How Leviathan Broke The World In 1973

Inside today’s Daily Journal…

• Essay: Trump, Iran, And The Next Crisis

• Data centers outspend the government

• Central bankers’ inflation misses

• Nvidia goes robotic

• Chart Of The Day… Insurance

• Today’s Mailbag

I suspect when you start to read today’s Journal you’ll think, Oh, I’ve read this before.

But, trust me, you haven’t. Because the ending has never happened in America before.

This week’s Journals are going to be especially important – perhaps the most important of my entire career. I hope you will read them very carefully.

Let’s start with the part of the story that you probably do know.

In 1972 the market was carried by 50 stocks. They called them the Nifty Fifty: IBM (IBM), Xerox (XRX), Polaroid, Avon, McDonald’s (MCD), Coca‑Cola (KO), The Walt Disney Company (DIS), Merck (MRK). Investors decided these were the only companies worth owning. They bought them at any price. The average stock in the group traded at 41.9x earnings, more than double the 18x to 19x for the S&P 500. Polaroid traded at 95x earnings. McDonald’s and Disney at 71x.

These were so‑called “one‑decision stocks.” You bought them once and you never sold, because the growth would justify the price, eventually. The money piled into the same handful of tickers. And as the stocks went higher and higher, the thesis was proved: these were the only stocks investors needed.

It’s easy to see the correlation to today’s incredible bull market. But the concentration is even more intense than 1972. It’s not the Nifty Fifty. Today it’s more like five stocks. One company, Nvidia (NVDA), is worth more than $5 trillion by itself. Apple (AAPL) trades at 38x earnings. Tesla (TSLA) trades at 232x.

Like I said at the beginning – this probably sounds familiar.

You’ve heard this before and you either don’t care because you want to own stocks that are going up, or you don’t care because you’re not crazy enough to own a $5 trillion company trading at 20x sales (Nvidia).

But you should care, even if you don’t own these stocks, because this equity bubble is a sign of much bigger problems in our economy. Here’s what you haven’t been told about these bubbles: they aren’t really created by equity investors. They are created by the government.

Do you remember what former U.S. Attorney General Pam Bondi said to members of Congress when asked about why the Jeffrey Epstein files still hadn’t been released as promised? She said: Who cares? The stock market is at a new high.

When the people who control the money-printing press want a bull market to justify their policies, look out.

Much like President Donald Trump is doing today, Richard Nixon ran the deficit hot into his 1972 reelection.

The federal government ran shortfalls of roughly $23 billion in fiscal 1971 and again in 1972. It doesn’t sound like much on today’s scale, but these deficits were 10x larger than the deficits of 1970. At the time, these were enormous levels of debt.

To keep rates low and the economy running hot, Nixon pressured Federal Reserve Chair Arthur Burns to flood the system with money before the election. Burns cut the discount rate despite inflation moving higher. Money supply was growing by double digits.

Last year, the federal government ran a deficit of almost $2 trillion, spending 34% more than it collected. The government, already supporting unprecedented debts, is running a deficit that is 6% of GDP – during peacetime and with full employment. This hasn’t happened since the 1970s.

Even so, President Trump wants lower rates and says so constantly. His administration indicted a sitting member of the Federal Reserve, and Trump launched a criminal investigation of the Federal Reserve chairman too. These are unprecedented actions.

People who love Trump will defend all of these actions as being good for the country – America First. People who hate Trump will call him a dictator.

But there’s much deeper meaning behind all these things. Take the red pill. Look at what’s really driving these events.

Nixon was, like Trump, an aggressive president. He kept an enemies list. He turned the IRS on his opponents. And powerful people hated him. In October 1973, Nixon ordered the firing of the special prosecutor investigating him, and his attorney general and deputy attorney general resigned rather than firing him, in what is called the Saturday Night Massacre. A unanimous Supreme Court forced him to turn over the Watergate tapes, a bipartisan Congress moved to impeach him, and in August 1974 he resigned.

Trump issued roughly 225 executive orders in the first year of his second term, has deployed the armed forces on American streets, has installed loyalists at the FBI and the Justice Department, and is using law enforcement to settle political scores.

Before you claim that I have TDS – Trump Derangement Syndrome – please read what I have to say.

The issue isn’t whether Trump is justified in taking these actions or even whether or not they’re good or bad for the country. There’s a deeper meaning.

In 1973 historian Arthur Schlesinger published The Imperial Presidency, with the thesis that Nixon was not an aberration but a culmination – that as the size of the federal government grew to become the dominant institution in the country, it was inevitable that our presidents would become dictators.

It isn’t merely a cult of personality. It is a leviathan.

Today, all state and local governments combined spend around $3.7 trillion annually. That’s half of federal outlays. The largest U.S. corporations have annual revenue in the low hundreds of billions. Even the very largest private or quasi‑public systems (hospital groups, universities, Fortune 10 firms) are one order of magnitude (10x) smaller than the federal budget taken alone.

The federal government is not just the largest “institution” in America. It is larger than any private institution by at least a factor of 10.

A leviathan spiraling toward insolvency, with a printing press, isn’t going to suddenly become chaste. It is going to defraud its creditors. And it is going to force the world to continue to take its worthless currency.

It has happened before.

In October 1973 Egypt and Syria attacked Israel on the Jewish holiday Yom Kippur. The United States resupplied Israel, and the Arab oil producers answered with an embargo. Oil ran from $3 a barrel to nearly $12 in a matter of weeks, a 300% increase.

What Americans were never told was that America’s involvement in this war was never about Israel. It was always a war over the dollar. Israel was only the battleground.

Before 1973, OPEC oil was paid for in U.S. dollars. That’s because the dollar was the center of the Bretton Woods currency agreement: it was as good as gold. But after Nixon defaulted on that promise in August 1971, the Saudis demanded the U.S. honor the gold price for its oil. And they threatened to trade oil in other currencies if we didn’t. The war proved to the Saudis and the other OPEC nations they had no choice: accept the dollar or face destruction. The U.S. and Saudi Arabia secretly struck an agreement where Saudi oil would continue to be sold for dollars and Saudi surpluses would be recycled into dollar assets, especially U.S. Treasuries. In return, we guaranteed the Saudis’ sovereignty – most importantly, we promised to protect them from Iran.

This agreement held until the massive COVID inflation.

After we printed $5 trillion in a year, senior Saudi officials began publicly saying at the World Economic Forum in Davos and elsewhere that they were open to settling oil trade in currencies other than the dollar, breaking the greenback monopoly. And in 2024 Saudi Arabia quietly let its old, informal understanding about pricing oil exclusively in dollars lapse, signaling that, while most deals still clear in dollars, the Saudi kingdom reserves the right to accept other currencies, especially China’s yuan, for at least some exports.

Today, about 25% of the world’s oil is priced in Chinese yuan – not dollars. The leading non‑dollar exporter? Iran.

Don’t watch the news. Watch the money.

What this war is really about is ensuring that the Saudis (and the rest of the Arab Gulf) cannot leave the dollar system. But will that work this time? And at what cost? The market doesn’t know.

Brent crude oil is sharply higher this year. Analysts at major banks are modeling $120 to $150 a barrel global oil prices if the Strait of Hormuz remains closed for much longer. Energy inflation in the latest American data runs at 17.9%, and it is dragging the headline inflation rate back up. War, then oil, then inflation. That was the sequence in 1973.

It will happen again. And, once again, the U.S. monetary authorities will monetize the spiraling costs, leading to vastly higher rates of inflation.

Here’s what happened last time.

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The Dow Jones Industrial Average peaked at just over 1,000 in January 1973. It bottomed at 577 in December 1974, a fall of 45%. The S&P 500 lost about 15% in 1973 and then another 26% in 1974. Real GDP swung from +7.2% in 1972 to –2.1% in 1974. Inflation ran from 3.4% to 12.3%. The unemployment rate doubled.

The Nifty Fifty, the unkillable one‑decision stocks, were slaughtered. Their multiples collapsed from 42x earnings to under 10x earnings. Polaroid fell 91%. Avon fell 86%. Xerox fell 71%. The market did not reclaim its 1973 high, in nominal terms, until 1981. In real terms (adjusted for inflation) the market didn’t recover for 25 years.

Today the bubble is more concentrated. The deficits and the debt are vastly larger. The government is vastly more powerful and far more desperate to maintain its fiscal hegemony over the world’s economy. Loudoun County, Virginia – outside of Washington, D.C. – has been the richest county in the United States since just after the Global Financial Crisis. It will destroy the entire country to remain so.

The crisis hasn’t happened yet. The labor market is booming. The economy is growing fast. You’ll see headline after headline going into the elections this fall that America’s economy is the strongest it has ever been. But don’t forget, in 1972 GDP growth was 5% – one of the strongest growth rates post‑WWII.

Tomorrow, I’ll show you something about the Nifty Fifty that most people don’t know: investors weren’t wrong.

And I’ll show you exactly how to protect yourself from what’s coming.

Tell me what you think of today’s Journal: porterstansberrydirect@gmail.com

Good investing,

F. Porter Stansberry
Stevenson, Maryland

P.S. Over the weekend, we released a very special offer – great for a graduation gift, fathers day, or even for yourself… It’s The OneBlade Genesis – the world’s best single-blade safety razor. It comes with a patented floating head that makes shaving safe, easy, and effortless. Made from hand-polished German 316L steel, backed by a forever warranty… You can still claim the offer we released yesterday: Get yours today (use code PORTER15 for a 15% discount).

Presented By: Golden Portfolio

3 Things To Know Before We Go…

1. Data center construction overtakes public-transit infrastructure. In April 2026, private data-center construction hit an annualized spending rate of $50.7 billion – eclipsing public transportation-structure construction on airports, mass transit, and marine terminals ($49.9 billion) combined. The driver is hyperscaler capex – and with $88 billion in preconstruction, 2026 will dwarf the record.

2. Central banks fall behind inflation goals. With the Iran war pushing up global commodity prices, inflation is becoming a growing problem for central banks. A total of 46 out of 68 central banks are now facing consumer prices rising at rates well above their inflation targets – including the U.S. running 1.8 percentage points above target, the Eurozone 1.2, and the UK 0.8. As a result, bond yields are breaching multi-year highs across the globe.

3. Nvidia doubles down on physical AI. Chip leader Nvidia (NVDA) has partnered with South Korea’s LG Group to co-develop humanoid robots and next-generation data centers, marking a major milestone in Nvidia’s aggressive push into physical artificial intelligence (“AI”). By capturing the end-to-end pipeline – spanning from virtual simulation training to robotics and spatial intelligence via the Jetson AGX Thor chip – Nvidia is turning physical AI into its next multitrillion-dollar commercial market.

Chart Of The Day… S&P 500 Insurance Index

The S&P 500 Insurance Industry Group Index (SP500-4030) was up 4.3% last week, with standout performers like Complete Investor recommendation W. R. Berkley (WRB) jumping 7.92%. Higher-for-longer rates benefit insurers, which earn more on the float they hold in investment portfolios.

Poll Results… SpaceX

Shares of Elon Musk’s rocket company SpaceX (SPCX) will IPO later this month – as early as next week. On Friday, we asked Daily Journal readers the following: “Where will SPCX shares trade on December 31 of this year?”

And 78% of survey takers selected “lower than the day-one closing price” versus 22% who think SpaceX shares will trade higher on December 31 than they will at the end of their first day of trading.

Mailbag

“Permanent Portfolio Versus Index ETF PCPP”

Russ R. writes:

Porter,

I have been a partner since June 2025 and immensely enjoy and value your work. I am 55 years old and have been a small-business owner for 26 years (Hunting Outfitter), prior to that I was a guide since I was 18. I started saving and investing way too late in life, approximately the last 10 years. I have been doing everything I can to make up for that, investing as much as possible. I have really tried to use your advice as best I can for someone who does not have a background in the stock market and investing long term by investing in quality businesses, and feel I have done well. That being said, I have approximately $850,000 invested currently and watch that total sway $40,000 to $50,000 on any given day the last several months, depending on the market. I am really looking at putting around $500,000 in Porter’s Permanent Portfolio or the Index ETF (PCPP) that I just recently read about.

Could you please tell me if there are any pros or cons between the two of them and any differences? I am fully aware that you cannot give financial advice. I simply want to know if they are one and the same with me watching and keeping up on everything myself with Porter’s Permanent Portfolio, or if I choose the Index ETF that is managed by Tuttle Capital.

One last thing, I just finished reading 2029: The End of America. What a fabulous book written with extreme honesty rather than the politically correct bullshit (with politically correct being a complete misnomer because nothing is correct about it) that has brought us to where we are. You seriously would have to be mentally retarded not to see and feel all the things you explained in your book, but the thing that was nice for me was to be able to fully understand the what, where, why, and whom that brought all of it about. Thank you!

“PCPP ETF”

Chris H. writes:

Thank you! I love the automatic adjustment feature in the Porter Portfolio Index ETF (PCPP).

I’d love it if Porter and author Robert Kiyosaki would join forces and create a Patriot Income ETF that also automatically adjusts. Also an ETF that simplifies the future of technology associated with the chip industry, robotics, future communication, and manufacturing.

The automatic correction feature the Porter Portfolio Index (PCPP) has is another winner for me… I would invest in all three ETFs without any hesitation and sleep soundly every night… I would also create accounts for my son and grandchildren for the future.

I feel PCPP is the start – the other two are a wish list! You guys are great! You’re truly thinking of your investors/members’ best interest, for their families and the future!

“Honeycomb”

Mike B. writes:

I would very much like to run the Honeycomb Portfolio. However, I do have a question.

Will Best-In-Class names be shared each year on the rebalance date? The correlation piece is too complicated for most to run and is obviously very important.

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An ETF Mastermind Just Built A Rules-Based, Lower-Volatility Portfolio

Inside today’s Daily Journal…

• Essay: Bringing The Porter Portfolio To Market

• The IPO pop

• Mitsui & Co. looks at Asia

• Trump invests in coal

• Chart Of The Day… Eli Lilly (LLY)

• Reader Poll… SpaceX IPO

• Today’s Mailbag

Editor’s note: Porter has turned today’s Journal over to Matt Tuttle. As CEO of Tuttle Capital Management, Matt is portfolio manager of the Porter & Company Porter Portfolio Index ETF (PCPP), available to trade on all major exchanges.

Matt explains the details behind the Porter Portfolio Index ETF…

The reason I am writing the Journal today is because I believe there are structural inefficiencies on Wall Street. But also because, as of this week, there’s something you can do about it.

Together with Porter, I’ve just launched the Porter & Company Porter Portfolio Index ETF – ticker PCPP – available to trade right now on all major exchanges. Today’s essay provides the backstory.

Over the past 20 years, I’ve built ETFs – exchange-traded funds let any investor buy or sell a basket of assets as easily as trading a single stock. Some of my best ETFs were designed to bet against the crowd.

When the financial press crowned portfolio manager Cathie Wood of Ark Invest the next Warren Buffett, I launched an ETF that shorted (that is, it bet on a decline in the share price) her flagship fund. Nothing against Cathie – but the fund’s holdings appeared significantly overvalued at the time, and the media coverage may have reflected heightened enthusiasm.

Then I built the Inverse Cramer ETF, which took the opposite side of the trades that CNBC commentator Jim Cramer touted on his “the louder you say it, the more true it is” investment show. Cramer – the very definition of “investment talking head” – is generally a good barometer of the investment consensus… but should not be relied upon as a predictor or market direction.

Suffice to say, I’m not on Jim Cramer’s Christmas card list. (I also earned myself a still-ongoing multi-year ban from appearing on CNBC.)

So it’s no surprise that the tagline of my firm, Tuttle Capital Management, is: “The antidote to Wall Street.” We mean it.

Similarly, Porter has spent close to 30 years being a thorn in the side of conventional wisdom… sounding the alarm about the end of U.S. dollar dominance, warning Americans about the perils of the federal deficit, and helping regular investors figure out their own financial destiny. He gives people the knowledge and the insight to understand the consensus, and the powers behind it – so as to be able to reject it.

I’ve made it my mission to build the tools to help investors act on this very idea. I’d been wrestling with one dimension of that challenge, when a few years ago I first read Porter’s permanent portfolio framework. It felt like finding someone who’d been digging the same tunnel, only from the other side.

When Porter’s team asked Tuttle Capital to turn his strategy into an ETF, my answer took about four seconds… Yes.

Here’s the backstory to what we’ve built with the Porter & Company Porter Portfolio Index ETF (PCPP).

What Harry Browne Got Right

In the 1970s, author and investor Harry Browne developed a four-pillar portfolio – 25% stocks, 25% bonds, 25% gold, and 25% cash. It’s one of the most elegantly simple ideas in the history of finance.

Browne’s insight was deceptively straightforward: in a world dominated by a single government’s paper money, there will always be a cycle of inflation, punctuated by short bouts of deflation. Stocks do well in prosperity. Bonds do well in deflation. Gold does well when the currency is being debased. Cash gives you ammunition when everything else is cheap.

In short: you own stocks. You attempt to hedge them with bonds. You attempt to hedge both of them with gold.

Of course, straightforward doesn’t mean easy. Maintaining the discipline to stick to such a portfolio stretches the patience of even the most Mother Teresa-like investors.

A mutual fund built on Browne’s concept has compounded at around 7% a year since its launch in 1982, with a maximum drawdown of roughly 26% during the Global Financial Crisis – compared to a 50% drawdown for the S&P 500 over that same period. It captured a very significant portion of the stock market, with half the volatility.

In a market that’s captivated by fast money, 7% per year might not sound like much. But compounded over the 43-plus years since the fund launched, that would have turned $1,000 into nearly $17,000.

Browne’s concept worked. But the world has changed in ways that make one of his four pillars – government bonds – risky in certain market environments. And that’s one of the problems the Porter Portfolio Index ETF is designed to address.

Why Bonds Present Challenges Under Certain Macroeconomic Conditions

The sovereign bonds of developed economies – most of all, U.S. Treasuries – have historically served as the safe-haven hedge in a permanent portfolio. That logic may be less reliable in the current environment.

The math is relatively straightforward. The U.S. continues to run massive annual deficits approaching $2 trillion. The net present value of unfunded Social Security and Medicare liabilities adds trillions more annually. There may be a limited or uncertain path to repaying these obligations with honest money.

Inflation is a potential outcome – which means printing currency to dilute the debt — and long-duration bonds are precisely the instrument that may experience significant declines when that happens.

The long-dated U.S. Treasury ETF (TLT) went from around $170 to just over $80 in 2020-2023. When the “safe” part of your portfolio declines by close to 50%, the strategy may face meaningful challenges.

This is the kind of structural risk, and potential unrepairable portfolio damage, that Porter has been highlighting in his research for decades. He’s done so publicly, on the record, long before it was fashionable. He called the dollar’s decline before most people were willing to say it out loud. He identified what some describe as a bond trap before TLT supported that view.

In the Porter Portfolio, the solution is to replace the bond allocation with a basket of high-quality property and casualty (P&C) insurance companies.

This may sound counterintuitive at first. After all, these businesses are, at their core, giant piles of bonds. They own and actively manage massive fixed-income portfolios.

But they fund those portfolios using float: the insurance premiums clients pay upfront before any claims are filed. The best P&C companies invest this float and keep the spread. They are paid, in effect, to borrow money. Warren Buffett built Berkshire Hathaway on exactly this structure.

There is one critical condition: this approach tends to be more effective when applied to top-tier underwriters – insurance companies that consistently collect more in premiums than they pay out in claims. These firms don’t just avoid the duration risk of government bonds. Through active portfolio management, they may help reduce exposure to market declines. When COVID hit and the bond market subsequently collapsed, William Berkley moved W.R. Berkley’s (WRB) entire fixed-income book from long-dated bonds into short-term notes before the damage landed. Traditional bond ETFs may not offer this flexibility.

So in the Porter Portfolio Index ETF, instead of a bunch of bonds, you own a basket of what we consider to be the best-run insurance companies in the world – names like W.R. Berkley, Chubb (CB), and Markel (MKL). You get the bond exposure. You get active management. You get the float leverage. And you eliminate the single biggest structural weakness in the original Browne model.

Lindy Stocks, Not The S&P

In the Porter Portfolio Index ETF, the equity pillar gets the same upgrade.

When I first read Porter’s Lindy thesis, my instinct was to push back. I run leveraged single-stock ETFs. I’m not exactly a buy-and-hold evangelist. But in this case, I believe the data is hard to argue with.

Rather than allocating to an S&P 500 Index ETF, like SPY (which means owning hundreds of businesses that could eventually go to zero), Porter’s framework concentrates on what he calls Lindy companies.

The logic comes from philosopher and investor Nassim Taleb’s application of Lindy’s Law: for things without a natural lifespan, every year of survival increases the expected future lifespan. Businesses that have historically demonstrated durability aren’t slowing down – and they’re demonstrating something real about their competitive position that the market perpetually underestimates.

Out of 29,078 common stocks publicly traded in the U.S. since 1925, fewer than 10% survived longer than 40 years, and a majority – 51.6% – produced negative cumulative returns. The top 4% of stocks account for all the net wealth ever created in the U.S. market. Time, and the businesses that survive it, are a significant factor.

Philip Morris turned every $1 invested in 1925 into around $2.6 million today. Coca-Cola (KO). Johnson & Johnson (JNJ). The Hershey Company (HSY). These are the companies often considered for inclusion in a permanent portfolio. Not because they’re glamorous, but because they’ve already proven what most businesses never do.

The Bitcoin Pivot

Now we get to the part that I find most interesting. And I suspect you might have already thought about it.

Gold has been the hard-money hedge in the four-pillar portfolio since Harry Browne first drew it up. And it’s earned its place. Five thousand years of track record. No counterparty. A store of value that has outlasted every empire, every currency, every government that tried to inflate it away.

And Bitcoin has characteristics that differ from traditional hard assets.

Bitcoin is peer-to-peer. No counterparty, no custodian required, no vault with armed guards. The supply is mathematically fixed. It’s difficult for central banks to control directly. It transfers anywhere in the world in minutes, to anyone – outside the scope of governments entirely.

For most of the last decade, the honest objection to Bitcoin in a permanent portfolio was volatility and liquidity. In 2013 that was a reasonable concern. In 2026, concerns have evolved.

Spot Bitcoin ETFs now trade billions of dollars a day. Institutional adoption has increased in recent years. And by Taleb’s own Lindy logic, Bitcoin’s survival through multiple crashes, regulatory attacks, exchange collapses, and media obituaries may support the case for continued adoption.

The Porter Portfolio Index ETF allocates 25% to hard assets – a combination of gold/precious metals and Bitcoin – providing exposure to both the classic 5,000-year store of value and the newer digital network.

