ALERT: Stansberry Research Spews Dubious Investment Advice

stansberryIt starts out with a warning about “Obama’s Secret New Tax” and then goes on to state, categorically, that “the more you trade and invest, the more likely you are to get hit hard” by this new “devastating” law called FATCA.   Stansberry Research is blasting emails and paid ads drumming up concerns about this law.   It “guarantees” that the new law will “….actually bring our country and our way of life to a grinding halt” in a video posted at the Stansberry web site.   Notably, this dubious pitch targets senior citizens, who are often vulnerable to fear-mongering. Like most of the Internet doomsaying,  it turns out that the truth is being held hostage by information hucksters looking to take your money.    And these kinds of outrageous or dubious claims are highly characteristic of Stansberry and his “researchers”.

Recently Stansberry has seized upon this new law to hawk a $99 newsletter.    But who is Stansberry Research?   He’s clearly controversial and has been labeled a scam artist by some.    A fraudster by others. Stansberry Research is headed by Porter Stansberry.   A Google search revealed few, if any, credentials, that Stansberry has as a financial analyst.   It does reveal that while working for Agora Financial, another financial newsletter publishing company, Stansberry was successfully sued by the SEC for defrauding subscribers of a newsletter.   According to Reviewopedia, Stansberry was found 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.   In 2007, Stansberry (and his investment firm, then called Pirate Investor) was ordered by a federal court to pay $1.5 million in civil penalties and restitution. Stansberry Research did not respond to a request for comment.

In 2010, Stansberry released a similar video slideshow called “End of America” (77 minutes long), in which he predicted waves of violence and tumult across the United States and the impending implosion of the American economy.    Four years later, no financial collapse has occurred and the U.S. remains relatively tumult-free.  With this tax evasion law about to go into effect,  Stansberry argues that banks to exit the US market and avoid the dollar.  His pitch — as it was with his “End of America” spiel is that you need to get into assets that you don’t have to report to the government (like American Eagle gold or silver coins), and get some money overseas (get a foreign bank account while you can, buy real estate in other countries), and buy farmland to protect your family.

So what is the truth?  It turns out this new law is the “Foreign Account Tax Compliance Act” requires Americans, including individuals who live outside the United States, to report their financial accounts held outside of the United States. It was designed  to combat offshore tax evasion through increased reporting and tax withholding to increase compliance by U.S. taxpayers rather than to enforce collection from foreigners. FATCA requires foreign financial institutions to report information related to the ownership by U.S. persons of assets held overseas.    It was passed by the Republican-led Congress and Democratic-led Senate in 2009, so it is hardly “Obama’s New Tax”.    If you are a U.S. resident and all of your money is in U.S. holding companies (banks, etc.), you will not be affected by FATCA.   The law is really targeted at the banks, who have been facilitating international money laundering and tax evasion.

Later in 2014,  Stansberry sent out emails targeted to seniors promising:

  • The 24% “Cash Certificate.” Get steady income from the safest high-interest opportunity we’ve ever seen…without going through Wall Street.

    How to Collect “Overnight”Income. There’s a way to collect $350 or more—in cash—within 24 hours, from a unique type of transaction.

    The Dividend Boost. Check one simple box and get potentially 5 to 10 TIMES bigger dividends directly from top US companies.

    The Secret of Fed Trades. Made possible by the Federal Reserve in economic downturns, this investment could pay you thousands per year.

    How to Make Sure you Never Run Out of Money. I don’t know of any other investment that can guarantee to pay you money month after month… for the rest of your life.

These are unusually bold pronouncements.   They are authored by a gentleman named David Eifrig — who is fairly infamous in the investment community.   Eifrig turns out to be peddling very complex investments that amount to “bets” on how long you are going to live.   For example, the “Never Run Out of Money” scheme turns out to be an annuity.   Like a life insurance policy, it could work out well if you live a long life…..and an investment disaster if you don’t.

His “overnight income” pitch is a hedge strategy that that several newsletters have reportedly used over the years to pitch their services: Selling covered calls.  Stansberry has hawked this concept before, though most of the “covered call selling” pitches.    The deal is that you buy a stock, preferably a “blue chip” that you intend to hold, and sell a call option against that stock. You collect the option premium, and if the stock stays below the option exercise price you also get to keep your stock — if the stock goes up past the exercise price, you’re forced to sell at perhaps less than the market price.   It’s a highly risky proposition.

Now, if Stansberry were just spewing his contorted opinions about laws or politics, he’d be just another blogger with wild ideas.   But Stansberry is looking for money — your money.    So before you throw your hard-earned money at Stansberry and his internet marketing machine,  look into the real facts behind the new law and all of the “controversial” opinions held by this company.   There’s nothing wrong with strong opinions about where to put your dollars, but beware those who trample the truth in order to support those opinions.

2 replies
  1. JAson
    JAson says:

    I reference to your Fatca blurb. I am an american who has lived out of the United States for over 25 years in various countries. I do totally disagree with your statements that it is aimed at banks and does not affect the average guy. Actually it is causing tremendous problems for many. Foreign banks have been closing american citizens accounts , often without informing them of the event. I have been refused a bank account solely because I am an american at three different banks in the country I live with the reporting requirements being given to me as the sole reason. I have also had my accounts in another country where I lived recently before moveing here also closed for the same reason. I do not have a lot of money,infact I live month to month as most people do. Now ,unfortunately it has become extremely difficult as an american to have a bank account in several countries just for your daily use(meaning atm etc.)……..several of my friends who also have chosen to live abroad are facing the same problems. Many have had to resort to using the “black” banks (underground banks) just to be able to function. This is really causing a tremendous amount of problems . Our government needs to consider these matters more carefully before creating new laws……..

    Reply
    • admin
      admin says:

      Your points are well-taken. The governments efforts to make off-shore investing more transparent has definitely complicated life for Americans who try to open bank accounts in other countries. There are compelling arguments on both sides; it would appear that concerns about tax evasion and financial support for malicious interests are driving these government efforts. Our concerns are that FATCA isn’t used as justification for unwise financial strategies, as we report in this article.

      Reply

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