually made $77,000 in March of 1981).  By August of 1981, I had lost all of that and around another $300,000.  So this speaks to your point about don't be the gambler, be the casino.
Smarting from that made me think over the next 30 years about how it happened and how to avoid it in the future.  And that's how my strategy of selling options (which I had formulated before I became aware of your services, and precisely why I subscribed initially - because you were suggesting what I had already determined worked) developed.
NOW, SINCE that time, the worse mistake I made was not paying attention to my advisory services (another of your points) and staying in WLT after the service had advised buying to close the put, and then compounding that by violating another of your points, "averaging down" with a second round of puts.  And, of course, since I believe that the coal producers will eventually recover, I am violating another of your points by not selling the damned thing at a $20,000 loss

April 02, 2014

My Worst Investment in The Last Five Years

My worst mistake in the last five years was buying several mining stocks and then not following the 25% trailing stop rule and hanging on for 40%, 50%, 60% losses.
At this point I have not sold them because I believe they will eventually go up, but I should have sold long ago. Fortunately, I have a diversified portfolio and I have done well in other stocks over the last five years, using many Stansberry and Associates picks.

April 02, 2014

Worst Investing Mistake

Dear Aaron and Porter,
It is a good thing being stupid on occasion in not a crime otherwise I would have been locked up and the key thrown away.
You wanted the worst investing mistakes every made.  Does real estate count?
My wife and I bought a property in Cape Coral, FL in about 1998 for about $10K (sight unseen but it was on a canal and was supposed to get inner coastal access in the future).
We could afford the $10K so made the purchase.
In about 2006 while we were still living in Atlanta we got a call from a resource developer with an offer of $225K for the property.
My wife called around to the various real estate people and the feedback we got was that the property would not go up as dramatically but there was still the expectation of around a 10% gain per year in property values.
You all know where this story is going.
We did not sell and of course after 2008 the property was selling for about what we paid for it.
We could have had our house mortgage paid off and I would have had that money to invest so I figure that was well over a million dollar mistake if one considers the opportunity lost.
My gut told me to sell but I deferred to the information my wife got rather than doing some numbers work and evaluating what could be done with the mortgage payments over time, i.e. investing that amount each month at some nominal/conservative rate and comparing that to keeping the property and evaluating worth based on the numbers given by the real estate folks.
But as usual a bird in the hand…………………..
We sold in 2010 for $20K.  Getting back what we had paid in taxes over 12 years and some small appreciation. 
Perhaps the second mistake was to have let the property go rather than waiting out the market for real estate in the area.  I figured the $225K was so over valued for the property it would be decades before that price would come back if ever.  We took the $20K.
Oh well such is life.
I still got my mortgage paid off and started investing in stocks (vs. just mutual funds in IRAs and 401K) including the various picks from the PWA membership.
Now I tend to sell too soon if I buy a stock like Baidu or NetFlix but I tend not to lose money that way either.  Take out your investment in the high flyers once you have 100% gain and then if you want to gamble with the rest so be it.
As always enjoyed the show and thanks for all the information and mayhem as well.
Take care guys.

April 02, 2014

Investment Blunder


I can say with the utmost confidence that my greatest investment blunder(s) occurred when I first began investing  on my own in 2011. 
I made every conceivable mistake mentioned in the latest edition of the "Black Label Show". Specifically, my worst mistake; and a possible eleventh "investing don't"; was making my first stock pick and having it become a huge winner, almost immediately. 
I looked at what was then known as Heckmann Corp (water management), saw that it had a strong balance sheet (as far as I could discern) and bought solely because it was trading near its 52 week low and thought "probably can't go lower", and it didn't. 
It went from 2.47 per share to $5. Unfortunately I then dubbed myself an investing Demi-God and reveling in my own genius I managed to compile an impressive track record of losers. 
I have since become a student of the markets; subscribing to several S&A publications, reading every book mentioned by you and your analysts and currently work for a Fortune 500 Financial Firm as a financial advisor and spend my days working my tail off to prevent my clients from making the same mistakes that I did (while regularly pushing your newsletters as well, much to the disdain of my employer). 
I have found my passion in life and it all began when I became a subscriber to S&A. 
I am dead serious when I say that my goal is to eventually work for S&A (also to the disdain of my current employer, probably) and I look forward to sending an idea to you within 2 years. Until then I shall continue to be a student of the market and inadvertently, a student of Stansberry. 
I apologize for hijacking this feedback email to gush but I couldn't help myself. Thank you for all that you and your associates do to make our dollars worth while. All the best.

Warmly, Matt

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