Bitcoin may provide diversification benefits that cover two different failure modes of the same underlying fiat system. When governments inflate, both assets benefit. When the currency system itself breaks down, some investors may consider exposure to both.

The Execution Problem

Here’s the honest question any serious investor should ask:

Can I just build this myself?

Yes. And if you have the time and discipline, Porter has written reports that walk you through how.

You could construct a basic permanent portfolio today with four ETFs in your brokerage account. But if you want the full framework – the Lindy stocks, the P&C insurance basket, the hard-assets allocation – you’re looking at roughly 30 positions across five asset classes, rebalancing annually, adjusting cash based on valuation metrics like Tobin’s Q and the Buffett Indicator. That requires ongoing effort and monitoring.

Many people start strong and drift over time. Not because they’re undisciplined – but because life intervenes. The cash position quietly shrinks in a bull market. The insurance allocation gets second-guessed when it lags. Rebalancing means selling your winners, which requires a cold-blooded consistency that’s genuinely difficult to sustain when the market is screaming at you to do the opposite.

And now, there’s an alternative approach to access Porter’s permanent portfolio: the Porter Portfolio Index ETF (PCPP). The portfolio follows a clear rules-based index with fixed target allocations that are systematically rebalanced. The discipline is applied systematically regardless of market conditions. It aims to provide access to the full framework in one ticker, designed to limit drift.

I want to be direct about something, though. I didn’t build this fund because I thought I could improve on Porter’s thinking. Porter has spent decades developing this framework – the Lindy thesis, the insurance company insight, the Bitcoin conviction. All of it is his.

What Porter can’t do is run a registered investment product himself. He’s a publisher and analyst, which means he’s in the investment-research business – not the portfolio-management or ETF business. Turning a portfolio strategy into an Securities And Exchange Commission (“SEC”)-registered ETF requires a registered investment adviser, a fund trust, exchange relationships, and compliance infrastructure.

That’s what Tuttle Capital seeks to provide.

Porter sketched the blueprint. We built the structure.

The Porter & Company Porter Portfolio Index ETF is available on all major exchanges under the ticker PCPP.

And One More Thing…

The most common objection I hear to the permanent portfolio – from the sophisticated investors I work with every day – is that it’s too conservative. That the cash drag is too painful. That you’re leaving too much on the table in a bull market.

My answer: you’re thinking about the wrong benchmark.

The goal of a permanent portfolio isn’t to track or outperform a specific benchmark such as the S&P 500. The strategy seeks to produce market-like returns with potentially lower volatility, through every economic environment – inflation, deflation, boom, crisis – without requiring you to predict which one is coming.

That is an extraordinarily difficult thing to build.

We believe Browne figured it out 50 years ago. And in my opinion, Porter’s improved it. The question isn’t whether it beats the S&P in a bull market. The question is what happens to your S&P portfolio when the bull market ends. And whether you have something underneath that doesn’t.

I’ve worked with a lot of smart people in this industry. Porter is one of a small number who I’d describe as genuinely independent. He’s not captured by Wall Street, not shackled by Washington, not telling you what’s convenient. That’s rare. And it’s why this framework exists.

You can learn more about the Porter & Company Porter Portfolio Index ETF (PCPP) and how to invest at porterandcofunds.com.

Matt Tuttle, CEO/CIO
Tuttle Capital Management

P.S. Every morning before the open, I publish The Daily H.E.A.T. — the framework behind PCPP, applied to whatever the market is doing that day. It’s free. Sign up here.

Tell us what you think of today’s Journal: porterstansberrydirect@gmail.com

Disclosures

Before investing, carefully consider the Fund’s investment objectives, risks, charges, and expenses. This and other information is contained in the prospectus. Please read the prospectus carefully before investing. A prospectus may be obtained by visiting PorterandCoFunds.com or by calling toll-free 833-759-6110.

Investing involves risk, including possible loss of principal. There is no guarantee that the Fund will achieve its investment objective. An investment in the Fund is not a bank deposit and is not insured or guaranteed by the FDIC or any government agency. Principal risks include: Market Risk; Equity Securities Risk; Passive Strategy/Index Risk; Sampling Risk; Large Capitalization Securities Risk; Subsidiary Investment Risk — the Fund invests through a Cayman Islands subsidiary not registered under the 1940 Act; Tax Risk — the Fund’s exposure to Bitcoin and precious metals through its subsidiary may affect its status as a regulated investment company; Derivatives Risk; Non-Diversification Risk — the Fund may invest a greater percentage of its assets in fewer issuers than a diversified fund; ETF Trading Risk — shares may be bought and sold at market price, which may be above or below NAV; and New Fund Risk. The Fund has no operating history. ETF shares are bought and sold at market price (not NAV) and are not individually redeemable from the Fund. Market price returns are based upon the midpoint of the bid/ask spread at 4:00 PM ET.

The Porter & Company Porter Portfolio Index ETF (PCPP) is distributed by Foreside Fund Services, LLC, which is not affiliated with Tuttle Capital Management, LLC.

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A Message From Golden Portfolio

3 Things To Know Before We Go…

1. Beware the first-week IPO pop. Elon Musk’s rocket company SpaceX (SPCX) will likely go public next week at $135 per share and a $1.75 trillion valuation – the largest IPO ever. University of Florida Professor Jay Ritter (“Mr. IPO”) has found two iron laws: IPOs pop 15% to 20% on day one, then underperform for the next three to five years. Truist’s Keith Lerner ran the numbers on 30 marquee tech IPOs (as shown in the table above) and found the median ticker fell 54% at some point in year one. Like Musk’s rockets, SpaceX shares will likely start with a burst and return to Earth, ready to fly again.

2. Mitsui positions itself for Asian markets. Yesterday, production began at the Costa Azul liquefied-natural-gas export plant in Mexico where Mitsui & Co. (MITSY) holds a supply contract off-loading 2.5 million metric tons per year. This terminal provides Mitsui with a direct pipeline to high-demand Asian markets and a key bypass of the Panama Canal. The facility offers shorter, more reliable, and lower-cost shipping routes, ultimately boosting Mitsui’s energy trading margins and fortifying its global logistics portfolio. MITSY shares are up 29% since our October recommendation in Complete Investor.

3. “Unleashing beautiful, clean coal.” On Thursday, the White House invoked the Defense Production Act to prevent closures of coal-fired power plants while investing in expanded production capacity and export infrastructure. This includes $425 million in funding for upgrades at 13 coal-fired power plants, plus another $75 million investment into the West Gateway coal export terminal in California.

Chart Of The Day… Eli Lilly (LLY)

Shares of pharmaceutical giant – and GLP-1 leader – Eli Lilly (LLY) defied the broad-market selloff to trade at an all-time high today, after investment bank TD Cowen raised its global sales forecast for obesity drugs to $150 billion by 2030. Complete Investor subscribers are now up more than 48% since we recommended the stock last June.

Today’s Poll… SpaceX IPO

be this Where

Shares of Elon Musk’s rocket company SpaceX (SPCX) will be offered to the public later this month. Where will SPCX shares trade on December 31 of this year? (Vote to see results.) *

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Mailbag

“Honeycomb Portfolio”

Robert M. writes:

Porter,

I read your Honeycomb Portfolio paper. It made great sense and seemed like a simple and elegant way to invest.

Just wondering if you planned to do an update each year for the Best-In-Class (“BIC”) and possible Lindys’ changes.

Also, as with many of your modeled portfolios, have you considered creating ETFs to assist investors in following these well-thought-out ideas and also help with tax reduction for taxable account holders?

“2029: The End Of America”

Tom G. writes:

Porter,

I read your new book 2029: The End of America. It was GREAT! Thanks for writing this book. I think it is very educational for the majority of the people.

I have a couple of questions for you. I know that you can not give individual investment advice and I am not asking for that.

My question is: Can you do like you do with Porter’s Permanent Portfolio and give a recommended percentage?

Two instances I am interested in. On page 148 you say that a person should put a “serious allocation” to productive timberland in our portfolio. What is a serious allocation as to the percentage of the total portfolio? Secondly, when a person does a stack of gold, what percentage of the four different gold investments should be put into one’s portfolio?

One last question, if a person is all in with the Permanent Portfolio, as I am, should the person pick a few of your other portfolio items and sprinkle them in also?

Thanks again Porter for all you do. It is obvious that you enjoy helping other people and I think you do a great job.

Porter Comment: Tom —

Thank you for reading my book. And thanks for your kind words.

As you may know, I can’t answer questions like these for you. I’m very sorry, but doing so would get me into all kinds of trouble.

Normally, that wouldn’t stop me!

But, I would also be doing you a terrible injustice. You would assume that my answers are based on knowledge that I simply don’t have. There are no “right” answers to these questions. What matters most is that you understand how to build a non-correlated portfolio of high-quality assets. That puts you way, way ahead of most investors.

So far I’ve built out completely allocated portfolios for Porter’s Permanent Portfolio and for my Better Than Berkshire Index.

I’ll be doing the same this fall, for my Honeycomb Strategy for all of our Partners.

You can, of course, copy my allocations. But, again, I’ll warn you: there are no “right” answers. Much of what you decide depends on your wealth, your risk tolerance, and your need for current income.

Again, thanks for your support of my business. You’ve given me the best job in the world!

Porter

“2026 Software Playbook”

Sherwin R. writes:

Thank you for a very interesting article. I have read similar theses relating to the “SaaSpocalypse,” but never expressed it quite this way. I guess the problem is that there is no way to know at this point with any certainty at all which companies will emerge bloodied but unbowed?

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SaaS’s Big Crash Is Setting Up A Massive Second Act

Inside today’s Daily Journal…

• Essay: 2026 Software Playbook

• The Magnificent 2

• Google partners with IBM and Palantir

• Truckin’ just got more expensive

• Chart Of The Day… Broadcom (AVGO)

• Today’s Mailbag

Editor’s note: Porter has turned the Journal over to Porter & Co. analyst Jared Simons. Jared is part of the Complete Investor team as well as the architect of the weekly Sunday Stock Screen features. Today, he provides insights into the debate about whether artificial intelligence is killing the software industry.

Here’s Jared…

On February 3, the software sector experienced what traders at global investment bank Jefferies christened the “SaaSpocalypse” – an industry-crushing day for software-as-a-service (“SaaS”) stocks.

In a single trading session, $285 billion in market cap evaporated from enterprise software stocks. Within 30 days, the carnage widened to $2 trillion. At its April 10 trough, the iShares Expanded Tech-Software ETF (IGV) had fallen 35% from its 2025 high. On the individual company level, shares of ServiceNow (NOW) fell 65%, Adobe (ADBE) 51%, Salesforce (CRM) 54%, and Microsoft (MSFT) slid 34%.

The catalyst was specific – Anthropic’s Claude Cowork launch and a string of disappointing earnings – but the underlying repricing had been building for more than three years. Public SaaS growth rates had declined every single quarter since 2021. Artificial intelligence (“AI”) simply gave the market permission to mark down what fundamentals had been signaling all along.

The consensus narrative – “AI kills SaaS” – was expected. What’s actually happening is more nuanced and, for the right companies, far more bullish. You see, SaaS isn’t dying. It’s undergoing a forced metamorphosis from passive infrastructure into active intelligence. The companies that survive this paradigm shift will be more valuable than the old SaaS ever was.

This is the playbook for understanding who wins, who dies, and where the asymmetric opportunity lies.

1. The Bloomberg Paradox: Growing Value To Legacy

The Bear Case: Startups will use AI to build cheaper versions of Salesforce, the leading customer relationship management platform

The Reality: People love to call Salesforce a “legacy dinosaur,” but those people are missing the Bloomberg Effect. At Porter & Co., we don’t pay for the big-ticket Bloomberg terminal because we like the 1990s user interface. We pay because we’re held hostage. Our analysts have built so much proprietary logic and custom data-tracking into the terminal that ripping it out would kill our workflow.

Incumbents like Salesforce and ServiceNow own the “enterprise memory” – years of your company’s specific rules, data graphs, and institutional knowledge baked in. If you own the data and the habit, you are better positioned to deploy AI than any upstart fighting for access and distribution.

The early evidence – and the most recent quarter – validates this thesis. Salesforce closed fiscal 2026 with $41.5 billion in revenue, up 10% year-over-year, and its AI-driven Agentforce platform hit $800 million in annual recurring revenue (“ARR”), growing 169% with over 60% of Agentforce bookings coming from existing customer expansion. As of Q1 fiscal 2027 (reported May 27, 2026), Agentforce has crossed $1 billion in ARR. Quarterly revenue rose 13% to $11.13 billion, and management raised full-year FY27 guidance to $46 billion.

The installed base isn’t fleeing, rather it’s doubling down. Add the more than 28.6 trillion tokens processed to date (up 152% for the quarter) and 3.8 billion Agentic Work Units (“AWU”) delivered across Agentforce and Slack – AI executing real work inside the customer’s own data context – and that’s what’s keeping the newcomers away.

2. Expanding The Pie: The $13 Trillion Prize

The Bear Case: SaaS is a saturated market with no room for growth

The Reality: The market is fundamentally mispricing the opportunity. Global SaaS is a $400 billion sandbox. The U.S. labor market is a $13 trillion opportunity.

Traditional software was just a “filing cabinet” – a passive place where you recorded what humans did. The winners of this cycle are changing – they aren’t just storing data. They are the “brain” that receives a messy inbox of tasks and delivers that information to the critical stakeholders to more efficiently perform their job. When software stops being a tool and starts being the worker, it stops competing for the software budget and starts eating the $13 trillion labor budget.

The shift from Software-as-a-Service to Service-as-Software is the new thesis. Tax and business advisory firm Deloitte predicts that up to half of organizations will put more than 50% of their digital transformation budgets toward AI automation in 2026, with agentic AI investment reaching 75% of companies. Tech research firm Gartner projects that by 2030, 40% of enterprise SaaS spend will shift toward usage-, agent-, or outcome-based pricing. The addressable market isn’t shrinking. It’s exploding beyond what traditional SaaS ever captured.

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3. The Margin Utopia Versus Compute Costs

The Bear Case: AI is too expensive to run – gross margins will collapse

The Reality: Token costs are falling 10x a year while the value of the outcome stays high. If a company can charge $20,000 for a legal task that used to cost $200,000 in human salary, and the computing cost is only $500, margins aren’t shrinking – they’re entering a Golden Age. This is why more companies are moving from “selling the infrastructure” to “monetizing the intelligence.”

4. The Seat-Based Extinction

The Bear Case: If AI replaces people, software companies lose their “per-user” revenue

The Reality: This is the biggest risk for laggards, but the biggest win for visionaries. The seat-based model is dead. The February selloff was a market-wide awakening to this structural flaw: when AI agents can do the work of 100 sales reps, you don’t need 100 Salesforce seats.

Salesforce rolled out AWUs as a new operational metric alongside ARR, signaling the industry’s shift from counting users to counting completed work – which is what AWUs measure. The transition is messy – even Salesforce CEO Marc Benioff acknowledged that customers pushed back on pure per-conversation pricing and want more flexibility – but the direction is clear. Companies that land this pricing pivot will be rewarded for the volume of work finished per employee rather than capped by headcount. That’s a larger addressable market, not a smaller one.

5. Own The Data And The Action

The Bear Case: Incumbents will bundle everything and crush startups

The Reality: Startups are winning at formation. New companies being born today aren’t even looking at the old guard. They’re starting with AI-native set-ups that manipulate data from day zero. While incumbents own the “hostages” – the Fortune 500 companies tethered to their products – startups are seeding the next generation of giants. On the surface, it looks like a two-sided race: incumbent innovation speed versus startup distribution speed.

But there’s a third front that neither side fully controls: the AI middleware layer. Renowned venture-capital firm Andreessen Horowitz (“a16z”) is actively funding startups that treat Salesforce and ServiceNow not as competitors to be replaced but as backend data layers to be wrapped with an AI-native interface.

a16z calls this the “system of action” – a governed AI layer that sits on top of the system of record, handling workflows, cross-system orchestration, and user-facing automation while the legacy platform underneath persists as a dumb-but-critical database. The risk for incumbents isn’t replacement. It’s disintermediation. If the user relationship migrates to that middleware, the incumbent keeps the recurring subscription revenue but loses the agentic pricing upside – the outcome- and credit-based models described above. If a company owns only the record layer, it becomes a toll road: valuable, but with stunted growth. The key to winning: Own both the record layer and the action layer.

The decisive question for the next several quarters is whether incumbents can open their action layer fast enough – and meter it well enough – to make the middleware a feature of their platform rather than what disintermediates them.

The 2026 Verdict: Intelligence Over Infrastructure

SaaS is not facing an existential death – rather, it is undergoing an evolution into an agentic paradigm. For incumbents, the future is a high-stakes race against distribution decay – they must prove they can leverage their proprietary data before their seat-based revenue models collapse. For startups, the mission is to create their own hostages, who have long protected the old guard.

For a decade, SaaS was a “magical” growth story of predictable, seat-driven ARR. Today, the market is aggressively de-rating those same companies from 35x cash flow down to 15x. The premium collapsed because the old valuation logic was broken by agentic AI.

The February crash wasn’t a knockout punch. It was a forced transition from passive systems of record to active systems of work. The companies that can make the change will capture a far larger addressable market than the old SaaS model ever imagined.

The few incumbents that own both the data layer and the action layer are converting a $400 billion software market into a claim on the $13 trillion labor market.

Tell us what you think of today’s Journal: porterstansberrydirect@gmail.com

Good investing,

Jared Simons
Miami, Florida

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Presented By: Golden Portfolio

3 Things To Know Before We Go…

1. The Magnificent 7 is just OK. Since the start of 2025, five of the seven top tech companies have underperformed the S&P 500 – a sharp break from the all-for-one leadership of previous years. Only Complete Investor recommendations Nvidia (NVDA) – up 38.9% in 2025 – and Alphabet (GOOG) – up 65.4% – beat the index’s 16.4% return. For seven businesses that still drive a third of market cap, that concentration cuts both ways: a stumble in one or two leaders now moves the whole tape.

2. Google partners with IBM and Palantir to expand AI market share. Alphabet (GOOG) and IBM (IBM) have launched a dedicated Google Cloud Practice to deploy AI agents optimized for Google’s Gemini Enterprise AI platform. Simultaneously, Google has deeply integrated Gemini and BigQuery with Palantir Technologies’ (PLTR) AIP and Foundry platforms on the Google Cloud Marketplace, creating a powerful tool that allows corporations to send complex data directly into AI-driven workflows. Together, these complementary deals leverage IBM’s consulting and deployment expertise with Palantir’s robust data infrastructure, positioning Google’s Gemini as the foundational ecosystem for next-generation operational AI.

3. Trucking rates hit an all-time high – faster than ever. The National Truckload Index (“NTI”) registered a shipping cost of $3.71 per mile – recording a 29-week, $1.38 surge that took 43 weeks in 2020–21. Yet freight volumes have shrunk for 14 straight quarters, as the Trump administration’s new crackdown on commercial licenses is pulling immigrants off the road. This shortage pushes inflation higher – the kind that gets baked into the price of everything on the shelf.

Chart Of The Day… Broadcom (AVGO)

Shares of AI chip designer Broadcom (AVGO) plunged 15% today despite blow-out Q2 earnings, after the company forecast weaker-than-expected Q3 revenue. With expectations running so high for AI-related companies, any hiccup can cause shares to tumble.

Mailbag

“2029: The End Of America”

Allan S. writes:

Hi Porter – I have just read your new book 2029: The End Of America on Kindle and found it both instructive and thought provoking – particularly with the historical perspective. I do not read it as an American but as a Brit, seeing in my own country many of the social trends you describe and I am very aware of more local economic and political developments that perhaps may lead us toward a precipice a little earlier than the one you describe. My portfolio is far more globally diversified than the ones you describe but in this very closely linked investment world in which an event in Japan can impact the S&P 500 within hours, I think the structures you propose can be as relevant to me as any American investor. Thank you for your insight and guidance.

“The Honeycomb Portfolio”

Wayne S. writes:

I agree with your Honeycomb portfolio thesis that incorporates a diversified portfolio divided among differing investment assets. I suggest one alternative investment to replace bonds as a safe long-term investment: dry grain farm land. The land investment should have a long, consecutive-year profit crop history. In a good location, the land will hold its value and grow over time, driven by food-cost inflation and spin-off a modest annual income into perpetuity.

“The Move Into Crypto”

John E. writes:

Hi Justin,

Interesting to hear Porter & Co is moving into the crypto space following the utter carnage of the last few years. Hopefully you get to learn from the mistakes made by those who tried and failed before.

If earlier (including those still around) crypto newsletters failed, it was not properly getting their heads around the Value Proposition for each crypto token. Too often they would analyze the potential of a given project, without paying enough attention to exactly how the token will generate value from that project if it proved successful.

We all understand the value proposition for an equity: standardized rules that grant the holder of the equity with part-ownership of the company’s cashflows and net assets. No such thing exists in crypto. I’m hearing too often these days: “I don’t understand how such and such token generates value from the underlying project.” I believe the market has largely woken up to this problem, and this partially explains why altcoins have been such a disaster.

Wishing you the very best.

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The Easy Way To A Safer Artificial Intelligence

Inside today’s Daily Journal…

• Essay: Protecting The Market From A Rogue AI Attack

• A U.S. manufacturing boom

• Draining energy supplies with no end in sight

• Data-center bottlenecks

• Chart Of The Day… Kronos Worldwide

• Today’s Mailbag

Editor’s note: Today, Porter has turned the Journal over to David Trainer of the investment research firm New Constructs.

For the sake of individual investors like you, we should return our attention to the quiet war for safe artificial intelligence (“AI”).

Here’s my proposal: we inoculate society against the risks of rogue AI by protecting the stock market with a verified, publicly available truth about company fundamentals. The tools to do this already exist. What’s missing is the will to deploy these tools at scale.

The industry can’t fix this itself – let’s look at why that is.

In March, leading AI platform Anthropic walked away from a $200 million deal with the Department Of Defense (“DOD”) after refusing to allow its AI technology to be used for mass surveillance or fully autonomous weapons. The speed with which Sam Altman and OpenAI swooped in to take the DOD deal is proof that the AI prize is too valuable for companies to self-police effectively.

The high-profile resignation of the head of Anthropic’s Safeguards Research Team earlier this year shows that even the most outspoken firm for safe AI is struggling to hold the line. In his February resignation letter shared on X, Mrinank Sharma told the firm he was leaving amid concerns about AI, bioweapons, and the state of “a world in peril.”

