◼ FINANCE Bloomberg Businessweek July 27, 202023STANSBERRY:
STANSBERRY
RESEARCH.
ILLUSTRATION
BY
KATI
SZILAGYI
● The bull is calling the tune, but prices are high and some pros are
getting anxious about what will happen when the music stopsInvestors Can’t
Stop Dancing
Iftheyear 2020 wasn’tweirdenoughalready,
addthistothelist:TheU.S.isinthemiddleof
arecession,yetsomeprofessionalinvestorsare
worried that the stock market may be rallying itself
right into a bubble.
WhilemostAmericansarestilltryingtoavoid
crowdstostemthespreadofthecoronavirus,
investorsarecrowdingtightlyintosharesoftech-
inflected companies believed to have the least at
risk from the economic disaster. To buy into the
U.S. stock market right now means paying about
$23foreverydollarofearningsfromcompaniesin
theS&P500,themostina decade.TheNasdaq 100
Index’svaluation, at 34 times earnings, is the high-
est it’s been in more than 15 years. These numbers
are unusually skewed to the biggest names, which
investors have piled into. The five largest U.S.
stocks—Apple, Microsoft, Amazon, Google parent
Alphabet, and Facebook—now account for almost
a quarter of the total market value of the S&P 500,
comparedwithabout12%in2015.
Thecheapestprice-earningsratioamongtheBig
Fiveis about30.At37,MicrosoftCorp.’sis thehighest
since the euphoric dot-com heyday 20 years ago.
That said, a few other names have also taken partinvestment ideas. “The ideological underpinning
of newsletters has always been populist and anti-
Wall Street,” says Mark Hulbert, who’s tracked the
industry for more than four decades with Hulbert
Financial Digest Inc. “Stansberry has always been
very good at tapping into that sentiment.”
In 2003 the Securities and Exchange Commission
sued Stansberry and a newsletter he edited, Pirate
Investor, for disseminating false information tied to
a Maryland energy company. Stansberry emailed his
readers: “DOUBLE YOUR MONEY ON MAY 22ND ON
THIS SUPER INSIDER TIP.” He would reveal which
companyonlyif hissubscriberspaid$1,000,and
hehadplentyoftakers.Thattipnettedmorethan
$1million in sales, but the SEC said it was bogus.
After a multiyear legal battle, Stansberry and Pirate
were ordered by a U.S. District Court to pay $1.8 mil-
lion in disgorged profits and penalties. He’s argued
that the SEC infringed on his First Amendment right
to publish financial commentary; the New York Times
agreed with him in a 2010 editorial titled “The Right
to Be Wrong.”
Stansberry has had another regulatory run-in as
well. In 2011 the company paid a $55,000 penalty to
the Social Security Administration for claiming to
have “insiders” at the agency and agreed to cease
promoting his Get Social Security No Matter What
Your Age publication. The company didn’t admit
wrongdoing. Stansberry was also called out in 2013
by the liberal group Media Matters for America for
using racist and homophobic slurs on his online
radio show. He told listeners that it’s “bulls---” if
he’s criticized for using such terms when he’s “not
the least bit bigoted.” In an emailed statement, Brett
Aitken, publisher at Stansberry Research, said “the
words [Stansberry] chose, and the way he tried to
articulate his message, obscured the point he was
trying to make,” that words need to be judged in
context. Aitken said there’s no place for racism or
homophobia at the company.
Stansberry has worked on building a bigger
media footprint in recent years. Stansberry Research
publishes a free online political magazine called
American Consequences, which advertises the com-
pany’s newsletters. His podcasts have drawn big
right-wingnamessuchasGlennBeckandAlex
Jones,aswellasmoremainstreamfinancialcom-
mentatorsandjournalists.WhitneyTilson,thehigh-
profile former hedge fund manager, teamed up with
Stansberry to write his own paid newsletter. “I did
so because he’s built a very impressive business,”
Tilsonsaidinanemail.�MattRobinsonTHE BOTTOM LINE In the years after paying a big fine to the
SEC, Porter Stansberry has built a network of newsletters and a
sprawling online presence.