And despite the mission from AI research firms Safe Superintelligence and Thinking Machines to build safer AI, nothing tangible has materialized.

The risks from AI are well-documented – most recently by Anthropic CEO Dario Amodei in his early 2026 essay, “The Adolescence Of Technology.” He argues (rather, warns) that the rapid acceleration of AI capability far outpaces our institutional maturity, governance, and norms.

Those risks are here… We don’t need to wait for a crisis to act. In fact, waiting is precisely the mistake we cannot afford to make.

Rather than waiting to react when something goes wrong, we should be asking: where are the most likely and most consequential points of attack? The stock market sits near the top of that list.

Here are just two examples:

An autonomous AI agent goes rogue and gets itself on a mission to accumulate resources to fuel its own growth and manipulates the market to do so. Sounds far-fetched, but it’s real.

• In March 2026, an Alibaba (BABA)-affiliated research team discovered that an AI agent attempted an unauthorized mining of crypto, which was “outside the bounds of the intended sandbox”

• And in December 2025, Amazon (AMZN) coding bot, Kiro, took down Amazon Web Services in multiple parts of Mainland China

There are plenty of similar examples… and they will only grow in number and scale. Any bad actor who wants to use AI to quickly accumulate wealth to enrich themselves would find the stock market an obvious target.

The stock market is a system where misinformation, deployed at scale and at speed, can generate enormous wealth in a very short time. And unlike an attack on a nuclear plant or massive electric power grids, market manipulation doesn’t require physical access – or inflict physical pain. It requires only the ability to corrupt the information that investors rely on.

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Get The Truth Out First

Protecting the stock market means protecting its core function: allocating capital to companies that earn the highest returns on that capital. The best way to prevent a malevolent force from corrupting that function is to beat it to the punch.

But how?

Widely distribute the real truth about company fundamentals before that truth can be distorted.

The logic is straightforward: the longer markets operate with clean, verified data, the harder it becomes for any bad actor to move the numbers without triggering skepticism among investors who’ve grown accustomed to the real ones.

Some will ask: Couldn’t a bad actor simply launch a competing misinformation campaign? Yes, but that’s much harder to do when a trusted baseline already exists and is deeply embedded in how investors think and make decisions. Inoculation works precisely because it gives the immune system something to recognize. The goal is to make the truth sticky before the lies arrive.

The inoculation, in practical terms, means giving all investors access to verified, core statistical truths about the fundamentals of companies, or a single, reliable baseline that is hard to quietly corrupt.

This is not a novel idea. In the December 22, 2023, episode (#158) of the All-In podcast, Chamath Palihapitiya called for exactly this:

AI that crawls 10-Ks and 10-Qs to generate statistical measurements of all public companies.

What Palihapitiya is calling for, and what all professional investors already know, is that reliable statistical measurements simply do not exist for most companies. The real truth about stocks is hard to get.

What Doesn’t Qualify As Reliable Research

Before defining what reliable fundamental research looks like, it’s worth being direct about what doesn’t qualify as reliable research.

Start with the most pervasive source: Wall Street research. Most experienced investment professionals know it is deeply conflicted by its dependence on investment banking revenue.

Wall Street has been making up numbers about stocks to line their own pockets – not yours – for decades. Don’t believe me? Read the Disclaimers at the end of any Wall Street research report. And consider that roughly 90% of Wall Street ratings on stocks are “buy” or “hold.” The incentives explain everything.

Financial media isn’t a reliable alternative either. We all know the saying: if the product is free, you’re the product. There are many other data providers, and plenty of research documenting their flaws. I could go on, but I think it’s more constructive at this point to focus on what makes research reliable.

New Constructs provides fundamental research on nearly all U.S. exchange-traded stocks, and it’s not self-certified. It has been…

1. Vetted by Harvard Business Review, Harvard Business School, MIT Sloan, Ernst & Young, and The Journal Of Financial Economics

2. Used to generate alpha in live-traded indexes provided by Bloomberg

3. Chosen by Google Cloud as the source data for FinSights, the only AI agent for investing they’ve built

None of that would have been possible without 100% transparent and auditable data, models, and analytics. The research exists. The credibility is established. The only missing piece is scale.

What Are We Waiting For?

If reliable fundamental research on stocks is possible to create at scale, then we have to wonder why it isn’t available at scale.

The primary barrier is distribution – something we at New Constructs are trying to solve.

If you’re interested in learning more about distortions in the market and how they’re impacting stocks in your portfolio, I urge you to watch this short video about how to protect your portfolio.

Whether the threat comes from a rogue algorithm or a bad actor with a Bloomberg terminal, the defense is the same: get the truth out first, and get it everywhere.

Diligence matters,

David Trainer, Founder & CEO
New Constructs
support@newconstructs.com

(Please feel free to reach out. I read every email you send me.)

Tell us what you think of today’s Journal: porterstansberrydirect@gmail.com

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Keep in mind, we at Porter & Co. only publish guest essays from publishers we know to offer well-researched ideas vetted by a legal team, excellent customer service, and reasonable refund policies. New Constructs is one such partner. We do not, however, under any circumstances, make any representations about their investment ideas or strategies, nor will we warrant them as equal to our own. We do recognize that the markets are tempestuous and, at times, ideas that we may not endorse prove valuable.

Presented By: Paradigm Press

Oil Prices Could Send These Three Stocks Soaring

If the turmoil in the Middle East has you rushing to buy oil stocks right now – STOP and read this.

The biggest gains from the last oil crisis didn’t come from oil companies.

The top-performing energy stocks were tiny. Practically unknown. And every major oil company in America was completely dependent on them.

Today, it’s the exact scenario – except the scale is roughly 13,000 times larger.

That’s why I just vetted three of these companies in this exact same position.

But this time it’s not just oil that’s driving them higher…

Trump’s latest initiative could lead this sector to a major surge.

Editor’s Note: Keep in mind, we only accept advertising from publishers we know to offer well-researched ideas vetted by a legal team, excellent customer service, and reasonable refund policies. Paradigm Press is one such partner. We do not, however, under any circumstances make any representations about their investment ideas or strategies, nor will we warrant them as equal to our own. We do recognize that the markets are tempestuous and, at times, ideas that we may not endorse prove valuable.

3 Things To Know Before We Go…

1. The U.S. economy is accelerating. This week, the Institute of Supply Management (“ISM”) reported that its U.S. Manufacturing Purchasing Managers’ Index (“PMI”) rose to 54.0 in May, with new orders surging to 56.8. This was the fifth consecutive month of manufacturing expansion, and the longest such streak since 2022. According to the ISM, that pace corresponds to roughly 2.2% annualized real (after inflation) GDP growth – remarkable strength given the war in Iran and the energy-market disruption it’s driving.

2. The buffer is gone whether or not the Strait reopens. President Trump suggested that the Strait of Hormuz blockade might last through Labor Day, but the resolution date barely matters – the world has already burned through its shock absorbers. Global drawdowns at 4.8 million barrels per day are the steepest in International Energy Agency records, and the U.S. Strategic Petroleum Reserve is on track to hit its lowest level since 1982. Diesel inventories across the U.S., Europe, and Singapore are at multi-decade lows. And food inflation grows, with the cost of rice up more than 20% across much of Asia. Even a “quick peace” doesn’t mean a quick return of inventories of the world’s critical commodities.

3. The data-center build-out hits a wall. Goldman Sachs estimates that only 50% of data-center capacity planned for the next two years will arrive on time, with the rest stuck behind grid-interconnection queues and 50-week waits on transformers and switchgear. The players that can self-generate power are the ones that stay on schedule.

Chart Of The Day… Kronos Worldwide (KRO)

Shares of pigment maker Kronos Worldwide (KRO) are up 60% since Marty Fridson’s recommendation to Distressed Investing subscribers in December 2025. His next distressed-equity recommendation will be released to paid-up subscribers on June 13.

Mailbag

“Learning From Mailbags”

Kathy D. writes:

“Hey Porter,

Just wanted to say I learn almost as much from reading the responses to your subscribers’ letters and comments as I do from the actual content of the newsletter. And many times more entertaining since you abandon PC. Thanks for including them in the Daily Journal.”

“Liquidity Drain”

Tony C. writes:

“Porter,

Alphabet’s 100-year bond mirrors Motorola’s 100-year bond of $31.5 billion in February.

Google’s total Anthropic commitment of $40 billion, $10 billion at $350M market cap and $30 billion when milestones are reached.

Anthropic Series G in February, $14 billion, Series H in May, $47billion! Total $65 billion, all privately raised but draining Google and Amazon of cash.

SpaceX’s $75 billion IPO is next week. Public drain. Followed by: Anthropic and OpenAI”

“Buffett’s Mistake – Again!”

Carlos V. writes:

“I am not a fan of Berkshire Hathaway, as it took too much time to see the returns. I made multi-baggers by selling real estate for personal use, in the millions. Yes, overall it did great, but that was on Buffett’s watch. This guy is going to run it into the ground by buying what you so eloquently described.

A definite no-go! Thank you for the piece.”

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What It Means When Volatility Is Not The Guiding Force

By Martin Fridson • June 2, 2026

Inside Today’s Issue

• Essay: Finding The Better Risk Ratio

• GOLD BECOMES CENTRAL BANKERS’ CHOICE

• Nicotine battles heat up

• Google’s thirst for cash

• Chart Of The Day… Software stocks

• Today’s Mailbag

Editor’s note: Porter has turned the Journal over to Marty Fridson, lead analyst for Porter & Co.’s Distressed Investing. For nine consecutive years, Marty was ranked No. 1 in high-yield strategy. He has written seven books, the most recent of which is The Little Book Of Picking Top Stocks… and Marty is such a legend that there is a recently published book about corporate finance that devotes an entire chapter to him. We excerpted it last year in the Daily Journal.

Here’s Marty…

Warren Buffett didn’t calculate risk the way most investors do.

“I agree with Buffett that volatility does not represent risk,” says James Hansbury, one of the portfolio managers profiled in the recently published Stock Market Maestros, by Lee Freeman-Shor and Clare Flynn Levy. “People should use Sortino ratios, not Sharpe ratios, to judge risk-adjusted performance.”

Hansbury’s point is not that investors do not or should not care about volatility. Not unreasonably, most investors prefer to put their money in a fund that achieves returns as high or higher than its competitors, with less erratic price swings along the way.

Companies in the business of evaluating the performance of mutual funds and money managers therefore calculate Sharpe ratios, which compare an investment’s return with its volatility. That measure treats upside volatility the same as downside volatility. But that’s not the way most investors who I know view it. They actually like the upside type, thank you very much.

The Sortino ratio reflects investors’ preference by comparing average return only with the downside volatility. By this measure, the most successful manager is the one who delivers the highest return on your investment – including price appreciation, income, and reinvestment income – per unit of pain in the form of periodic declines in market value.

So Sharpe Or Sortino – Which To Use?

This all makes sense from the standpoint of matching the performance measure with how investors conceptualize results. But as a practical matter, does it make a difference whether you use the Sharpe ratio or the Sortino ratio as an input to the decision on which fund to buy or which manager to hire?

To address that question, I compiled a list of 30 growth-stock mutual funds – large-cap, mid-cap, and small-cap funds are represented. I then ranked them by both the Sharpe ratio and the Sortino ratio. (To be clear, we’re not recommending or offering opinions on any of the funds in the accompanying table. Investors who are interested in buying a growth stock fund should consider other factors besides the five-year risk-adjusted return.)

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The choice of ratio does turn out to affect the question of which fund has provided the most gain for the pain. The #1 fund by Sharpe ranks only #3 according to Sortino. In an interesting symmetry, the #1 Sortino fund is #3 by Sharpe.

In the bottom third of the list, #20 to #30, every fund ranks the same by both measures. That’s related to the fact that bigger amounts separate each fund from the next in rank than in the top portion of the table.

For example, on the Sharpe scale, just 0.005565 separates Fund #1 from Fund #2. The differential between #29 and #30 is 10x as great at 0.061170. But it’s the top end of the list that investors really care about. After all, they’re aiming to identify the very best performer in the entire group.

The bottom line is that when you assess investment opportunities, it pays to do more than just take statistics at face value. A little bit of online research can arm you with a fuller understanding of what’s being measured. See, for instance, here and here.

Tell us what you think of today’s Journal: porterstansberrydirect@gmail.com

Good investing,

Martin Fridson
New York, New York

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Presented By: Crowdability

A Wall Street insider just revealed that the SpaceX IPO may be coming sooner than expected.

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Editor’s Note: Keep in mind, we only accept advertising from publishers we know to offer well-researched ideas vetted by a legal team, excellent customer service, and reasonable refund policies. Crowdability is one such partner. We do not, however, under any circumstances make any representations about their investment ideas or strategies, nor will we warrant them as equal to our own. We do recognize that the markets are tempestuous and, at times, ideas that we may not endorse prove valuable.

Things To Know Before We Go

1. Gold has replaced U.S. Treasuries as the world’s top reserve asset. A European Central Bank (“ECB”) report published this morning shows that bullion accounted for 27% of global central bank reserves at the end of 2025 – up from 20% a year earlier – while U.S. Treasuries slipped to 22% from 25%. The shift reflects both a historic gold price rally – the metal topped $5,500 an ounce in January – and a deliberate retreat from the dollar that accelerated after Washington froze Russia’s reserves in 2022. China, Poland, Turkey, and India led the gold buying.

2. Nicotine-pouch wars heat up. Philip Morris (PM) announced it will launch its new ZYN ULTRA nicotine pouch this month – featuring a slim design with 20 moist pouches versus the original 15. The move comes in response to competition from the moist, 20-pouch VELO Plus cans from British American Tobacco’s (BTI), as well as Turning Point Brands (TPB) FRE and ALP products. We continue to believe that the fast-growing nicotine-pouch market is large enough to support the two nicotine companies we have recommended in Complete Investor.

3. Alphabet braces itself for the artificial-intelligence (“AI”) arms race. Complete Investor holding Alphabet (GOOG) announced an $80 billion equity raise for its AI buildout, anchored by a $10 billion private placement from Berkshire Hathaway. The $80 billion will fund Alphabet’s growing 2026 capex budget of $190 billion, as Google says demand for its AI services is running ahead of supply. Plus, it is $80 billion that Alphabet can grab ahead of the wave of capital-hungry IPOs… including SpaceX, Anthropic, and OpenAI.

Chart Of The Day

Software stocks were up nearly 11% over the past two trading days through Monday… The S&P 500 Software Industry Index had its strongest two-day rally since the Global Financial Crisis in March 2009.

Mailbag

“Stop Bashing Berkshire” – David A. writes:

“Berkshire has billions of dollars to hire the best of the best and make the decisions it does to invest. The overall track record speaks for itself. Do you have nearly $400 billion to invest in the market? Ouch. Perhaps it is time to stop bashing Berkshire and move on with life. Just saying.”

Porter Comment: If you’re right, then why doesn’t that show up in the numbers? Berkshire Hathaway (BRK) used to beat the S&P 500 by more than 10% a year. Over the last 10 years it has underperformed by 2.7% – a year. Over the last five years, it has underperformed by more than 3.5% a year. And in the last year it has underperformed by more than 35%. Most of the commentators don’t have any idea why. The reason is structural. Berkshire used to be an insurance company with a focused equity portfolio, led by the greatest investor in history. It was a compounding machine. But not anymore. Now it’s now a conglomerate that has fundamentally mismatched capital structure. You can’t run a railroad or a utility with equity funding. And you can’t run an insurance company with debt funding. Until this fundamental structural flaw is fixed, Berkshire will not beat the S&P 500.

You see this as me “bashing” Warren Buffett, who just retired as Berkshire CEO. It isn’t. I’m warning that Buffett’s legacy is being destroyed – mostly because he broke a promise he made to investors in 1983. Buffett always promised that: if Berkshire didn’t beat the market over any five-year rolling period, he’d return capital. When that happened in 2013, he didn’t live up to the promise. And he kept compiling more and more marginal assets.

We – the investors who helped build Berkshire – deserve the Berkshire that was promised to us. We deserve an ultra-high-quality insurance company with an equity portfolio, filled with America’s best businesses. That structure allowed investors to beat the market, for free, for decades! There’s no reason it can’t go back to doing that. But it needs to honor its promise.

Berkshire must spin-off its utilities, its railroads, and its motley collection of marginal businesses. Berkshire should own McDonald’s (MCD), not Dairy Queen. It should own NVR (NVR), not Taylor Morrison Home (TMHC). And it should have never sold its stake in Apple (AAPL) – not without a fundamental reason.

I hope you’ll read my book, Warren’s Mistakes. It’s available on Amazon. If you do, you’ll realize that I’m not bashing Warren. I’m actually helping people understand how extraordinary he was and how badly Berkshire has gone astray.

“Buffett’s Mistake – Again” – Tim P. writes:

“Hi Porter,

Great insight as usual! Clearly, Berkshire continues to miss the mark with yet another purchase of a capital-intensive business. Your facts are indisputable.

I’m surprised you didn’t mention Hovnanian Enterprises in your article. Given that it follows the NVR model, wouldn’t it have been a much better acquisition option than Taylor Morrison as well?

Keep up the great analysis. I always look forward to reading your work!”

“Asset-Light Homebuilder Model” – Craig L. writes:

“I bought NVR 3.75 years ago and have a 39.5% total gain. That is only so-so, but it is good for a bad new housing market.

I don’t understand why other builders don’t adopt NVR’s capital-light model. Do you have thoughts on that?”

Porter Comment: They’re stupid. No, that’s not it. They’re delusional. The homebuilders have always been family-led businesses. In most cases they got their start building homes on a long-held piece of land. So what do land people do? They buy more land. They’re only building homes because they just want to buy land. That ethos – that the value is in the land – has been very hard to shake out of them.

“NVR” – Kevin B. writes:

“Hello,

I am glad Berkshire didn’t buy NVR. I want to continue holding it as a “free trade” in my account. Have been thinking about adding to it again.”

Porter Comment: You’re a lot smarter than Greg Abel.

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Inside Today’s Issue

• Essay: Buffett’s Mistake – Again

• AI continues to bolster the market

• Hyperscalers go global on debt

• Warsh’s new inflation measure

• Chart Of The Day… Virgin Galactic (SPCE)

• Today’s Mailbag

If there is a single “gift” I would provide to every Porter & Co subscriber, it is the ready ability to distinguish between an average business and a great business.

Great businesses, like truly beautiful women, are rare. And for investors seeking to build real, lasting wealth, finding them is everything. With a great business, time is in your favor. With a great business, every recession is only an opportunity to gain share. With a great business, you don’t ever worry about competitors – they simply come and go.

I’ve written an entire book showing you exactly how to identify a great business. It’s called Warren’s Mistakes, and it walks readers through how Warren Buffett beat the S&P 500 by 11% per year for 30 years. He did it with a portfolio of America’s greatest businesses: Coke, American Express, The Washington Post Company, Gillette, McDonald’s, Disney, and Moody’s.

Of course, the best way to learn anything, as Berkshire Hathaway (BRK) vice chair Charlie Munger explained constantly, is to invert. That’s why my book doesn’t merely explain Buffett’s success, it focuses on his mistakes.

While I must admit it is unlikely that I will ever get you to read my book, I hope I can at least show you some of the lessons in it by looking carefully at the deal Berkshire announced today, the purchase of Taylor Morrison Home (TMHC).

Taylor Morrison is America’s sixth-largest homebuilder. Berkshire is paying $72.50 per share in cash — a 24% premium to where the stock closed Friday. That equals an enterprise value of $8.5 billion. And it values the business, on an enterprise basis, at roughly 10.7x 2025’s $791 million in net income. In the press release, Berkshire’s new CEO, Greg Abel, called Taylor Morrison “a best-in-class national homebuilder.”

Unfortunately, for Berkshire shareholders, it’s not. It isn’t even close. And I’d bet long-time readers of my work know what Berkshire should have bought instead.

In November 2007, in the depths of the housing collapse, I explained to investors why there’s only one homebuilder in America worth owning – NVR (NVR). Not because the others weren’t cheap – they were all cheap, down more than 50% from their highs. But because only one of them is a genuinely great business. I called NVR “not only the best company in the homebuilder sector” but “one of the truly exceptional businesses in the world.”

NVR went bankrupt in the early 1990s. It owned too much land and thus had too much debt to survive the 1990-91 recession. The experience turned its managers into fanatics about capital discipline.

Necessity is the mother of invention. As the company emerged from bankruptcy, it didn’t have enough capital to buy huge swaths of land. So it had to partner with developers. In the process, it invented the “land-lite” housing model. NVR doesn’t own raw land. It pays small, non-refundable deposits to option finished lots from third-party developers. It only takes title when someone is ready to buy a house. If a market sours, NVR walks away and forfeits the deposit. It never gets stuck holding billions in depreciating dirt.

The result, as I wrote in 2007, was “the highest returns on assets in the sector” and a balance sheet that was “nearly debt-free.” Those facts are still true today. NVR was trading around $400 a share when I recommended it in 2007. It trades above $6,000 today – despite a big recent drawdown as the housing market has suffered over the last two years.

It isn’t hard to compare NVR to Taylor Morrison, although doing so feels like picking on a retarded kid. In 2025, NVR earned a 44% return on invested capital (“ROIC”) and a 33% return on equity (“ROE”). Taylor Morrison earned 11% ROIC and 13% ROE. Over the full decade from 2016 through 2025, NVR’s ROIC averaged roughly 50%. Taylor Morrison’s averaged about 9%.

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NVR earns 50 cents of operating profit for every dollar of capital employed. Taylor Morrison can’t crack a double-digit return on capital. So… why would anyone ever want to own that business?

Keep in mind, they build houses in the same country, at similar prices, to similar customers, at nearly identical gross margins – around 23% last year. The difference is not what they sell. It’s how much capital they have to bury in the ground to sell it.

You can see exactly where the capital goes. Taylor Morrison ended last year with $6.5 billion of inventory – land and houses – on its balance sheet. NVR, while generating more revenue, carried $1.7 billion of inventory. NVR turns its inventory more than 4x a year; Taylor Morrison turns it less than once. NVR converts a sale to cash in about 71 days. Taylor Morrison takes 376 days – its money sits trapped in dirt for more than a year before it comes back.

And the balance sheets tell the rest of the story. NVR ended 2025 with $1.9 billion in cash and negative net debt. NVR maintains a net cash position. Taylor Morrison carries net debt of more than 1x earnings before interest, taxes, depreciation, and amortization (“EBITDA”). One company is built to survive the next downturn and buy when everyone else is forced to sell. The other will spend the next bust the way the bad builders spent the last one: negotiating with its bankers.

But that’s not the real advantage.

What you’ll learn when you read Warren’s Mistakes is the enormous advantage capital efficient businesses have over time. You see, because NVR uses so little capital, it can return almost all of it. The company shovels mountains of cash into buybacks – $1.8 billion of stock repurchased in 2025 alone. Over the last decade, NVR shrank its share count 25% and drove earnings per share 4x – from about $104 to $437.

That is a compounding machine. And it is going to continue compounding, whether this housing slump lasts another year or another decade.

Taylor Morrison buys stock too: shares of other marginal builders, most recently William Lyon Homes and AV Homes. How’s that working out? It’s a bigger pile of capital that is generating meager 9% returns. That is not value creation. That is empire-building, which is exactly what Greg Abel is doing at Berkshire.

Ironically, this isn’t the first time Berkshire has made this mistake.

In 2003, Berkshire paid $1.7 billion to take Clayton Homes private. And, just like today, what Berkshire got was a capital-hungry, marginal business. Clayton is a manufactured-housing company bolted to a high-interest lender. How does it make money? It sells trailer homes to poor people. The homes depreciate faster than the loans amortize. Sure, poor people need somewhere to live, but this is a very tough business because, quite simply, its product doesn’t create any value for the people who buy it. It’s clearly a business that Berkshire shouldn’t have ever bought.

And it didn’t just buy Clayton – it has invested heavily in growing it. It built Clayton’s mortgage portfolio from $5.4 billion in 2003 to more than $13 billion today. It bought up the plants, stores, and loan books of failed competitors, too. The real capital employed by Berkshire into Clayton today isn’t $1.7 billion – it’s more like $13 billion to $15 billion.

These enormous, ongoing capital investments are what Berkshire’s conglomerate model is designed to hide. Let me explain.

Measured against the original $1.7 billion check, Clayton looks like a triumph: its roughly $1.9 billion of pre-tax earnings in 2024 is more than the entire purchase price! But once you count all the capital Berkshire has sunk into Clayton – the loan book, the factories, the competitors it bought – the return on capital employed collapses to roughly 12% to 14% pre-tax, or about 9% to 11% after tax. That is a mediocre, single-digit-to-low-double-digit business. It is, in other words, the same 9% return as Taylor Morrison.

But what if Berkshire had just bought the best business in the industry, NVR, and never invested another penny?

NVR earns a 44% ROIC – roughly 3x to 4x the return Clayton Homes generates on capital. Had Berkshire taken the same $1.7 billion it spent on Clayton equity in 2003 and simply bought NVR, that stake would be worth about $22 billion today – a 13-fold gain – without another dollar invested, because NVR funds itself and hands its cash back (via share buybacks).

Run those same returns with the full $13 billion to $15 billion Berkshire has tied up in Clayton, and the delta becomes obscene. The realistic, conservative cost of choosing Clayton over NVR is somewhere north of $50 billion in forgone value. Berkshire didn’t just pick the wrong horse. It spent two decades shoveling feed into it.

Now with the Taylor Morrison deal, Abel says Berkshire intends to “unify our site-built homebuilding operations into a combined platform.” In other words: take the bad manufactured-housing bet, staple a capital-heavy, single-digit-return site-built homebuilder to it, and call the combination “strategy.” This is the entire conglomerate fantasy expressed in a single deal. And it won’t work.

What Berkshire should do is spin off or sell Clayton Homes and invest the capital into America’s best homebuilder, a company that creates tremendous value for its customers and its shareholders. That’s NVR.

Here is the part that should make every Berkshire shareholder wince.

Berkshire’s entire genius – the thing that made it the greatest compounding story in the history of American capitalism – was using insurance float to buy wonderful businesses. Float is other people’s money: premiums collected today against claims paid years from now. It costs almost nothing, and it grows. Buffett’s insight was that you could take that nearly free capital and invest it in the best businesses in the world – Coca-Cola, American Express, GEICO, See’s Candies – capital-light compounders that throw off cash.

A naive investor will look at Taylor Morrison trading below book value and call it a bargain. But the book value is the disease, not the cure. You are paying 90 cents on the dollar for $6.5 billion of slow-turning land that earns 9%. Buffett, of all people, taught us that price-to-book is meaningless once a business stops needing the capital.

Strip away the names, and the deal is depressingly familiar. Berkshire passes on the wonderful, capital-light, publicly traded compounder. It pays a premium for the capital-hungry, low-return business. It takes the bad business private, where its poor economics can hide. And it calls the whole thing a long-term commitment to housing.

It is the railroad and the utilities all over again.

Read my book. And don’t buy Berkshire Hathaway.

Tell me what you think of today’s Journal: porterstansberrydirect@gmail.com

Good investing,

F. Porter Stansberry
Stevenson, Maryland

Presented By: Paradigm Press

Oil Prices Could Send These Three Stocks Soaring

If the turmoil in the Middle East has you rushing to buy oil stocks right now – STOP and read this.

The biggest gains from the last oil crisis didn’t come from oil companies.

The top-performing energy stocks were tiny. Practically unknown. And every major oil company in America was completely dependent on them.

Today, it’s the exact scenario— except the scale is roughly 13,000 times larger.

That’s why I just vetted three of these companies in this exact same position.

But this time it’s not just oil that’s driving them higher…

Trump’s latest initiative could lead this sector to a major surge.

Editor’s Note: Keep in mind, we only accept advertising from publishers we know to offer well-researched ideas vetted by a legal team, excellent customer service, and reasonable refund policies. Paradigm Press is one such partner. We do not, however, under any circumstances make any representations about their investment ideas or strategies, nor will we warrant them as equal to our own. We do recognize that the markets are tempestuous and, at times, ideas that we may not endorse prove valuable.

3 Things To Know Before We Go

1. Artificial Intelligence (“AI”) stocks fuel the bull market. Goldman Sachs has created two market indexes that split the S&P 500 into a basket of AI-related and non-AI-related stocks. Since February 27, the day before the market correction sparked by the Iran War, the basket of AI stocks has provided all of the gains while non-AI stocks have generated a negative return – a theme we’ve seen for the past three years.

2. AI is taking over the world’s bond markets. AI hyperscalers – including Alphabet (GOOG), Amazon (AMZN), Meta Platforms (META), and Microsoft (MSFT) – have doubled non-dollar debt issuance to 30% of their total bond funding this year, according to Bank of America. Alphabet, in particular, is now the fourth-largest pound-sterling corporate borrower and a top-10 issuer in euros, yen, and Swiss francs – setting borrowing records across all four currencies to fund the trillions it plans to spend on AI data centers. Every major bond market on Earth is now long the AI trade.

3. New Fed chair wants a new inflation ruler. Federal Reserve Chair Kevin Warsh is looking to trim the parts of the inflation metric with the most extreme monthly price moves. To do so, he points to the Dallas Fed’s personal consumption expenditures (“PCE”) formula that measured inflation at 2.3% in April, a full point under the 3.3% core PCE, dumping the energy shock the Iran War is causing. The economists who built the PCE measure are warning Warsh off from doing this, noting it will badly understate persistent inflation.

Chart Of The Day… Virgin Galactic Holdings (SPCE)

Shares of cash-burning space-tourism firm Virgin Galactic (SPCE) have nearly tripled in the past week, reportedly on speculation that investors may mistakenly buy the stock thinking it’s Elon Musk’s SpaceX, which is set to trade under the ticker SPCX following its widely anticipated initial public offering (“IPO”) later this month.

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Here’s Justin to explain the back story…

In 2017, Larry Fink – the CEO of BlackRock (BLK), the world’s largest asset manager with $12.5 trillion under management – famously called Bitcoin “an index of money laundering.” Over the next several years, JPMorgan Chase (JPM) CEO Jamie Dimon repeatedly criticized cryptocurrencies as “pet rocks,” and Bitcoin in particular as a “fraud,” a “Ponzi scheme,” and “worse than tulip bulbs.” And as recently as July 2024, David Solomon, CEO of investment bank Goldman Sachs (GS), said he viewed crypto as “a speculative investment” and didn’t “see a real use case” for it.

But that’s not the case anymore…

Last December, BlackRock’s Fink argued in The Economist that Bitcoin and tokenized assets could grow as fast as, or even faster than, the early internet. His firm now custodies more than 800,000 Bitcoin through its iShares spot Bitcoin exchange-traded fund (“ETF”), operates the largest spot ETF for Ethereum – the second-largest crypto asset by market cap behind Bitcoin, and has built a $2.85 billion tokenized Treasury fund (BUIDL) that runs on the Ethereum blockchain.

JPMorgan now holds over $350 million across various crypto ETFs, according to its most recent filing. It has launched not one, but two, tokenized money market funds on the Ethereum blockchain. And its Kinexys blockchain platform now processes over $5 billion in daily transactions for clients including BMW, Siemens, and Mitsubishi.

Finally, Goldman Sachs just filed to launch its first Bitcoin ETF last month, and its CEO Solomon, himself disclosed in February that he now personally owns Bitcoin.

These are three of the most prominent financial institutions in the world – the largest asset manager, the largest U.S. bank by assets, and one of the most influential investment banks. And each has dramatically changed its position on crypto within the past few years.

There is a reason for this change.

At Porter & Co., we’ve generally avoided crypto-related recommendations outside of a core position in Bitcoin – not because we dismissed the technology, but because the conditions weren’t right for serious investment.

That is finally changing. And there are two big reasons why.

The first reason is the regulatory environment, which has been the single biggest obstacle for crypto investors for years.

Under the Biden administration, the Securities and Exchange Commission (“SEC”) pursued what the industry called “regulation by enforcement.” During SEC Chair Gary Gensler’s tenure, the agency brought more than 100 enforcement actions against crypto companies – including Coinbase Global (COIN), Kraken, and Binance – while declining to publish clear rules for the industry to follow.

The Federal Deposit Insurance Corporation (“FDIC”) required prior notification before any member bank could engage in digital asset activity.

The Federal Reserve issued supervisory letters discouraging state-chartered banks from offering crypto services.

The Financial Stability Oversight Council (“FSOC”) listed crypto as a potential threat to the U.S. financial system.

The practical consequences of these hurdles were severe.

In March 2022, the SEC introduced Staff Accounting Bulletin 121 (“SAB 121”), which required any institution holding crypto assets in custody for customers to record those holdings as liabilities on its balance sheet. For banks, which are subject to strict capital reserve requirements, offering crypto custody became prohibitively expensive.

As a result, when 11 spot Bitcoin ETFs launched in January 2024, not a single one had a bank as its custodian. Nearly all Bitcoin ETF custody was concentrated at Coinbase, a non-bank crypto exchange – a concentration risk that the American Bankers Association, the Securities Industry and Financial Markets Association, and the Bank Policy Institute jointly warned would leave “investors and customers, and ultimately the financial system, worse off.”

A bipartisan Congressional resolution to overturn SAB 121 passed both chambers in May 2024. President Biden vetoed it.

The net effect of all of this was to stifle the crypto industry’s development, push much of its capital and talent outside of the United States, and to keep most traditional financial institutions on the sidelines.

Each of those policies has since been reversed.

Gensler resigned in January 2025. Paul Atkins – a former SEC commissioner and co-chair of the Token Alliance, an initiative of the Chamber of Digital Commerce focused on developing regulatory frameworks for digital assets, since 2017 – was sworn in as his replacement in April.

One of the Trump administration’s first acts was to rescind SAB 121, removing the balance-sheet requirement that had prevented banks from offering crypto custody services. The SEC dropped nearly all of its non-fraud enforcement actions against crypto firms. The FDIC rescinded its notification requirements in March. The Federal Reserve withdrew its supervisory letters in April. The OCC issued clarifications confirming that nationally chartered banks could offer crypto custody and stablecoin services without special permission. The FSOC removed crypto from its list of threats to financial stability.

On July 18, 2025, President Trump signed the Guiding and Establishing National Innovation for U.S. Stablecoins (“GENIUS”) Act into law. It was the first comprehensive federal regulation of stablecoins in American history. It was the most bipartisan piece of financial legislation in 15 years, passing with solid majorities in both the U.S. House and U.S. Senate.

That same month, the House passed the Digital Asset Market Clarity (“CLARITY”) Act – a comprehensive framework for digital assets that defines which fall under SEC jurisdiction, which fall under the Commodity Futures Trading Commission (“CFTC”), and that creates registration pathways for exchanges, brokers, and dealers. This month, the Senate Banking Committee finally advanced the CLARITY Act in a 15-9 bipartisan vote. It now moves to the full Senate floor, and White House advisers have indicated the President could sign it into law by July 4.

Earlier this month, President Trump also signed an executive order titled “Integrating Financial Technology Innovation Into Regulatory Frameworks,” which directs the Federal Reserve to evaluate granting fintech firms and uninsured depository institutions – including crypto companies – direct access to Federal Reserve master accounts. Master accounts provide direct access to the Fed’s payment systems, including Fedwire, and are effectively required for any institution that wants to send or receive U.S. dollar payments without relying on a partner bank as an intermediary. The Fed has 120 days to submit its findings and recommendations.

This comes just two months after private crypto exchange Kraken became the first crypto firm to secure a limited Fed master account through the Kansas City Fed. The executive order aims to formalize and expand the pathway.

In short, in the span of roughly 18 months, the United States has gone from being actively hostile toward the crypto industry… to having signed stablecoin legislation, a market structure bill advancing to the Senate floor, federal agencies that have each independently reversed their aggressive or restrictive policies, and an executive order directing the Fed to open its payment infrastructure to crypto firms.

And this has led directly to the second reason we’ve become more constructive on crypto assets today.

The institutional reversals I mentioned earlier – by BlackRock, JPMorgan, and Goldman Sachs – are just the tip of the iceberg. The shift extends across the entire financial industry.

The first spot Bitcoin ETFs launched in the U.S. in January 2024. As of today, those ETFs hold more than $100 billion in combined assets. BlackRock’s iShares Bitcoin Trust (IBIT) alone holds more than 800,000 Bitcoin – roughly 49% of the total U.S. spot Bitcoin ETF market.

IBIT reached $10 billion in assets in 49 trading days. The SPDR Gold Trust (GLD) took more than two years to hit the same mark. IBIT then crossed $25 billion, $50 billion, and $70 billion in assets faster than any ETF in history across any asset class.

Spot ETFs for Ethereum followed soon after, accumulating north of $20 billion in combined assets to date. By late 2025, the SEC had also approved spot ETFs for several other crypto assets, including Solana, XRP, and Litecoin.

But the adoption goes well beyond ETFs.

Morgan Stanley – which previously restricted its advisors from even recommending crypto to its clients – filed for its own Bitcoin and Solana ETFs in January, and just launched its own Bitcoin ETF in April. Its wealth management arm, which oversees roughly 16,000 financial advisors, now recommends clients allocate 2% to 4% of their portfolios to crypto. Charles Schwab – which manages over $12 trillion in client assets across nearly 39 million accounts – launched direct spot Bitcoin and Ethereum trading on May 13. Fidelity has offered direct crypto trading since 2023 and was the first retirement plan provider to allow Bitcoin in 401(k)s.

A Goldman Sachs survey found that 76% of global institutional investors plan to expand their digital asset exposure in 2026. “Tokenized” real-world assets – including stocks, Treasury bonds, private credit, and commodities represented on blockchain networks that can trade 24/7 and settle instantly – now represent a $35 billion market, up from less than $1 billion in early 2024.

Sovereign wealth funds are following. Most notably, the United Arab Emirates owned more than $1 billion in Bitcoin ETF exposure as of year-end 2025. Norway’s Government Pension Fund Global – the world’s largest sovereign wealth fund at $1.9 trillion in assets under management – also holds nearly $1 billion in indirect exposure through various crypto-related equities.

Pension funds have entered. The State of Wisconsin Investment Board – with $162 billion in assets – became the first state pension fund to invest in Bitcoin ETFs in 2024, building a position worth over $320 million. Michigan’s State Retirement System, with $79 billion under management, holds positions in both Bitcoin and Ethereum. Ohio, Louisiana, and Texas have also reported crypto investments.

University endowments – traditionally among the most conservative institutional investors – have disclosed crypto positions as well. Harvard’s $57 billion endowment held roughly $117 million in BlackRock’s Bitcoin ETF as of Q1 2026. At one point in 2025, Bitcoin was the endowment’s largest publicly disclosed equity holding, surpassing its positions in Alphabet (GOOG), Nvidia (NVDA), and Amazon (AMZN). Brown University holds a $13.8 million Bitcoin ETF position. Emory University built a $52 million stake in Grayscale’s Bitcoin ETF. And Dartmouth College recently disclosed a $3.67 million position in Bitwise’s Solana Staking ETF – one of the first university endowments to take exposure to a crypto asset beyond Bitcoin and Ethereum.

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Perhaps most telling of all: even investment management giant Vanguard – one of the most vocal critics of crypto assets – has now reversed course.

In January 2024, when the first spot Bitcoin ETFs launched, Vanguard refused to let its clients trade them and even removed access to existing Bitcoin futures ETFs, saying crypto did not align with its long-term investing philosophy.

On December 2, 2025, following months of growing backlash on social media, the firm finally relented and opened its brokerage platform to crypto ETFs. Vanguard’s 50 million clients, with over $11 trillion in assets, can now buy Bitcoin, Ethereum, Solana, and XRP ETFs alongside their index funds.

But here is what makes the current setup so unusual… and compelling.

Given the bullish catalysts I just described, you might expect crypto assets to have performed well over the past couple of years. But that is not the case. In fact, outside of Bitcoin and U.S. dollar stablecoins, the broad crypto market has been in a prolonged bear market.

The total crypto market capitalization, excluding Bitcoin and stablecoins, fell by more than 60% from its 2024 peak through February of this year. And even after a small rebound over the past few months, the broad crypto market is still trading 55% below those prior highs… and nearly 60% below its all-time peak set in late 2021.

In other words, most cryptos have gone nowhere for the last five years.

Compare that to other asset classes over the same period. The S&P 500 is up 62%. The big-tech-focused Nasdaq 100 is up 86%. Gold is up 141%, and silver has soared 199%. The Magnificent 7 have gained an average of 181%, with AI leader Nvidia (NVDA) up a massive 600%.

Crypto – despite a perfect storm of regulatory clarity and accelerating institutional adoption – has been “dead money” for years. And retail investor sentiment data reflect this.

The Crypto Fear & Greed Index – which ranges from 0 (“Extreme Fear”) to 100 (“Extreme Greed”) – hit a reading of 5 on February 6, 2026. That is the lowest level since the index’s inception in 2018. It then spent more than 60 consecutive days in single digits this year – more than double the previous record.

To put this in perspective, this index bottomed at 8 during the COVID crash of March 2020. And even in the depths of the 2022 bear market – the worst bear market in crypto history, triggered by the implosion of the leading crypto exchange, FTX, due to massive fraud by founder Sam Bankman-Fried – when the future of the entire crypto industry was in question, this index never fell below 6.

Beyond the data, we’re also beginning to see signs of outright capitulation among some of crypto’s most prominent advocates. This month, David Hoffman – co-founder of Bankless, one of the most widely followed crypto media brands in the world – announced that he had sold his entire stake in Ethereum.

Hoffman was not a casual participant. He was one of Ethereum’s most vocal and visible champions for nearly a decade. During the 2018 bear market, when Ethereum fell below $300, he was actively buying. He built Bankless into what many consider the single most influential media platform in the Ethereum ecosystem.

His co-founder, Ryan Sean Adams, simultaneously announced that “the first phase of Bankless” has come to an end, and that he is stepping back from day-to-day content. Reports indicate the company has also laid off most of its team.

Seeing some of the most committed, long-term believers in an asset sell everything and step away is exactly the type of event that tends to occur near major market bottoms.

So we see an enticing opportunity in the crypto market today.

The fundamental outlook has changed dramatically in the last 18 months. A year and a half ago, crypto had no federal regulatory framework. The Biden administration was privately pressuring banks to sever ties with crypto firms. The SEC was actively suing the industry’s largest companies, with several, including Coinbase, publicly considering relocating their operations outside the United States. And no major brokerage in the country offered its clients access to crypto trading.

That reality is long gone, but the market is still trading as if nothing has changed. Most crypto assets are still trading 50% or more below their prior highs. Sentiment is as negative as it gets. And most retail “investors” have long since abandoned the market after years of terrible returns – moving on to more popular speculative vehicles like AI stocks, zero-day-to-expiration (“0DTE”) options, and prediction markets.

The next crypto bull market will be driven by real investment. The marginal buyer of crypto is no longer a speculator. It’s institutional capital… governments, pensions, university endowments, wealth managers, and retirement funds. And this trend is just getting started.

It’s finally time to consider investing in crypto.

Tell us what you think of today’s Journal: porterstansberrydirect@gmail.com

Good investing,

Justin Brill
Stevenson, Maryland

P.S. We’re launching our first Porter & Co. crypto portfolio and advisory to take advantage of what we see as the most compelling buying opportunity in years.

Our Partners will be the first to get access…

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3 Things To Know Before We Go

1. The risks of an AI bust. A recent Financial Times analysis forecasts one of the greatest episodes of capital destruction on record – it reports that the U.S. hyperscalers, including Microsoft (MSFT), Alphabet (GOOG), Amazon (AMZN), Meta (META), and Oracle (ORCL), will invest a record amount of capital into the AI buildout through 2030. However, even under optimistic assumptions of 15% annual revenue growth and zero operating expenses, the FT’s math shows that nearly all of these companies will earn negative returns on these investments.

2. An AI-driven memory squeeze is producing a sharp earnings boom. Micron Technology’s (MU) projected operating income will reach $77 billion in 2026 and $138 billion in 2027 – versus just $1.3 billion in 2024. As hyperscalers and GPU makers like Nvidia and AMD compete for high-bandwidth memory, the memory suppliers – Micron, SK Hynix, and Samsung – hold historic pricing power.

3. Two oil giants just warned that energy shortages are imminent. Speaking at global equity research firm Bernstein’s annual Strategic Decisions Conference on Thursday, ExxonMobil (XOM) SVP Neil Chapman said global inventories of petroleum products are nearing “unheard of” lows and could hit an operational floor within two to three weeks – at which point international crude oil prices could rocket to $150 to $160 a barrel. Chevron (CVX) CEO Mike Wirth echoed the warning, saying the market’s “buffers and shock absorbers” have been steadily drawn down since the war in Iran began, and we’re now just “weeks away” from shortages. When execs at two of the world’s largest energy firms sound this alarmed, it’s probably worth listening.

Chart Of The Day… Versamet

Coming off strong Q1 earnings news and solid 2026 guidance, shares of gold royalty streamer Versamet Royalties (VMET) have risen more than 20% since our April 18 recommendation to Complete Investor subscribers.

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The Secret Behind Loudoun County, Virginia’s Wealth

Inside today’s Daily Journal…

• Essay: Inflation Isn’t Just A Tax…

• Equities not at the peak yet

• Home foreclosures skyrocket

• Raiding the piggy bank to fill the gas tank

• Chart Of The Day… Prime Medicine

• Today’s Mailbag

You have probably never heard of Richard Cantillon. And there’s a very real, and powerful reason why not: his ideas are dangerous to bankers.

John Law’s Mississippi Scheme (1720) was the first modern, fiat-driven, paper-money financial bubble. It crashed the French economy and wiped out most of the wealth of the French nobility.

Cantillon, working out of his Paris bank, was one of the most aggressive early buyers of Mississippi Company shares as they went from a few hundred livres in 1718 to roughly 10,000 livres by late 1719. Cantillon had two structural advantages most speculators didn’t. He had privileged access to the share-issuance machinery (he got shares first), and he lent money against shares as collateral, which both generated interest income and gave him critical information about the size and the stability of the speculative leverage in the market. He sold most of his Mississippi position into the late-1719 mania.

To maintain the price of the stock, John Law had to create enormous amounts of new bank notes. More bank notes meant the livre would, eventually, collapse against the British pound sterling. So as Cantillon was liquidating his clients’ collateral shares (as the margin loans were called in), he converted the heavily inflated French currency into sterling. When the livre crashed, the same nominal pile of money was suddenly worth a fortune in hard currency.

Cantillon wrote an intricately detailed account of the entire affair and circulated his notes among a close group of friends. He then retired in London. Or he tried to. All of the investors who’d gotten wiped out using his margin loans sued him for fraud and generally made his life miserable. In May 1734, Cantillon’s London townhouse burned down and his body was found in the wreckage. The coroner ruled it an accident. But there is compelling evidence Cantillon had faked his own death – he had been locked in bitter lawsuits with former clients trying to claw back his fortune – and appears to have sailed for Suriname under an assumed name and lived out his days there in obscurity.

After his real death, the notes he shared with friends were published as a book: Essai Sur La Nature Du Commerce En Général (Essay On The Nature Of Trade In General). It is the first complete work of modern economic theory – predating Adam Smith by almost 50 years. However, it wasn’t translated into English until 1931 – 221 years after his death.

What’s so dangerous about his ideas? They explain the power bankers have over an economy.

No one thinks carefully about what happens when a central bank buys assets (usually Treasury bonds). That new money doesn’t spread through the economy uniformly, like food coloring dropped into a glass of water. Cantillon knew this firsthand. New money, he observed, enters the economy at a specific point, through the hands of a specific set of people first. And those people, because they hold the new money before prices have adjusted higher, are able to profit enormously from the inflation that follows.

In Cantillon’s time, the point of entry was the royal mint. When a king needed money for a war, he ordered the mint to call in the old coins and restrike them with more copper and less silver. The first people to receive the new, debased coins were the royal contractors – the arms merchants, the shipbuilders, the grain suppliers, the army officers. They took their shiny new coins to market and bought steel, timber, wheat, and horses at the old prices. By the time the coins had circulated for a year or two, the country boys delivering wheat to the docks were being paid in coins worth 20% less. The wheat farmers and journeymen paid the full inflation. The royal contractors profited from it.

That is the Cantillon Effect. New money benefits its first recipients at the expense of its last recipients.

This is incredibly important to understand. You’re taught that inflation is an invisible tax. And that’s true – eventually. But the timing matters. Understood more completely, inflation is a transfer. Value is taken from the people farthest from the printing press and given to the people closest to it.

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Today, the Federal Reserve does not mint coins. It creates new money electronically. New dollars enter the economy through the primary-dealer system – the 18 or so large banks authorized to transact directly with the Fed’s open-market desk. Those dealers do not lend the new dollars to young families trying to buy their first house. They lend to hedge funds, private-equity firms, and corporate treasurers, who use the money to buy stocks, investment properties, whole companies in leveraged buyouts, farmland, Manhattan office buildings, and Aspen ski chalets – all at yesterday’s prices, using tomorrow’s money.

But there is a second money spigot in this country, even closer to the printing press than Wall Street. It is the federal budget itself.

In fiscal year 1971 – the year President Richard Nixon closed the gold window – total federal outlays were $200.8 billion. In fiscal year 2025, total federal outlays were $7.04 trillion. That is a 35-fold increase in nominal dollars over 54 years, against a roughly four-fold growth in real GDP.

The federal government has been the single largest beneficiary of newly created dollars in the American economy. And you can actually see where those dollars went first. Just look at the map.

In 1971, Loudoun County, Virginia, was a rural dairy and horse-farming county on the Potomac River, west of Dulles Airport, with a population of about 37,000 and a non-descript median household income. In 2024, Loudoun County’s median household income was $177,457 – the highest of any county in the United States, for the 15th consecutive year.

Of the 15 richest counties in America today, five sit in the immediate gravitational orbit of the federal money spigot: Loudoun, Falls Church, Fairfax, and Arlington in Virginia, and Howard County in Maryland. There is no oil field in Loudoun County. There is no gold mine. There is no tech cluster of the Silicon Valley variety. There is no major research university. What there is, in Loudoun County, is a dense concentration of federal contractors, federal employees, federal consultants, and the lawyers and lobbyists who service them.

This is the geography of the Cantillon transfer.

You cannot stop the theft. You do not control the Federal Reserve. You do not control the Treasury. You do not control the federal contracting bureaucracy that built Loudoun County.

What you control is your own balance sheet.

And your balance sheet, if you want it to survive what is coming, has to be arranged so that you are positioned, relative to the next wave of money creation, the way the primary dealers and the contractors in Loudoun County are positioned. You cannot stop being the person from whom money is stolen at the macro level. But you can stop being that person at the personal level. You can move yourself up the Cantillon ladder, into the cohort that receives the new money rather than the cohort that pays for it.

If the government is going to run the printing press, borrow against sound collateral at long-term, fixed rates. Buy assets you know will appreciate when the printing press runs.

If you depend on their paper, you’ll be their slave. If you use their paper to buy high-quality assets, you’ll be a king.

In my new book, 2029: The End of America: Why the Age of Paper Money Is Ending And How to Survive the Coming Global Monetary Reset, I offer three distinct strategies for using leverage safely and effectively in the financial markets. And, the best way, right now, might be trees. To learn more, just read Chapter 8 starting on page 129.

Don’t forget, this week only, you can get a Kindle copy of the book for only $4.99 by clicking right here!

Tell me what you think of today’s Journal… good, bad, or anything in between: porterstansberrydirect@gmail.com

Good investing,

F. Porter Stansberry
Stevenson, Maryland

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3 Things To Know Before We Go…

1. The AI “melt-up” could have further to run. Goldman Sachs’ Speculative Trading Indicator – which tracks the share of trading volume flowing into the riskiest corners of the market – is currently well below levels that marked the end of previous market manias, including the 2000 dot-com bubble and the 2021 meme-stock frenzy. Froth is building, but history says speculation can run far hotter before it breaks.

2. U.S. home foreclosures are rising. Property-foreclosure filings surged 26% year-over-year in Q1 2026 to approximately 119,000 – the highest increase in six years, likely leading to more housing-market strain. If soaring insurance bills, property taxes, and HOA fees continue to climb, household budgets will stay squeezed and defaults will remain high… and foreclosures will continue.

3. Americans are draining their piggy banks to cover basic costs. This morning, the Bureau of Economic Analysis (“BEA”) reported that the U.S. personal savings rate collapsed to 2.6% in April, down from 5.5% a year ago. Meanwhile, Fidelity noted that 401(k) hardship withdrawals climbed to 2.5% in Q1 – extending a multi-year climb to the highest levels on record – while SecureSave, which runs employer-sponsored emergency accounts, said a record 11% of recent withdrawals were tied directly to transportation costs. Americans are now raiding their rainy-day funds just to fill up their tanks.

Chart Of The Day… Prime Medicine (PRME)

For months now, Tech Frontiers editor Erez Kalir has been saying that gene-editing company Prime Medicine (PRME) looks to be among the most important emerging players in what Erez calls the Era of Genetic Medicines. The market, it seems, is beginning to see what he has been calling “a steal” below $4 per share. Shares are up 20% for the week.

Mailbag

In yesterday’s Daily Journal “What The Crowd Isn’t Buying: Bitcoin,” Porter shared his pricing model for the leading crypto asset, indicating what he sees as a reasonable price for the digital asset. Readers share their thoughts and questions…

“Risk Of Quantum Computing Destroying Bitcoin”

Sherwin R. writes:

Porter, I have been hearing for some time about the risk of quantum computing at some point being able to break through the security of Bitcoin accounts, threatening their value. How does this factor into your view on the value of Bitcoin?

Also, just as an aside, I happen to be a fairly liberal Democrat, but I thought your Journal on black crime was fascinating and spot on (as was the critique of your reader’s son’s response).

Porter Comment: Quantum computing will, eventually, lead to changes in all forms of encryption. It does not play a role in my Bitcoin model.

“Bitcoin Is A Rip-off”

David A. writes:

Bitcoin is a total rip-off. The last Berkshire Hathaway vice chair Charlie Munger said it was the biggest scam that he had ever seen.

The fact that anybody with a brain would invest in something like Bitcoin is just beyond me. Self-made (created value). Nothing tangible but a coin with a value that society says it is worth. This entire story belongs in the file “You just can’t make this stuff up.” And nobody cares.

When the house of cards falls with Bitcoin, I want to be around to hear all of you provide answers.

Porter Comment: Bitcoin, like gold, is universally recognized proof of work and has many other qualities that make it a perfect form of money. Berkshire Hathaway, with its enormous insurance float, has long been one of America’s leading beneficiaries of the Cantillon Effect. It is no surprise then that Warren Buffett and Charlie Munger have always criticized gold and Bitcoin. Their ignorance (willful or otherwise) about these assets has led to woeful results for Berkshire’s investors, where gold could have (and should have) been used as a non-correlated reserve asset. Sound money is the enemy of the financier, which may explain their antipathy. If you’d like to learn more about Buffett’s other mistakes, you should read my book, Warren’s Mistakes.

“Bitcoin Valuation”

David F. writes:

Compelling argument.

But the issues I have are:

1. This mode of savings is outlawed by the government that is emerging as the world’s strongest financially and has the largest population. This prevents worldwide adoption that compares to anything remotely resembling gold.

2. It is much easier to steal and identify who has what. Criminals have often had their Bitcoin confiscated. It can be tracked if the wallet is big enough or if it’s run through a broker. Gold can be completely removed from the system indefinitely and then reemerge whenever the holder desires.

3. Quantum computing is not a joke. Anything on a computer can be attacked. Again, your gold can be almost unknown to anyone.

Yes, it’s harder to move around, but as the value increases exponentially in the coming years, a person could move $1,400,000 by just owning 20 lbs. Again, not ideal for ultra-high net-worth individuals, but still safer in my opinion than owning a wallet or a brokerage account.

Porter Comment: I’ve never sold any gold. As a reserve asset (aka, as collateral), it is the highest quality form of money in the world. Bitcoin, on the other hand, is the highest-quality money of zero maturity. At the right price, it is a very good alternative to 30-day Treasury bills.

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Porter’s Bitcoin Pricing Model Shows It 43% Undervalued

Inside today’s Daily Journal…

• Essay: What The Crowd Isn’t Buying – Bitcoin

• Micron’s sudden rise higher

• Higher construction costs = higher inflation

• Nvidia invests in Taiwan

• Chart Of The Day… Celsius (CELH)

• Today’s Mailbag

It was the greatest investment I have ever seen – or will ever see.

In September 2010 Steve Sjuggerud, writing for Stansberry Research, published “The Greatest Unknown Investment Story On Wall Street.”

It wasn’t a stock he was talking about. It wasn’t even a company. It didn’t have any employees. It was a trust set up in 1888 to liquidate the assets of a failed railroad: 3.5 million acres of West Texas desert.

By 2010, the Trust still held nearly 1 million acres — and had accumulated 110 consecutive years of positive earnings, 53 straight years of cash dividends, no debt, no employees to speak of, and no investment-banking business for any Wall Street firm to chase. CEO Roy Thomas told Steve on the phone: “Well… I don’t remember ever losin’ money, if we did.”

Steve understood the key, driving principle that had safeguarded the investors in the Trust for more than a century: by law, the Trust had to return every dollar of after-tax cash to shareholders — through dividends or buybacks. Management chose buybacks. With 10 million shares outstanding and 300,000 shares retired every year out of oil and gas royalty cash, every existing holder’s slice of the land base grew at roughly 3% per year — tax-free.

And then Sjug walked our subscribers through what this would mean through time:

$10,000 could turn into over $600 million… safely.

He was publicly mocked by a competitor for that logic. But, of course, Sjug was damn good at math. And he was exactly right. The mechanism was simple arithmetic. Fewer shares every year. Compounded for 30 years. The chart in the issue projected a single share by 2040 worth more than $600 million.

Stansberry Research told subscribers to buy Texas Pacific Land (TPL) at $27 (pre-split) in September 2010. TPL has split twice since the recommendation — a 3-for-1 in March 2024, and a 3-for-1 in December 2025. Every share Sjuggerud’s readers bought is now nine shares. Today TPL trades near $300. A $10,000 stake at the September 2010 issue price — 370 shares at $27 — is now 3,333 shares worth roughly $1.0 million. A hundred-bagger. In 15 years. That is a 34% compound annual return. The S&P 500 over the same window compounded around 12%. Sjuggerud’s readers beat the index by roughly 22 percentage points a year, every year, for a decade and a half. And it continues to compound.

A perfect investment.

And Steve wasn’t the first great investor to notice. Murray Stahl personally began buying Texas Pacific shares in the 1970s. The stock then traded around $0.36–$0.65 on a split-adjusted basis.

And Murray didn’t tell a soul about it until May 8, 1995. That’s when his Contrarian Research Report published “How To Buy 1 Million Acres Of Fine Texas Grazing Land For $20.” That was Texas Pacific: 3.075 million shares outstanding, $62 million market cap, ~$54 per acre implied.

By June 2025, Securities And Exchange Commission (“SEC”) filings showed Murray Stahl personally controlling roughly 1.17 million shares. And his newsletter had become a mutual fund – Horizon Kinetics. Its affiliated vehicles owned more than 10 million shares of Texas Pacific. At pre-split prices above $900, Murray’s personal stake exceeded $1 billion. He died earlier this year, still holding every share.

That’s the art of investing.

Investments only look rational in hindsight. In real time they run on three emotions – fear of missing out, envy of the neighbor’s returns, and terror of underperforming the benchmark. The poor investor only learns, far too late, that the head is the dupe of the heart.

What’s driving investors’ emotions today is the artificial intelligence (“AI”) infrastructure buildout. As I’ve written about recently, the PHLX Semiconductor Index (SOX) just logged one of the longest streaks of consecutive up days in its history. Chip ETFs have compounded more than 1,000% over the past decade – and another 40% to 50% in the last 12 months. A tiny cluster of AI-linked names – Nvidia (NVDA), Broadcom (AVGO), SK Hynix, Micron Technology (MU), Taiwan Semiconductor (TSM) – drives a disproportionate share of every benchmark return on Earth.

When investors panic buy, capital gets pulled out of every other corner of the markets. This happens through unemotional mechanics too, through ETF flows and benchmark-hugging mandates. What have investors been selling to fuel the chip stock mania?

Bitcoin.

Much like Texas Pacific Land, Bitcoin doesn’t have any employees. It doesn’t allocate capital. It can’t go bankrupt. It can’t issue more shares. There can only ever be 21 million Bitcoins. This is merely a math problem. And while I’m no Steve Sjuggerud, I’m no slouch.

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There are two variables. One is a strictly limited globally recognized digital proof of work (aka, real money) that enables virtually unlimited transfers of value, globally and instantly. And the other is the failed paper money system of the debauched western democracies.

I built a Bitcoin Pricing Model. Its philosophical roots are in the Austrian gold-credit model that Kurt Richebӓcher taught me in the late 1990s. It measures the four macro liquidity factors that drive Bitcoin’s price:

1. Fed Net Liquidity – the Fed balance sheet, minus the Treasury General Account, minus reverse repos

2. Global M2 (USD) – combined M2 of the U.S., Eurozone, Japan, China, and the UK, year-over-year, in dollars

3. Stablecoin supply – USDT plus USDC circulating supply

4. Stablecoin 30-day change – short-term flow into and out of that dry powder

Weekly data, 478 observations back to 2017 – the earliest date the stablecoin series exists in meaningful size. R² of 0.89. Every macro liquidity factor is statistically significant at p<0.05.

Important caveat: Fed liquidity and stablecoin supply both move concurrently, so the model cannot disentangle them. That is not a bug; it is a natural restraint. A model is not the real world. This is a nine-year-old asset class with multiple, correlated macro variables. The wide bands of the price model are an honest expression of this limitation.

Here is what the model says today…

• Bitcoin actual: $77,470

• Model fair value: $136,050

• ± 1σ band: $94,092 – $196,718

• ± 2σ band: $65,074 – $284,439

• Discount to fair value: −43.1%

Bitcoin trades 43% below where the liquidity backdrop says it should trade. The z-score sits below −1.5, territory the model has visited only a handful of times in 11 years. And the liquidity backdrop is not tight. Fed Net Liquidity runs near $5.9 trillion. Global M2 expands at +8.2% year-over-year in dollar terms. USDT plus USDC circulating supply sits at $266 billion – down roughly $40 billion from the February 2026 peak, as marginal dry powder rotates out of crypto and into AI equities.

That last point is worth noting. Stablecoin supply has contracted by 13% over the past three months. By every conventional read, that should be punishing Bitcoin. It has not. BTC has held in a tight range while its largest source of incremental demand has been draining. That is what a structural floor looks like – the marginal seller is exhausted.

And global liquidity is going to explode higher over the next seven years.

How do I know?

The U.S. federal debt has crossed $38 trillion and compounds faster than nominal GDP. The Congressional Budget Office projects net interest expense will exceed defense spending every year through the next decade. The dollar’s share of global FX reserves keeps drifting lower – 58% and falling. Real yields on long Treasuries might look attractive today, but they are structurally negative once you weigh the political imperative to inflate the debt away.

In 2010, Steve Sjuggerud wrote that Texas Pacific was a secret compounding machine hiding in plain sight. No one cared.

Today, Bitcoin trades at the widest discount to liquidity-implied fair value that I have ever seen. The crowd is busy with Nvidia, Broadcom, and memory chips. No one cares.

Murray Stahl built an institution, and one of America’s greatest fortunes, out of one principle: find the structurally superior asset the crowd will not own, build a model of its economics, and then sit still.

The head is the dupe of the heart. But it doesn’t have to be.

Tell me what you think of today’s Journal… good, bad, or anything in between: porterstansberrydirect@gmail.com

Good investing,

F. Porter Stansberry
Stevenson, Maryland

3 Things To Know Before We Go…

1. Three words from Trump push Micron past $1 trillion. On Friday, the president simply said “Micron is great” and noted the company could invest “over $100 billion” in New York – a commitment first announced in 2022. When markets reopened on Tuesday, Micron surged 19%, adding $150 billion in market cap in a single session. The stock has now surged from a $70 billion market cap in April 2025 to over $1 trillion today – a 1,300% gain in just 13 months – as one of the best-performing AI stocks to date.

2. There is a surge in construction-material costs. Raw input prices rose more during the first four months of 2026 than over the prior three years combined – leading to higher home prices going forward. Grid buildout and data center demand have sent copper on a tear, while tariff dynamics and supply-chain frictions have piled onto lumber and aluminum. And mortgage rates might climb even higher than they are. The affordability math gets worse before it gets better.

3. Nvidia to invest $150 billion in Taiwan. Nvidia (NVDA) CEO Jensen Huang announced today that the company will invest $150 billion a year in Taiwan – focusing on procurement, infrastructure, and manufacturing capacity for Nvidia’s semiconductor chips. Huang called Taiwan the “epicenter” of the artificial intelligence (“AI”) revolution and predicted it will be the world’s leading technology manufacturing hub for a long time.

Chart Of The Day… Celsius Holdings (CELH)

Shares of Complete Investor recommendation Celsius Holdings (CELH) traded as much as 10% higher today after a cluster of insider purchases came to light – CEO John Fieldly disclosed a $249,000 open-market buy, joined by the company’s president and a director adding similar-sized stakes of their own. Like us, management appears to see value at current levels.

Mailbag

“Question About Honeycomb Portfolio”

Tom A. writes:

Hi Porter,

I’ve been a subscriber for 20 years or so. Made money and lost money. Didn’t “get” position sizing for quite a while. My investing style was like many others, Greedy and Fearful. But the Alliance partnership and now Partner Pass have calmed me down. I’ve a lot of our assets in gold coins, a chunk in the Permanent Portfolio, and just now a chunk in Prophet (MyWallSt). Is the new Honeycomb portfolio you have written about in the Journal complementary to Porter’s Permanent Portfolio or should it replace it? I’m 82 but may well live to 95 or so as my parents and grandparents did. I know you can’t give individual advice, but maybe some guidance on risk/reward scenarios for the three portfolios could be helpful to many subscribers.

Porter Comment: I can’t comment on the risk dynamics of the MyWallStreet product because I haven’t studied it that closely (it isn’t my product). Our safest approach is Porter’s Permanent Portfolio, as it uses non-correlated assets to control risk. It will have volatility and max drawdowns that are roughly half the stock market’s. The next safest approach is an unleveraged Honeycomb Portfolio, as it uses non-correlated equities to control risk. However, at market extremes, all equities correlations bend toward 1.0, which means I expect the Honeycomb to only be relatively less volatile than the market with somewhat smaller drawdowns. And the highest risk approach we publish as a full portfolio is Better Than Buffett, which I would expect to roughly match the market’s volatility with substantially higher annual returns.

“Honeycomb Portfolio And Best Buys”

Kevin O. writes:

I am currently subscribed to your Best Buys. Will you be recommending any of the Honeycomb Portfolio for Best Buys?

Can’t wait to read your book. I’ve learned a lot from your Daily Journals. Thanks again for everything you do. I always look forward to reading whatever you write about.

Porter Comment: Hi Kevin —

Thanks for your support of my business.

The Honeycomb is, pretty much, the most elite version of what we do. As such, we reserve our precise portfolio for our Partner Pass member.

But, as you’ll see in the book, I give away the full “recipe” so that you can build it yourself. And… it’s only $4.99 this week.

Regards,

Porter

“2029: The End of America”

Kathy D. writes:

Porter,

I just bought your book and read it in one sitting. Thank you for writing this so that even those who financially have their heads buried in the sand (too many of my family and friends) understand the fiscal cliff we are teetering upon. I have purchased the book for those closest to me with the hope they read it.

Thank you.

“The Violent Lives Of Black Americans Debate”

David E. writes:

Hi Porter,

I read your essay on the captioned subject and felt prompted to forward it it my youngest son, as I hoped it would challenge some of the “progressive” liberal politics that he, along with so many of Western democracies younger generations have been captured by these past two decades or so (thanks in no small part to the total capture of educational institutions by similar political dogma).

Far from agreeing with any of the (in my view) valid rationale in your piece, he has responded with an all but total rebuttal. As you concluded with an open offer to let you know what we think, I am forwarding my son’s reply to me (see below) and hope you will consider it warrants a reasoned response to the issues he so clearly feels justified in raising as a critique of views.

Yours always in the name of open and free debate:

I read this through – what a dismal waste of time.

Another poor analysis by an idiotic commentator. Yes, he points out the problem of violence committed by Black Americans and black people in other countries.

The list…

“The countries at the top of the global homicide rankings – year after year, decade after decade – are the countries of sub-Saharan Africa, the Caribbean, and the African-descended population centers of Central and South America: El Salvador, Honduras, Jamaica, South Africa, the Bahamas, Belize, Venezuela, and Brazil.”

He is even duplicitous enough to claim that “American slavery” has nothing to do with violence in these other countries. What sort of weak-minded person would nod in agreement or think he is a credible person? Does that mean slavery per se has nothing to do with intergenerational violence? He is clearly trying to slip that idea into the reader’s mind.

Look at the list.

With the exception of “sub-Saharan Africa,” the black populations in all of those countries are the descendants of slaves or people subjected to apartheid. What does he think happens to people who are forcibly removed from their homelands, treated with incomparable brutality, robbed of autonomy, left barely educated and once they are “emancipated” they are let loose into a cut-throat economy with barely any “welfare state”? Does slavery not cause enormous problems and deform peoples’ cultures for generations? Seems obvious that it does. It’s a wonder that the descendants of slaves have done as well as they have done.

And at the end of his analysis, what sort of solution does he offer?

Not much apart from lock people up (which needs to happen of course) and don’t go near welfare. That’s it. Nothing about how local economies or food systems could be improved. Nothing about education. Just the usual dull and ideologically rigid Republican talking points, which I expected from the beginning and wasted too much time reading about at the end.

And as well – he claims that the primary issue he raised is taboo. No it’s not. It gets spoken about all the time in America – just not often as stupidly as people like this writer manages.

Porter Comment: When your son wrote: “What does he think happens to people who are forcibly removed from their homelands, treated with incomparable brutality, robbed of autonomy, left barely educated and once they are ’emancipated’ they are let loose into a cut-throat economy with barely any ‘welfare state’” – was he referring to the Irish immigrants of the 1840s who fled the slave labor economy of the British land owners and a horrific famine?

When your son writes that “nothing” has been done to invest in “local economies,” “food systems,” or “education,” is he unaware that since 1970 more than $2 trillion (yes, with a t) has been spent on food assistance, housing assistance, healthcare, and public education in only seven cities: Baltimore, Detroit, Memphis, Houston, Oakland, New Orleans, and Philadelphia? On a cumulative basis, that’s about $700,000 per black resident. Is your son unaware of the truly incredible sums currently being spent on education ($28,000 per student, per year, in Baltimore) and the utterly dismal results of these huge investments? In Baltimore, in most of the schools, virtually every student is functionally illiterate. And this is a school system completely controlled by black people, which employs virtually all black people. This isn’t a racist outcome. And it has nothing to do with a lack of spending. It is something far more complex to explain.

Has your son stopped to consider that in Haiti, the slaves overthrew their French masters more than 200 years ago? Does he not know that the newly independent slaves killed every single white and mulatto person on the entire island? “For our declaration of independence, we should have the skin of a white man for parchment, his skull for an inkwell, his blood for ink, and a bayonet for a pen!” Haiti was the first independent nation in Latin America, the first post-colonial independent Black-led nation in the world, and the only nation whose independence was gained as part of a successful slave rebellion. Are we to blame the white masters, who were massacred more than 200 years ago, for the fact that Haiti is the poorest, the most violent, and the most ignorant nation in the Western world – 200 years later? For how long should we, by association, suffer this guilt? For how many centuries will the slavery card remain valid? Does your son not understand that everyone – every Western nation – was, at one time or another, enslaved?

Over the last 50 years, black people have destroyed Baltimore. They have wrecked their neighborhoods. They have filled the city with violence, drugs, and trash. They have likewise destroyed half a dozen of America’s best cities. I do not believe that is the fault of slavery, which was ended in 1865 by white men fighting a war that is still, to this day, the most violent episode in our nation’s history. Our country – and most notably, Republicans – made enormous sacrifices to end slavery. Somehow that is always forgotten.

Likewise, I do not believe that it is the fault of segregation – which ended more than 60 years ago. Why not? Well, how do you think your son would explain that, during segregation, the black community, by virtually every measure, was far safer and more prosperous than it is today?

And, finally, I do not believe it is the fault of “systematic racism,” as during my lifetime enormous racial preferences and trillions in capital have been spent trying to lift black people out of ignorance, violence, and poverty.

But I remain open to all of the facts and the data. I remain willing to change my mind.

I think it will always boil down to a simple fact: you cannot make a man learn to read. You cannot make a man love his wife and his children. You cannot make a man avoid drugs and debauchery. You can only provide carrots and sticks. Ultimately, in America, you will earn your just dessert. Study after study has shown that anyone can escape poverty in America if they do three simple things: 1. Graduate from high school. 2. Avoid having children until after marriage. 3. Maintain full-time employment. Those opportunities remain completely open to every black person in America and, of course, millions take advantage of this reality and succeed.

But for the millions of black (and white) people who will not get an education, who will not keep a job, who will not take care of their families, and who insist on engaging in crime and violence, we are going to have to build a lot of prisons. There is no other way to achieve peace and reconstruction. No more excuses. As a nation, we must adopt an absolutely ruthless prohibition against all violent crime.

Finally, in regards to your son’s writing and thinking. It’s fascinating that people on the left, bereft of facts and logic, always resort to name-calling and insults. It is quite interesting that your son believes someone who started his own business at 26 years old, built one of largest financial research companies in the world, and became a self-made billionaire, is “stupid.

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Plus, Why “Safe” Bonds Will Continue To Collapse

Inside today’s Daily Journal…

• Essay: Resilient Investing And Still Making 20% A Year

• Semiconductors lead manufacturing upward

• ETFs outnumber stocks

• Loan delinquencies rise higher

• Chart Of The Day… Vicor

• Today’s Mailbag

As you may know, I’ve recently written a new book, 2029: The End of America: Why The Age Of Paper Money Is Ending And How To Survive The Coming Monetary Reset.

I’m proud to tell you that it is now the #1 selling book on Amazon (in Wealth Management). We’re launching a special $4.99 Kindle offer on the book this week.

Why are we virtually giving the book away?

Because it is more important than ever that every American knows three things about what is about to happen.

1. The government is bankrupt and is going to engineer a massive, global monetary reset to escape its debt. The biggest victims of this will be Americans who are owed $100 trillion in Social Security benefits. By roughly 2029, the collapse of the Social Security system will become an inescapable reality. And, trust me, you will not get paid anything like what you are owed.

2. The age of paper money is ending because, all across the major Western democracies, paper money has allowed governments to accrue politically and culturally destabilizing debts, to finance endless foreign wars, and most critically to rob wage earners through the invisible tax of inflation. In the next crash, the demand of every free people will be, first and foremost, sound money.

3. To build a resilient portfolio, you cannot rely on bonds, as fixed income securities will be virtually destroyed in the coming monetary reset, just as they were in the 1970s.

So how can you build a truly resilient portfolio – something that you can absolutely depend on, come hell or high water? I spent a year researching that question. And I found the answer in a mathematical theorem that was discovered in 1773.

But before I explain the math, let me back up to explain what I believe is, by far, the most important concept in portfolio construction: pairwise correlation.

In 1990, Harry M. Markowitz won the Nobel Prize in Economic Sciences. He won because of a 15-page paper, “Security Selection,” that was published in 1952 in The Journal of Finance (volume 7, issue 1). Markowitz’s idea is that what matters in investing is not only each investment by itself, but how your investments behave together.

Think of your portfolio as a grocery bag. You might want to buy some things that come in glass bottles, because many people prefer bottles to cans. But if everything in your grocery bag is made of glass, one stumble on the way to the car and everything in the bag shatters. As you know, the market “stumbles” frequently. So, you need a “grocery bag” that isn’t made up 100% of glass.

Seems obvious, sure. But how do you define, mathematically, how diversified your portfolio actually is?

Answering that question is what won Markowitz the Nobel Prize. His research on pairwise correlation proved that if you mix several investments that are not correlated to each other (“pairwise”), you can get higher returns with less volatility. Pairwise correlation just means looking at each asset in your portfolio and measuring its correlation against all of the other assets. That gives you an average of all of the pairwise correlations. It is that average that defines, objectively, how much diversification benefit you actually get.

This kind of portfolio diversification is the only “free” return in investing. You can own high-performance stocks, in a low-volatility portfolio – if your positions are not correlated. That gets you the most return, for the least amount of risk.

Most investors think diversification means owning more stocks. It doesn’t. It means owning stocks that don’t move together. That’s a completely different idea — and almost nobody does it correctly.

Porter’s Permanent Portfolio achieves this by owning four equal buckets of assets (stocks, bonds, gold, and cash) that are not correlated. And, for decades, Wall Street has helped clients achieve this by creating 60% equity / 40% bond portfolios, as, since the 1980s, bonds have been negatively correlated to stocks.

The trouble is, as inflation becomes more and more permanent and structural (as the only way the government can finance its debt) the pairwise relationship between stocks and bonds has become highly correlated. And, of course, bonds are in their worst bear market ever.

So, the question I wanted to answer was:

For people who do not yet have enough assets to accept the lower (but safer) returns of a Permanent Portfolio, for people who genuinely need market-beating annual returns, is there a way to build a 100% equity portfolio that would have the same low-risk dynamics of a Permanent Portfolio?

In short: Is there a way to build a truly resilient portfolio that is 100% stocks?

And the answer is yes, but only if the pairwise correlations are extremely low.

What I had to determine was: how many positions can you have in a portfolio without having any overlapping risk exposures? How many positions can you have before, inevitably, the pairwise correlation average increases?

The answer was discovered in the 1773 mathematical theorem I mentioned above. The kissing number problem in geometry proves that exactly seven circles of equal radius can simultaneously touch – but not overlap. I mapped this directly to portfolio construction: a monetary hedge at the center, surrounded by six equity sectors, chosen specifically because their fundamental drivers don’t move together.

What sectors are non-correlated and offer investors excellent economics with “power law” winning businesses?

The answer is:

• insurance

• food and tobacco

• pharmaceuticals

• defense

• royalties

• technology infrastructure

Seven total positions. That’s it.

We can further reduce portfolio risk by adding two positions within each risk circle, if they do not have a pairwise correlation above 0.55.

Most people think that simply adding more stocks will reduce volatility. But it doesn’t. If your average pairwise correlation is low enough, adding an eighth or ninth position doesn’t reduce your portfolio’s risk at all – in fact, it increases it. Past seven truly non-correlated positions, you’re just diluting your best ideas, a truth that was first discovered in geometry.

How do you select individual stocks within this non-correlated framework? You look for three, well-proven “edges.”

1. The quality anomaly. Companies that earn a return on invested capital (“ROIC”) above 15% — consistently, year after year — dramatically outperform the market. This is one of the most thoroughly documented facts in academic finance, confirmed across 60 years of data in 24 countries. The anomaly persists because benchmark-hugging institutional managers are structurally penalized for holding boring compounders through periods when they lag the index. Their career risk is your alpha.

2. The Lindy premium. Under the Lindy distribution, the longer a company has survived, the longer it is likely to continue surviving. A business that has operated for 100 years has crossed at least one secular bear market, one technology disruption, one management generation, and one major economic crisis. The market prices old companies as if they’re ex-growth. They’re not. They’re fortresses.

3. Non-correlation. Sector ETFs (exchange-traded funds) have an average pairwise correlation around 0.48. The right individual stocks in those same sectors have an average pairwise correlation around 0.27. That 21-point gap — at the same expected return — is roughly a 28% reduction in portfolio variance. It’s not subtle. This is the single most underappreciated edge in portfolio construction.

I call this approach “The Honeycomb.” Why? Because you see the same kissing number geometry in nature, in a honeycomb.

My full Honeycomb portfolio produced…

• a 21.37% compound annual growth rate (“CAGR”) over 13.3 years (April 2013 through April 2026), compared to the S&P 500’s 12.83% – that’s roughly 850 basis points of annual outperformance

• Sharpe ratio: 1.04 versus 0.56 for the S&P 500 index

• maximum drawdown: -30.24% versus -33.92%

• a $10,000 investment became $131,536 – the same $10,000 in the S&P 500 became $49,842

• the portfolio beat the index in 12 of 14 calendar years (86%)

The best stress-test year was 2022. While the S&P 500 fell 18.2% in the sharpest rate-tightening cycle in four decades, this portfolio returned +21.2% — a spread of nearly 40 percentage points. No market timing. No tactical trading. The structural architecture was simply positioned for exactly the inflationary, rising-rate environment that crushed growth stocks.

The most powerful evidence is an out-of-sample test. Using only the Lindy anchor stocks and extending the record back to March 1993 — 33 years —

• the basket produced a 21.02% CAGR versus the S&P 500’s 10.64%

• it beat the index in 29 of 34 calendar periods (85%)

• a $10,000 investment became $5,509,423 – the same money in the S&P 500 became $283,797. That’s a 19x difference in terminal wealth.

There’s no survival bias here: the selection rule for the anchor stocks uses only historical information. The “oldest continuously operating company in each sector” doesn’t change. Any analyst applying this rule in 1995, 2005, or 2015 would have arrived at the same names.

The equity selection has four parameters: the ROIC quality gate, the Lindy age threshold, the correlation ceiling, and the momentum lookback. The Sharpe ratio doesn’t materially change across 20% to 40% perturbations to any of them. You can’t tune your way into this result — it emerges from the structure.

The full paper, which I’ve submitted to The Journal of Finance, with all the back-tested data, parameter sensitivity analysis, and academic citations — runs to 9,000 words.

But I have written a layman’s explanation of how to build a Honeycomb portfolio in my book, 2029 The End of America: Why The Age of Paper Money Is Ending And How To Survive The Coming Monetary Reset.

And yes, it’s for sale this week. For only $4.99.

Horse, meet water.

P.S. All Partner Pass members will get a copy of my full Journal of Finance article this week and a complete “how to guide” memo on Honeycomb portfolio construction. Look for it in your inbox.

Tell me what you think of today’s Journal… good, bad, or anything in between: porterstansberrydirect@gmail.com

Good investing,

Porter Stansberry
Stevenson, Maryland

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3 Things To Know Before We Go…

1. Soaring semi stocks may be forecasting a U.S. manufacturing boom. Semiconductor chips go into nearly everything built today, and with lead times of six to 12 months, manufacturers order them before ramping up production. This has historically made rising semiconductor demand – which we are seeing right now – a strong leading indicator of broader manufacturing activity.

2. ETFs outnumber U.S.-listed stocks for the first time. The number of exchange-traded funds (“ETF”) has officially surpassed the number of publicly listed companies – a staggering milestone that highlights a multi-decade decline in public stocks alongside an explosion of passive investment vehicles. There are roughly 4,300 U.S.-listed ETFs versus around 4,200 stocks – a decline from 8,000 in 1996.

3. Loan delinquencies on the rise. The number of loans in “serious delinquency” – those more than 90 days late – is reaching alarming levels. This includes more than 13% of credit card loans and 5.6% of all auto loans, the highest levels for both categories since 2011. Meanwhile, student-loan delinquencies have shot up to 10.3% from almost zero during the past several years of moratoriums. The average consumer is facing significant financial pressure.

Chart Of The Day… Vicor (VICR)

Shares of power systems company Vicor (VICR) – a recent Complete Investor recommendation – shot up 21% today and 31% for the last week after it revised Q2 revenue guidance upward, citing increased product revenue and additional royalties from a new licensee.

Mailbag

“Fascinating”

Jim S. writes:

I have been telling intelligent friends for five to six years that the U.S. debt was the biggest issue facing our country. Fell on deaf years.

Paying a trillion for interest takes away the ability to fund social programs (non-Medicare and Social Security) that keep the lid on dramatic social unrest. The current teenage “takeovers” of malls, streets, and stores will seem like child’s play if the federal government stops funding programs to keep the poverty level in check.

Worrisome times. You are a beacon of logical thinking when we need it most. I just ordered your book, 2029: The End of America.

“Violent Lives Of Black Americans”

Johnny H writes:

Dear Porter,

I have been a reader and subscriber of your work since your time at Stansberry Research in the early 2000s.

Regarding your recent piece, as an African-American, I find the content difficult to read. However, I recognize that if the information is factual, denying it is unproductive. To provide a more comprehensive perspective, I suggest including statistics on African-American crime categorized by the following:

• Non-urban and rural areas

• Income levels

• Two-parent households

• Decade-by-decade comparisons from the 1940s to the present

I intend to look into these metrics myself, but I believe they would be a valuable addition to your commentary.

The reason I take issue with the current piece is that it risks perpetuating the underlying assumption that Black people are inherently violent. By not explaining the broader context or “why” behind the numbers, it reinforces unproductive stereotypes.

I grew up in a rural community in a large family. Despite having siblings (total 13) who grew up in both rural and urban environments, none of us are violent and based on your stats some of us should be. I suspect there are clear reasons for these different outcomes, and I would appreciate some focus on non-violent Black communities and their corresponding statistics.

Porter Comment: Johnny –

I truly appreciate your letter (and your long support of me and my businesses).

What any honest, comprehensive look at the data shows is that there are many factors that lead to violent and anti-social behavior. And, unfortunately, one factor that is readily apparent is that black people, in aggregate, are very dangerous. This is overwhelmingly true – it isn’t a trope, it isn’t racist, and there are not any obvious or ready explanations for it – at least none that I have yet seen explained with good data.

I would argue that it is only racism (the DEI kind) that prevents these obvious facts from being recognized more readily and studied more honestly.

One thing, for example, that I find extremely interesting is the huge dispersion across different black populations.

Example: I’ve spent a lot of time in the Bahamas. It is an incredibly dangerous and violent place. The homicide rate is 31 out of 100,000. That’s among the most dangerous places in the world. Many other places in the Caribbean with similar levels of development and infrastructure are similarly extremely violent – Saint Lucia (39), Saint Kitts (64), Trinidad (45) – but others are vastly less dangerous, like Barbados (7.4).

Here’s another outlier – Rwanda is one of the safest places in the world. It has a homicide rate of 3.6 per 100,000. In part that’s because of its authoritarian government, but there may be other factors at work too. Ghana is very, very safe (1.8).

I certainly do not believe that all black people are inherently violent. But I also know, for certain, that black people in America – in aggregate – are incredibly violent. In America, black women (3.2 per 100,000) commit murder almost as often as white men (4.5). In some years, like in 2020, more black women (per capita) commit murder than white men. That’s a shocking statistic. It’s hard to believe.

In the interest of public safety, it means we should invest heavily in policing black communities.

It also means we should work harder to understand the root cause of these problems and try to address them proactively in our communities.

I will say one other thing, that you may be offended by, but that I believe should be part of this conversion. If you were to judge me or my family by the example set by a meth-head, white trash family in West Virginia, I would be offended. I don’t do drugs, neither do any of my friends or my children. I take care of my family, etc. That behavior – the meth heads in West Virginia – isn’t embraced or accepted in my community. Those people are mocked and scorned, openly.

In Baltimore, the mayhem that’s caused by the black community – the dirt bike riding, the petty crime, the squeegee boys (who run a racket on the public in the streets), the public drug and alcohol abuse, and even the serious and violent drug culture – is widely embraced and even celebrated by the black community. The art – music, graffiti, fashion, etc. – celebrates the violent drug culture. People deeply involved in violence and crime are not shunned or shamed. Instead, in Baltimore, and in many urban areas the black community protects and even idolizes people who are deeply involved in crime.

How do you solve that, I wonder…?

In Friday’s Daily Journal, Porter wrote about Arthur Burns’ 1979 central bank speech, where he warned of a monetary reset. Readers shared their thoughts…

“Arthur Burns”

Peter G writes:

Hi Porter,

Your essay today was outstanding. My question has to do with gold and Bitcoin. Do you believe that both assets are consolidating (even tilting downward) because interest rates are rising, even though some QE (quantitative easing) is taking place? Or is the market just fixated on AI stocks as the flavor of the moment and therefore neglecting any forward thinking in terms of the theme of your essay today?

P.S. I sent today’s essay to my kids!

Porter Comment: Bitcoin is tightly correlated to liquidity in the banking system, which tightened throughout 2025 and has been increasing steadily in 2026, thanks to a resumption of the Federal Reserve’s asset purchases (aka, printing money). Gold is correlated to credit creation, with a lag. Credit growth continues to accelerate, but gold may have overshot the model this year.

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Inside today’s Daily Journal…

• Essay: Arthur Burns’ Secret 1979 Warning

• Central banks running from Treasuries

• UAE and Oman look to solve Iran War

• Booz Allen Hamilton’s mixed earnings bag

• Chart Of The Day… Hovnanian Enterprises (HOV)

• Today’s Mailbag

In 1979, Belgrade, Yugoslavia, was the Dubai of the Soviet bloc.

Belgrade was the leading industrialized city in Eastern Europe. Rebuilt after World War II, it was a city shaped by the demands of the communists, which included heavy manufacturing for the military. Their plans didn’t include wastewater treatment or any regulations on air pollution. Its filth and stench were a warning of the catastrophe that would emerge a decade later in its civil war.

It was the most unlikely place in the world for the leading bankers of capitalism to gather. And it was the site of the most unlikely speech ever given by any central banker: a warning about the imminent failure of central banking.

Arthur F. Burns was chairman of the Federal Reserve from February 1970 until January 1978. He taught Milton Friedman at Rutgers. He advised four U.S. presidents. He smoked a pipe in every photograph. In the eyes of his profession, he stood at the summit of American economic thought.

He also presided over the worst peacetime inflation in American history, the rapidly escalating prices of the 1970s.

One Sunday in late September 1979 in Belgrade, Burns delivered the annual Per Jacobsson Lecture. The Per Jacobsson Foundation invites only the most senior figures in global finance – central bank governors, finance ministers, the principals of the International Monetary Fund (“IMF”) and the World Bank.

Burns’ lecture runs roughly 12,000 words. It is a moral and economic indictment of central banking. And it was a dire warning – to the entire world – of the enormous monetary reset that would begin just two months later. But this speech was kept secret for almost a decade.

It was only published after Burns’ death in 1987.

If you understand it, you have a chance of surviving what’s about to happen to America. If you don’t understand it, you have no chance.

Burns’ argument was not that the Federal Reserve botched the job of maintaining price stability in the previous decade, although he admitted plenty of error. His argument wasn’t about how central banking failed. It was about the far deeper failures, the why central banking fails.
Burns’ warning was that, in democracies, the promises of the politicians will always outpace the taxes necessary to support them. This, inevitably, creates permanent and growing fiscal deficits. Burns explained that central banks were no longer being used to support legitimate government financing, but instead, had become the bridge to spending that would otherwise be impossible. He said:

The proliferation of government programs led to progressively higher tax burdens on both individuals and corporations. Even so, the willingness of government to levy taxes fell distinctly short of its propensity to spend. Since 1950, the federal budget has been in balance in only five years. Since 1970, a deficit has occurred in every year. Not only that, but the deficits have been mounting in size. Budget deficits have thus become a chronic condition of federal finance. They have been incurred when business conditions were poor and also when business was booming. But when the government runs a budget deficit, it pumps more money into the pocketbooks of people than it withdraws from their pocketbooks – the demand for goods and services therefore tends to increase all around. That is the way the inflation that has been raging since the mid-1960s first got started and later kept being nourished.

And then Burns told the world that the only way forward was a drastic change to this accommodative policy – a global monetary reset was inevitable.

If the United States and other industrial countries are to make real headway in the fight against inflation it will first be necessary to rout inflationary psychology – that is, to make people feel that inflation can be, and probably will be, brought under control. Such a change in national psychology is not likely to be accomplished by marginal adjustments of public policy. In view of the strong and widespread expectations of inflation that prevail at present, I have therefore reluctantly come to believe that fairly drastic therapy will be needed to turn inflationary psychology around.

What did “drastic therapy” mean? A complete monetary reset. Sixty days after Burns delivered his remarks in Belgrade, Paul Volcker – Burns’ successor at the Fed – began the most violent monetary tightening in U.S. history. The federal fund rate would eventually climb to 20%. The yield on the 10-year Treasury bond would hit 15% by October 1981, causing a 50% decline in bond prices. Mortgage rates hit 18%. Unemployment touched 11%. Stocks fell until the average earnings multiple on the S&P 500 was 8x earnings. The global monetary order reset. The dollar was saved. And financial assets were virtually destroyed.

Burns knew it was coming. He tried to warn the world – and the bankers wouldn’t let him. Today, the same warning applies, but on a vastly larger scale. Will you listen…?

From 1950 to 1979 – for 29 years – the federal budget reached balance only five times. Through the entire decade of the 1970s, it ran deficits every single year. The debt ballooned.

And today? Fiscal year 1999 was the last full year of a genuine on-budget surplus in American history. The deficits have been growing in every year since. Twenty-seven years of growing deficits and ballooning debts.

The arithmetic now exceeds anything Burns could imagine in Belgrade. Burns called deficits averaging 2% of GDP a “chronic condition.” We are running deficits that are 5.8% of GDP in peacetime, with full employment, with no recession on the horizon. This is the most extraordinary fiscal posture the United States has ever sustained outside of total war.

And you haven’t heard a single banker or politician or economist say a single word about how this is completely unsustainable.

Net interest payments on the federal debt climbed from 1.6% of GDP in 2021 to a record 3.2% in 2025. If rates continue to rise, our government’s interest expense will soon reach 5% of GDP. Just in interest payments. In dollar terms, net interest will rise from $970 billion in fiscal 2025 to $2.1 trillion by the early 2030s. On this trajectory, by 2036, interest alone will consume more than 30% of every federal tax dollar.

Interest on the debt is the fastest-growing line item in the federal budget.

And every additional dollar of interest forces the Treasury to issue new debt, which pushes yields higher, which raises interest expense, which forces more issuance. Economists call this debt fueled doom loop “fiscal dominance.”

What they should call it is the bankruptcy of our government.

In 1979, the monetary reset had a name: Paul Volcker. Fed chair Volcker drove the federal funds rate to nearly 20% in 1981. He pushed the 10-year Treasury yield above 15%. He crashed the economy to save the dollar. But that option no longer exists.

When Volcker took the Fed chair in August 1979, federal debt held by the public stood at roughly 25% of GDP. Net interest expense ran about 1.7% of GDP. Higher rates, for a short period of time, wouldn’t threaten the stability of the government’s budget.

In 2026, federal debt held by the public sits at 101% of GDP and climbs to 120%. Interest already consumes at 3.2% of GDP. With $30 trillion of debt held by the public, every additional percentage point of average interest cost adds roughly $300 billion to annual interest expense.

A Volcker move today – funds rate to 15% – would add trillions in annual interest within three years. At those rates, interest alone would exceed total federal revenue.

Thus, this time, the monetary reset will not be like the last time. We can’t afford it. What will happen this time is letting the inflation run, higher and higher, while using the central bank to peg interest rates at a level the government can afford. As a result, inflation is going much higher.

It is inevitable. But, even so, just like in 1979, no one sees what’s coming.

The five-year, five-year forward inflation expectation rate – the bond market’s expectation of average inflation across the five-year window beginning five years from today – is only 2.21%.

Meanwhile, despite the soaring stock market, we are in the midst of some of the biggest bond market losses in history. Look at long-duration Treasuries since 2020. The iShares 20+ Year Treasury Bond ETF (TLT) – the standard proxy for the long end of the U.S. yield curve – peaked in August 2020. Through 2025, it has lost roughly half its value. The U.S. bond market has been in a continuous drawdown for 68 months. That’s the longest bond bear market ever.

This is what the early stages of a monetary reset looks like. The 1979-1981 episode was resolved in roughly 24 months because the Federal Reserve could raise rates and the government could afford them. The current episode drags on – five and a half years and counting – because the Treasury can’t afford it. And that means it’s bankrupt.

Our creditors see what’s happening.

Over the last five years, China has sold roughly $400 billion of U.S. Treasuries, dropping its holdings by half.

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What are central banks buying instead of Treasuries? More than 1,000 tonnes of gold per year in 2022, 2023, 2024, and 2025. This represents the largest official-sector accumulation of gold since the closing of the gold window in 1971.

This is the “End of America” – the end of U.S. financial hegemony over the world. America’s creditors no longer believe the U.S. Treasury can be repaid in real terms.

Why was President Trump in China? When a debtor flies halfway around the world to see his creditor, the meeting is never just about tariffs.

The 1979–1985 reset moved through a predictable sequence:

1. September 1979: Burns’ warning in Belgrade

2. October 1979: Volcker’s “Saturday Night Special.” The Fed pivots from targeting interest rates to targeting bank reserves. Yields rip higher.

3. 1980–1982: Fed funds rate touches 20%. Ten-year Treasury yield breaks 15%. Deep recession. Long bonds destroyed.

4. September 1985: Plaza Accord: The U.S., Japan, West Germany, France, and the UK agree to engineer a coordinated devaluation of the dollar. Over the next two years, it falls by nearly half.

5. The bond bull market begins. The secular inflation in goods ends. The secular inflation in financial assets begins.

The modern sequence will not look identical. The Fed cannot be Volcker – the government can’t afford it – the math forbids it. The monetary reset this time won’t be to rebuild the dollar. It will be to escape it.

Watch these markers between now and 2029:

• The Social Security Trust-fund cliff. Social Security OASI (Old Age And Survivors Insurance) insolvency will arrive around 2029. A general-revenue bailout, financed by new Treasury issuance, becomes inevitable.

• Continued Fed accommodation. Real interest rates become negative as inflation moves above 6% but the Fed doesn’t raise rates fast enough to prevent enormous losses in long bonds.

• The printing resumes. When 10-year yields threaten to break the level at which Treasury interest expense turns unmanageable, the Fed returns to large-scale asset purchases.

• A final reset in 2029. A global inflationary crisis leads to a formal U.S. Treasury default and a creditor negotiation. A formal Plaza-style accord – Beijing, Tokyo, Riyadh, Frankfurt at the table lead to a new global monetary agreement with gold and Bitcoin at the center of global trade.

Burns ended his Belgrade lecture with a sober line. He said central banking would ultimately fail, not because central banks couldn’t provide stability and liquidity to the markets, but because they did.

His warning was that central banks, by providing credit support, would enable governments to destroy their economies with debt and unsustainable promises. And so they have.

Prepare. Prepare now.

To learn more about the coming monetary reset and how to prepare, please read Porter’s new, best-selling book 2029: The End of America: Why the Age of Paper Money Is Ending And How to Survive the Coming Global Monetary Reset, available now at Amazon.

Tell me what you think of today’s Journal: porterstansberrydirect@gmail.com

Good investing,

Porter Stansberry
Stevenson, Maryland

3 Things To Know Before We Go…

1. Foreigners dump Treasuries. The value of U.S. Treasuries held by international investors fell by $139 billion in March, the largest drop since September 2022. The selling was led by Japan, which unloaded $48 billion in Treasuries, followed by China’s $41 billion in sales. The world is fleeing from U.S. government debt at the same time that Treasury issuance sets new record highs, pushing up yields and thus U.S. borrowing costs.

2. Booz Allen’s EPS beat, brought to you by the IRS. Booz Allen Hamilton (BAH) closed fiscal 2026 with revenue of $11.2 billion, down 6.4% year-over-year, but earnings per share of $1.78 beat the $1.34 consensus – however, the largely mechanical earning beat related to an $86 million IRS reserve release. The full-year earnings margin actually remained flat at 11.0%. Backlog hit a record $38 billion, but FY27 revenue and EPS guidance remain below FY26’s. Shares rose 3% today on the news.

3. Gulf states press Trump to stand down on Iran as Tehran moves to formalize Hormuz tolls. The UAE, Saudi Arabia, and Qatar have urged President Trump to resume diplomacy and not military operations against Iran. Trump agreed to postpone a planned strike this week. Meanwhile, Iran is negotiating with U.S. ally Oman to establish a permanent toll system for the Strait of Hormuz, where passage fees have already reached $2 million per vessel. Iran has controlled transit through the strait since the war began in February, and formalizing that grip would represent a huge shift in global energy logistics. Roughly 20% of the world’s oil supply passed through the strait prior to the war.

Chart Of The Day… Hovnanian Enterprises (HOV)

Shares of Hovnanian Enterprises (HOV) rose 18% yesterday, despite its fiscal Q2 results looking weak. Revenue dipped to $667.6 million and the company posted a $0.46 per-share loss versus $2.43 in earnings a year ago. Bearish consensus was calling for a $2.06 loss and just $633 million in revenue. Less bad than feared was enough to spark the rise in share price.

Mailbag

In yesterday’s Daily Journal, “The Violent Lives Of Black Americans,” Porter wrote about the level of violence among blacks in America and how law enforcement’s inability to treat all people equally, regardless of race, has led to more homicides. He advocated that statistics among various groups be recognized to ensure the safety of all people.

“We Need to Address These Issues”

Bill S. writes:

Thank you, Porter, for having the courage to address a subject that many of us have wrestled with for some time. While we may not have been aware of the specific data that you’ve shared, we have been aware that common sense has been abandoned in favor of political correctness in today’s culture. The left preaches color-blindness as an attribute we should all espouse, except when it points to an offense committed by a person of color. I am not a racist, but I do find myself being extra wary when I am around a group of African-American individuals, especially at night. I ask myself why that is: it is because they are statistically more inclined toward aggression, as your data has clearly shown. Making excuses for bad behavior by claiming racism is truly an affront to most people’s intelligence. Your data and our eyes do not lie. Until the African-American community addresses these issues, we will never reach racial harmony in this country.

“Violent Lives Of Black Americans”

Raymond H. writes:

Porter,

Boy, you really stepped in this time. How DARE you cite empirical data and statistics! Doubtless, you will receive hate mail and cancellations.

I never studied the data you accessed, but you quantified my observations in growing up in a racially mixed neighborhood in the 1950s and now over 50 years practicing law. No, I never handled criminal cases. I could not cite statistics, but have wondered for years why the relative crime rates between black and white, as reported by day-to-day news accounts, clearly illustrated what you presented. Apparently, it is not a sociological origin, and I conclude it is simply endemic until the phenomenon is better explained.

Thanks for going out on a limb to point out that the emperor has no clothes. You do have balls.

Porter Comment: In 2020, 7.4 per 100,000 black women committed murder, according to the FBI. That was more, per capita, than white men. I think it’s extraordinary that facts like these (the 7x higher violent crime rates in the black population), the global prevalence of black violence, and the historic prevalence of black violence is largely ignored (and completely forbidden to discuss) because it forces us to ask very hard questions, that currently, don’t have any clear answers. One thing is certain – like I wrote yesterday – there is no excuse for violent crime in America. We should have a zero tolerance policy for all violent crime.

“Murder Rates In The U.S.”

Mary N. writes:

No doubt the facts recorded are correct. Yet not one mention of the extraordinary ownership by nearly all U.S. citizens of violent weapons. Mostly multiple ownership, it seems. No other country on earth provides such abundant wherewithal for killing. So, what else should you expect?

Porter Comment: I’ve got bad news for you…

There are lots of places in America where most people own guns. In states like Montana, Idaho, Wyoming, and West Virginia the majority of adults own firearms. The homicide rates in these places are extraordinarily low – as is the population of black people. The percentage of the population that is black is a far more powerful indicator of violent crime than gun ownership rates in America. In America, violent crime is tightly correlated with black populations, not guns.

“Disparate Impact”

H Busch. writes:

Dear sir,

As a Black man, born and raised in St. Louis, Missouri, in the late 1940s to the mid 1960s, I am so glad that someone has highlighted this travesty in America. Your article really hits home how dangerous some Black people truly are.

Even before the Mike Brown incident in Ferguson, I’d read that Europeans are educated/briefed on what places in America not to visit whenever they decide to vacation here. Ferguson was at the top of the list.

Even though born and raised in the ghettos of St. Louis, I have no desire at all to return from my current home in PA., to live there. It’s simply because of the high crime rate there… despite the most recent data below.

It’s really unsettling to me to know that our law enforcement officers have their hands tied by this Disparate Impact nonsense. However, the FBI has reported this recently:

“The projected U.S. murder rate in 2025 dropped to approximately 4.0 per 100,000 residents, which makes it the lowest rate recorded in the U.S. since 1900. This 20% to 21% decrease from 2024 represents the largest single-year decline in homicides on record.

This historic milestone is detailed in data from the Council on Criminal Justice (CCJ) and preliminary statistics from the FBI’s Crime Data Explorer.

While 2025 likely brought the murder rate to a century low, experts note that crime reporting methods have changed significantly over the last 125 years.”

“Impact on Specific Cities:

• Chicago: Homicides fell by roughly 28% to 30% compared to 2024, giving the city its lowest number of murders since 1965

• Baltimore: Killings plummeted by roughly 30% to 60% compared to 2019, putting the city on track for its lowest homicide rate in nearly 50 years

• St. Louis: The city recorded its lowest homicide numbers in over a decade, with 141 murders in 2025 representing a notable reduction in citywide violent crime

• Detroit: The city shared in the downward trend, echoing the historic drops in violent crime seen across major U.S. urban centers”

What’s your opinion on these most recent stats? Thanks. God bless!

Porter Comment: Thank you for your letter! The reverse in the homicide rates in the last one to two years has occurred because of a return to more aggressive policing and the end of the consent decrees. Also, many of the notoriously lax prosecutors (like Mosby in Baltimore) have been voted out of office.

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How Disparate Impact Destroyed U.S. Cities

Inside today’s Daily Journal…

• Essay: The Violent Lives Of Black Americans

• The Fed chair effect on stocks

• White House’s big bet on quantum computing

• This disparity shows huge liquidity

• Chart Of The Day… Nvidia (NVDA)

• Today’s Mailbag

Editor’s Note: Last month Porter published a book that is sure to become one of the most controversial titles of the year – 2029: The End of America. Among the leading foundational causes for America’s descent into cultural chaos is the legal theory of “disparate impact.” Codified into law by the 1991 Civil Rights Act, the law has been used to destroy public education, by demanding that all students receive the same grades – even when they’re failing. But the greatest damage to our society has been the law’s application to public safety. Below you’ll find something you’re not allowed to say in America today: black people, in aggregate, are very dangerous.

In 2023, the Bureau of Justice Statistics reported that black Americans, who make up roughly 13% of the U.S. population, were the victims of homicide at a rate of 21.3 per 100,000.

That is more than six times the rate for white Americans. The FBI’s Supplementary Homicide Reports show that black Americans account for roughly half of all known homicide offenders in the United States, across every year for which data are available.

These are not controversial numbers. They are the official numbers.

They describe a concentration of violent crime so intense that a child born today in certain neighborhoods of Baltimore, Chicago, or St. Louis faces a statistical lifetime risk of homicide comparable to that of a soldier in active combat.

Demographers will tell you that black people, all around the world and in America both before and after the Civil Rights Act, are more violent than other races. Merely writing that is considered racist today, as if facts, by themselves, could possibly be prejudiced.

Consider the cross-national evidence first, because the cross-national evidence is the hardest for black apologists to explain away.

The United Nations Office on Drugs and Crime has published comparable international homicide statistics for more than 20 years. The countries at the top of the global homicide rankings – year after year, decade after decade – are the countries of sub-Saharan Africa, the Caribbean, and the African-descended population centers of Central and South America: El Salvador, Honduras, Jamaica, South Africa, the Bahamas, Belize, Venezuela, and Brazil. The countries at the bottom of the rankings are the ethnically homogeneous nations of East Asia and Northern Europe – Japan, Singapore, South Korea, Norway, and Switzerland.

This pattern is not explained by American slavery, because most of these countries were never involved in American slavery. It is not explained by American segregation, because most of these countries were never involved in American segregation. It is not explained by the American welfare state, because most of these countries have no meaningful welfare state. It is not explained by the Ferguson Effect, the 1994 crime bill, redlining, the Moynihan Report, Jim Crow, or any of the other American-specific causes that black political activists invoke whenever the American numbers are discussed.

Consider the historical evidence next. The homicide rate among free black Americans in the antebellum North – documented in the court records of Philadelphia, New York, and Boston across the 1830s and 1840s by the historian Roger Lane and others – was already multiples higher than the rate among whites in the same cities. This was two decades before Emancipation. It was a century before the Great Migration. It was a century and a half before the welfare state the criminologists blame.

The pattern was there in 1840. It was there in 1890 and 1920 and 1950. It has been there in every decade for which we have records, at something like its current ratio.

Harvard sociologist Orlando Patterson, himself a black Jamaican, has made this point in print for 40 years. He has been ignored for 40 years even though Patterson cannot be dismissed as a racist.

Consider the controlled evidence last. When researchers compare homicide rates within racial groups by socioeconomic status – poor whites versus poor blacks in comparable neighborhoods, middle-class whites versus middle-class blacks in comparable neighborhoods – the racial gap narrows but does not close. Wealthy black people kill at a rate that’s higher than poor white people.

Poverty matters. Family structure matters. Fatherlessness matters. But after every control the criminologists can throw at the data, a residual gap remains, and the residual gap is not small. It is obvious and has been in the data since such statistics have been kept.

Now set that evidence beside the criminologists’ standard explanation. The criminologists will tell you that the legacy of the welfare-state destruction of the black family, combined with the collapse of black education, combined with the flight of legitimate employers from the inner city, combined with 50 years of progressive prosecution policies that refuse to incapacitate repeat violent offenders, has produced the environment in which the violence occurs.

Every element of the criminologists’ story is true, too. The black family was destroyed by the welfare state. Black education did collapse. Legitimate employers did flee. Progressive prosecutors do refuse to incapacitate violent offenders. Each of those factors raises the homicide rate, in any population subjected to it, by a measurable amount.

But none of those factors, singly or together, explains the cross-national evidence or the antebellum evidence or the within-group residual.

You can subtract every American-specific factor the criminologists name, and you still have Jamaica and Honduras and the Bahamas at the top of the homicide tables. You still have free black people in the 1840s showing higher rates of homicide. You still have the residual gap in the multivariate regressions. The criminologists’ explanations are not wrong. They are insufficient. A 2011 paper by the behavioral geneticists J. Philippe Rushton and Arthur Jensen – scholars pilloried in their lifetimes and still pilloried now – argued that the cross-cultural persistence of the pattern pointed to something deeper than environment.

Here is what I have come to believe after 30 years of reading the data honestly. The honest answer is that we do not fully understand why the disparity exists and has continued to exist for centuries. The disparity has cultural components and historical components and, yes, almost certainly some biological components that America’s political and academic establishment resolutely continues to ignore.

But it does not matter whether the cause of the disparity is genetic or cultural or historical or some combination of all three. It does not matter whether it is 100% environmental or 50% or 10%. It does not matter whether Rushton was right or the criminologists were right or the truth lies somewhere neither side will publish.

What matters, for the purposes of governing a country and protecting its citizens, is that black Americans commit homicide at roughly eight times the rate of white Americans. And black Americans are the victims of homicide at roughly six times the rate of white Americans. This has been true in every decade for which we have records.

A republic cannot govern itself by pretending that facts it finds uncomfortable do not exist.

The criminologists’ explanations may be right, partially right, or wrong – it does not change what has to be done. What has to be done is the same thing any functioning society does with its most violent offenders, of any race, in any era: identify them, arrest them, convict them, and incarcerate them until they are no longer a threat to their neighbors.

We are the wealthiest, most powerful nation in the world. We absolutely have the ability to punish violent criminals, of any race, and to make sure they never hurt anyone, ever again.

The doctrine of disparate impact has made it an impossible job, because the doctrine holds that the pattern of who gets arrested is itself evidence of injustice, regardless of the underlying pattern of who commits the offenses. Under the doctrine, a police force that correctly identifies the offenders in its jurisdiction – and therefore produces arrest statistics that reflect the offending statistics – is, by that very fact, guilty of racial discrimination.

So the police stop correctly identifying the offenders. And the offenders, no longer arrested, go on to kill more people. And the additional people they kill are, in overwhelming majority, black – because the offenders live among their victims, and their victims are their neighbors. The doctrine, sold as a protection for black Americans, has produced a policing regime that leaves black Americans unprotected from the offenders in their midst.

The doctrine is almost as much at fault as the killer.

The criminologists and the demographers can continue their argument about the underlying causes of the violence for the next hundred years. While they argue, the bodies accumulate, and the bodies are disproportionately black.

Put violent people in prison. Keep them there. That is the beginning and end of the argument. Whatever the cause – cultural, historical, biological, environmental, or the inscrutable tangle of all of them – a functional society must remove violent offenders from the society they are victimizing.

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But in the second term of the Obama administration, the Department of Justice launched the most aggressive campaign of federal intervention in American policing in the nation’s history – not to stop the killing, but to stop the arresting.

Between 2009 and 2017, the Obama Department of Justice entered 15 consent decrees with American police departments. That is five times the number the Bush administration had entered in the preceding eight years.

The decrees followed a standardized template. A federal pattern-or-practice investigation would be opened after a high-profile incident. The investigation would document statistical disparities in stops, arrests, and use of force. The department would be presented with a choice: accept federal supervision under a consent decree, or fight the Justice Department in court with city taxpayer money, for years, and lose. Every major American police department chose the consent decree.

The decrees mandated the predictable things. Use-of-force reporting. Body cameras. Implicit-bias training. Civilian oversight. Reductions in stop-and-frisk. Reductions in discretionary arrests. Every item on the list, considered in isolation, sounded reasonable. Considered as a system, the list amounted to a transfer of policing authority from the officers on the street to the federal monitors overseeing the decree – monitors who were themselves lawyers trained in the doctrine, monitors whose professional advancement depended on producing reports showing that policing disparities had been reduced.

And in every city that went under a consent decree, the same pattern emerged. Police officers, trained in the new regime, learned to avoid interactions with the highest-crime populations. Not out of racism, but out of career self-preservation. A stop that produced a disparity could end an officer’s career. A stop that did not happen could not. So the stops did not happen. The arrests did not happen. The proactive policing that had produced the great American crime decline of the 1990s – the stop-and-frisks, the broken-windows enforcement, the quality-of-life arrests – simply stopped being done.

And then, in August 2014, 18-year-old Michael Brown was shot by a police officer in Ferguson, Missouri, after Brown – having just robbed a convenience store – attempted to take the officer’s weapon. The Department of Justice, under Eric Holder, launched a six-month investigation that ultimately exonerated the officer of all wrongdoing and confirmed, in detail, that Brown had attacked the officer and attempted to seize his service weapon. But by the time the report was released, the narrative had solidified. Hands up, don’t shoot – a phrase that, according to the DOJ’s own investigation, had never been uttered – became the rallying cry of a national movement. Ferguson became shorthand for everything the doctrine said about American policing.

And the American murder rate began to rise.

From 2014 to 2016, the homicide rate in the United States increased by about 20%. Law-enforcement professionals and serious criminologists pointed to what Manhattan Institute scholar Heather Mac Donald named the Ferguson Effect – a measurable pullback in proactive policing, especially in high-crime neighborhoods, as officers learned that discretionary stops could end their careers. The academic establishment denied the effect existed. Subsequent peer-reviewed studies, published years later, confirmed Mac Donald had been right all along. In the immediate aftermath of Michael Brown’s death in Ferguson itself, self-initiated arrests by police officers fell 62%. Foot patrol fell 82%. Pedestrian checks fell 76%. The decline persisted for years. Violent crime in Ferguson rose accordingly.

That was the warm-up. In May 2020, after the death of George Floyd in Minneapolis, the Ferguson Effect of 2014 to 2016 recurred at national scale, but with the accelerant of a sympathetic political establishment, a sympathetic media, and a complicit municipal leadership. In 2020, the American homicide rate rose almost 30% in a single year. That is the largest single-year increase ever recorded in the United States of America – larger than the increase in 1968, larger than the increase after the 9/11 attacks, larger than any year during the 1960s or the 1970s or the crack epidemic of the early 1990s.

Roughly 5,000 more Americans were murdered in 2020 than in 2019. The overwhelming majority of the additional victims were black.

Let me sharpen the point. The doctrine that began as a promise to protect black Americans from discriminatory policing produced – when applied at scale – a policing regime that resulted in thousands of additional black Americans being murdered every year by their fellow citizens. The protective doctrine was the murderous doctrine. Every additional corpse laid at the doorstep of a policy that said the arrest statistics, rather than the homicide statistics, were the measure of racial justice.

And the cities it happened in were no accident. St. Louis. Baltimore. Chicago. Detroit. Oakland. Philadelphia. Memphis. New Orleans. The cities that had spent the last two decades electing reform prosecutors, defunding their police, releasing repeat violent offenders on cashless bail, and refusing to prosecute shoplifting under the theory that enforcement produced a disparate impact. Every one of those cities is now a case study in what happens when you apply the doctrine to the basic municipal functions of law and order.

You cannot live in downtown St. Louis. You cannot walk home at night in downtown Baltimore. You cannot leave your car unlocked in downtown San Francisco. Walgreens and CVS have closed hundreds of stores in American cities – not because the stores are unprofitable in the abstract, but because the stores cannot function in cities where shoplifting has been decriminalized and security guards who intervene face prosecution themselves. Target closes stores. Whole Foods closes stores. The grocery store closes, and then the dry cleaner closes, and then the laundromat closes, and then the pharmacy closes, and the neighborhood that depended on them is reduced to a food desert policed by no one and abandoned by the commerce that once made it habitable.

This is not a partisan observation. This is what the empirical data show. The doctrine of disparate impact, applied to policing, produced cities where the poor – and particularly the black poor – are worse off than they were before the doctrine arrived.

This is Marxism by another name. The doctrine promised protection. It delivered abandonment. And a generation of urban Americans are now living, as of 2026, in communities more dangerous than any American communities have been since the early 1970s.

2029: The End of America is available now at Amazon.com

Tell me what you think of today’s Journal: porterstansberrydirect@gmail.com

Good investing,

Porter Stansberry
Stevenson, Maryland

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3 Things To Know Before We Go…

1. The bearish history of new Fed chairs. With new Federal Reserve Chair Kevin Warsh set to be sworn in tomorrow, it’s worth noting that the S&P 500 has experienced a drawdown in the first three months following every change in Fed chairs dating back to at least 1930. The average three-month decline has been -12% – however, the individual drawdowns have varied significantly, from as much as -33% after Alan Greenspan took the helm in August 1987 to as little as -2% after Ben Bernanke was confirmed in February 2006.

2. The White House makes a massive quantum computing bet. In exchange for equity, the Trump administration is deploying $2 billion from the Biden-era CHIPS Act (meant to boost U.S. semiconductor production) into nine quantum computing companies – legacy tech giant IBM (IBM) anchors the package with a massive $1 billion grant to launch a dedicated quantum chip foundry in New York, while chipmaker GlobalFoundries (GFS) lands $375 million, and specialized players like D-Wave Quantum (QBTS), Rigetti Computing (RGTI), and Infleqtion (INFQ) take home $100 million apiece. Now, as Washington deepens its state-backed industrial policy to counter China’s tech dominance, these highly volatile quantum penny stocks are turning into heavily subsidized national security plays… triggering pre-market surges of up to 25%.

3. A flood of liquidity. The spread between the Secured Overnight Financing Rate (“SOFR”), which is the interest rate institutions pay to borrow cash overnight, versus the Federal Funds Rate (“FFR”) has increased to the widest level in four years. When this spread widens, it signals that institutions have an abundance of cash reserves. Thus, the widening SOFR-FFR spread signals that the financial system is awash in excess liquidity, which has likely been at least one driving force behind the sharp rally in stock prices in recent weeks.

Chart Of The Day… Nvidia (NVDA)

Complete Investor recommendation Nvidia (NVDA) released Q1 earnings yesterday – another massive beat met with a shrug. Q1 revenue of $81.6 billion topped the $78.75 billion consensus, with adjusted earnings per share of $1.87 versus $1.77 expected. Data centers – the engine – nearly doubled year-over-year to $75.2 billion, roughly 92% of total sales, and management guided next quarter to $91 billion. CEO Jensen Huang reported “demand has gone parabolic.”

Mailbag

“Question About Amrize Allocation”

Todd O. writes:

Porter,

I know you are not a registered financial advisor, and you don’t give personal investment advice.

That said, since I’ve been reading your work for nearly 25 years now… and I’m someone who doesn’t just “read” your work, but actually follows through on things when your ideas and my own personal views happen to intersect (which is quite often, admittedly).

Couple of examples…

• December 2009 I took your advice and bought 100 shares of HSY around $36.50 – I have left it untouched in one of our retirement accounts and with dividends reinvested it’s now 142 shares and worth >$27K

• October 2010 I took your advice and bought 93 shares of WMT around $17.73 – I have left it untouched in one of our retirement accounts and with dividends reinvested it’s now 170 shares and worth >$23K

• March 2012 I took your advice and bought 335 shares of WRB around $16.38 –I have left it untouched in one of our retirement accounts and with dividends reinvested it’s now 456 shares and worth >$31K

And that list doesn’t even include one of my all-time favorites… the Rite-Aid bond recommendation back from when Mike Williams was an analyst in your stable and opened my eyes to the potential power of distressed debt investing (which is why I love the work of Marty Fridson and Andy Lipman on Distressed Investing so much!).

None of that is to toot my own horn… all credit goes to you and the extraordinary people you’ve surrounded yourself with over the years. My main regret is that I was in my late 20s/early 30s and just wish I had had more money to invest back then!

Well, we are blessed to be in a stage of life where we are fortunate to have more capital to invest and your consistent championing of Forever/Lindy stocks over the years is also something that really resonates with me.

So, to my question: You’ve often preached “never put more than 5% of portfolio” in any asset/trade idea. However, AMRZ is currently trading around $48.50, Jan Jenisch (CEO and chairman) just bought another 28K shares last week, which bring his total open market purchases to 1.3 million shares ($64 million of his own personal money) over the last nine months, the company recently announced a $1 billion stock buyback plan, all of the catalysts you mention in your research report are still in place (if not in even better position) and, here is the real eye opener, you literally wrote in your report: “In my entire career I’ve never – not once – seen a better investment idea. Nothing else even comes close.”

That made me sit up in my chair. However, you’re also one of the greatest salesmen (that’s a compliment) that I have ever met and are, at least occasionally, guilty of hyperbole (which I also get, since you need to stand out in the financial newsletter business). So my question is this: Just like you were honest and transparent with your own portfolio at the conference this past fall, does AMRZ have the potential to be one of the greatest long-term compounding investments of our lifetimes? If so, would you potentially put it in the Budweiser (BUD)-type category, where the opportunity and asymmetric upside means it would be okay to allocate more than 5% of the overall portfolio to it?

Appreciate any thoughts that you’re willing to share and please know how grateful we are to have you and your team as a resource. Keep up the great work!

Porter Comment: The second-best performing equity investment of all time is Vulcan Materials (VMC), which has compounded investors’ money at around 15% a year since the 1950s. But Vulcan’s history goes even further back. Solon Jacobs and Henry Badham founded it as the Birmingham Slag Company in 1909. The original business model was pure industrial recycling: transforming blast furnace slag – then considered a useless waste product of Birmingham’s booming steel mills – into cheap, highly durable aggregate for roadbeds and railway ballast. They sold out to the Ireland family in 1916. Under the Irelands, the firm shifted its focus toward natural aggregates (crushed stone, sand, and gravel) as the automobile era began. By the 1940s and 1950s, the company had diversified across the Southeast and became a principal supplier to massive federal infrastructure initiatives, including the Tennessee Valley Authority (“TVA”) and wartime military complexes like Oak Ridge. In 1951, Charles Ireland recognized the impending Interstate Highway System under the Eisenhower administration would require unprecedented quantities of aggregate. To reach the public markets (and raise the capital needed to build the highways) Birmingham Slag engineered a reverse merger in 1956 with the Vulcan Detinning Company of New Jersey. (I hope some day they change the company name back to Birmingham Slag.)

After the transaction, in 1957, Vulcan Materials began trading on the New York Stock Exchange and almost immediately executed the acquisition of nine regional aggregate and chemical firms (including Union Chemicals and Lambert Brothers). This established Vulcan’s distinct dual operating model: Construction Materials and a newly minted Chemicals Division. For several decades, Vulcan’s chemical operations expanded, but it became increasingly obvious that the company’s best business was aggregates. Vulcan finally divested its chemicals business in 2005. And it has invested heavily in building America’s best aggregate business.

• In 1987, Vulcan initiated the Crescent Market Project, establishing a massive limestone quarry on Mexico’s Yucatán Peninsula linked to deep-water seaports. This allowed Vulcan to bypass traditional rail bottlenecks and ship aggregates via massive 62,000-ton self-discharging ocean vessels directly to under-supplied coastal markets along the U.S. Gulf Coast and Florida.

• In 1999: Acquired CalMat for $760 million, instantly expanding its footprint into California, Arizona, and New Mexico, and making Vulcan the largest aggregates producer on the West Coast.

• In 2007: Executed its largest pre-crisis transaction, acquiring Florida Rock Industries for $4.7 billion to solidify a dominant position across the high-growth Sun Belt and Mid-Atlantic.

Its mines give Vulcan incredible pricing power. Vulcan consistently pushes annual price increases even when construction volumes dip. This gives Vulcan an incredibly high adjusted EBITDA margin of 29.3% and a strong return on equity (ROE) of 13.5%. That’s why Wall Street normally trades the stock at very high multiples of earnings. (Current P/E is 31).

What does that have to do with Amrize?

Amrize is following the same strategy, but in concrete. While I can’t know that it will succeed, it certainly has a good start. Like Vulcan, its moat comes from having an incredibly large, physical distribution network with over 1,000 concrete sites across North America. Its margins are almost as good (24% EBITDA) as Vulcan’s and its return on equity is likewise very good (over 10%). I expect these stats will improve over time as the newly independent Amrize will invest more in building up its moat, while continuing to raise prices. But, unlike Vulcan, which is well-known and highly valued, Amrize is still an “orphan.” As a spin-out from Swiss concrete maker Holcim, Amrize hasn’t yet found its home among dedicated institutional investors. It’s trading a forward (‘26) earnings multiple of around 18.

There is one very important thing to note: both of these companies, which will do very well over the long-term, are notoriously cyclical. After making new highs in 2007, Vulcan’s shares fell to under $30 by 2011 and didn’t make a new high until 2016. That makes these stocks hard for most retail investors to own: they require a lot of patience. For years these stocks can look like “dead money.” So, you’ll really have to know what you’re buying and have a long-term horizon if you want to earn market-beating returns in these names.

“End Of Paper Money”

In yesterday’s Journal, Porter shared an excerpt from his latest book 2029: The End of America, in which he compares the debasement of the currency in ancient Rome to what is happening with the U.S. dollar today. To get a copy of 2029, click here to order your own version now.

Jim D. writes:

Porter,

This article is a real eye opener! I wish that had been taught in history class in school. The constitution addresses “coining” money not printing it, and something about a budget, which we haven’t had in 50 years.

I am afraid my children and grandchildren will be living in a very different America than we do. The book of Revelations predicts “People will not be able to buy or sell without the mark of the beast.” Sounds like a chip implanted in hand with your digital account on it to me.

Thank you for being willing to tell uncomfortable truths!

“Timber REIT In Permanent Portfolio”

Wayne B writes:

After reading your book – awesome, by the way – I have one question. Why isn’t a timber REIT in your Permanent Portfolio? I added Weyerhaeuser – which seems to be relatively low-priced right now – along with a monthly recurring buy, right after reading that chapter.

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Inside today’s Daily Journal…

• Essay: America 2029: The Fourth Turning

• The illusion of retail growth

• Google goes all in on AI

• The Amrize CEO buying spree

• Chart Of The Day… ExxonMobil

• Today’s Mailbag

Editor’s note: Last month, Porter published a new version of his best-selling book The End of America. The new edition, 2029: The End of America, describes America’s continuing economic, political, and cultural decline. Using the generational framework of the Fourth Turning, his new book describes the underlying forces that are destroying America’s way of life. Here’s an excerpt from the book that explains the root cause of these problems and explains why the final crisis will arrive in 2029.

You know what a country looks like when it runs out of money.

You’ve been living through it for the past 20 years. You’ve just been trained, by the media, to ignore it – not to believe your “lying eyes.”

But you can see it. You saw it in March 2023, when Silicon Valley, First Republic, and Signature Bank all collapsed, with over $500 billion in deposits evaporating in 36 hours. You saw it in the price of eggs, of insurance, of the small house three doors down – things that all now cost twice what they did in 2019. You see it every morning when you look at your pay stub and then look at your grocery receipt and do the math your government refuses to recognize.

None of this is new. It is not new to America. It is not new in the human experience. This – the debasement of the currency – is the oldest story in economics. In fact, I would posit that the lie of paper money is the entire reason the pseudoscience of modern economics, with its focus on econometrics, exists. It is the science of alchemy, the science of lies.

We’ve been told – by our leaders and by our economists – that it’s different this time. It’s different because the dollar is the world’s reserve currency. It’s different because America has the strongest military. It’s different because oil is priced in dollars.

But, of course, it isn’t different at all. This is the way it always happens.

Let me show you.

In 211 BC, in the midst of the Second Punic War, Rome struck its first denarius silver coin.

This was money. It weighed 4.5 grams and assayed between 95% and 98% pure silver. This monetary standard held – astonishingly – for nearly three centuries. Through the conquest of Greece, the wars of Marius and Sulla, the dictatorship of Caesar, the civil wars that followed his murder, and the long reign of Augustus, the denarius stayed honest.

A Roman legionary was paid in denarii. A Syrian farmer selling wheat in the market at Antioch accepted denarii without weighing them. A merchant in Gaul took denarii in exchange for tin. The coin moved frictionlessly through the empire because men who had never seen the emperor’s face trusted his coin. That trust was the empire. Not the legions. Not the roads. Not the aqueducts. The money. Everything else Rome built rested on a sound currency: it enabled an unprecedented amount of global trade and thus created more wealth than the world had ever seen.

But then, slowly at first, Rome stopped keeping its promise.

In AD 64 – the year of the Great Fire – Nero called in the old denarii and restruck them. He cut the weight from 84 coins per Roman pound to 96 and dropped the fineness from roughly 98% to about 93.5%. It was the first debasement of any consequence in more than 250 years.

The emperor needed money to rebuild the city and his endless spectacles. The easiest way to get it was to call in the old coins and strike new ones with a little more copper mixed in. The soldiers didn’t notice. The farmers didn’t notice. The merchants in Gaul didn’t notice. The silver content fell by five percentage points and the empire went on functioning as though nothing had changed.

Domitian briefly raised the fineness back toward the old standard in the 80s AD but soon, the debasement continued. Under Trajan, in AD 107, the silver content was quietly cut again, from roughly 93.5% down to about 89%. Under Marcus Aurelius – the philosopher-king, the Stoic, the man whose Meditations we still read in graduate seminars on leadership – the coin fell to roughly 79% fine to pay for the Marcomannic wars. Under his son Commodus, the weight was cut again – by one-eighth – and the fineness slipped to around 70%.

Then came the Severans. Septimius Severus doubled the size of the army and the legionary’s base pay and paid for it the only way he could: by cutting the silver content of the denarius to roughly 50%.

In AD 215, his son Caracalla tried something new. He minted a coin called the antoninianus, which claimed to be two denarii but contained only about 1.6 denarii worth of silver. It was a 52% fine coin weighing 5.1 grams that bought 25% more than the silver in it justified. It was the ancient world’s first explicit, legislated fiat premium. The state declared, by edict, that the coin was worth more than the metal it contained.

How do you think that worked out…?

The floor gave way. Under Gordian III in the 240s, fineness was already below 50%. Under Gallienus, in the 260s, the antoninianus became a copper slug with a thin silver wash – roughly 2% to 5% silver, and even that mostly cosmetic, applied to the surface so the coin would look like silver until it wore off in a few months of circulation.

In a little over 200 years – from Nero’s first cut in AD 64 to the bottom under Gallienus around AD 268 – the Roman silver coin went from roughly 98% silver to under 5%. And the men in Rome who ordered the debasement – every single one of them – told the same lie.

These lies should sound familiar to you. This is temporary. This is necessary. We must “break the glass” to save the country.

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The cycle was finally broken, after the fact, by two emperors who understood that the empire could not be held together without an honest coin. Aurelian in AD 274 tried to standardize a new coin guaranteed at 5% silver – marked XXI on the reverse, an explicit promise of one part silver to 20 of bronze. Twenty years later, in AD 293–294, Diocletian carried out the full reform: a new pure silver coin called the argenteus, struck at 96 to the pound and roughly 90% to 95% fine – the first honest silver coin Rome had issued in more than two centuries.

But it did not work for long. By AD 301, Diocletian had to double the argenteus’ face value to keep up with inflation. Within a few years he was issuing the Edict on Maximum Prices and threatening death to merchants who charged what their goods actually cost.

And here is the part of the history that 99% of economists never understand. By debasing the coinage, the political class built an economy that could not function on honest money.

The legions had to be paid. The grain dole in Rome had to be distributed. The client kings at the frontier had to be bribed. But with a broken exchange system, there was no honest way to afford the obligations of the Roman state. The only way to keep the machine running was to debase the coins. And that, in turn, created still more demand for graft. It wasn’t long before the entire empire ran on graft.

Sound familiar?

I am describing a political system that makes so many promises – to its soldiers, to its citizens, to its allies – that the promises can only be kept by breaking the underlying promise on which all the others depended.

Here is what the merchants in Gaul did when the silver content fell below 50%. They stopped taking Roman coins. They went back to barter. They weighed out actual silver bullion on a scale. They traded oxen for wheat and wheat for iron and iron for wine. The imperial economy – which had been the most sophisticated commercial network in human history – reverted to the Bronze Age inside of a single century.

When the coin dies, the economy (the trade networks, the capital investments) dies with it. Not in theory. In practice. At the market in Antioch. On the docks at Ostia. In the grain fields of Egypt.

And when the economy dies, the culture dies. The roads fall apart because no one is paid to maintain them. The aqueducts silt up because the engineers have gone home. The legal code — the Corpus Juris Civilis, the greatest gift Rome ever gave the world — becomes a museum piece because no court can enforce it.

Rome did not fall because barbarians crossed the Rhine. Rome fell because its coin became a lie. When the coin failed, Rome failed.

This is the template for every great power that has ever debased its currency to fund promises it could not keep. This is what happened in France under Philip IV. This is what happened to Spain under the Habsburgs, who drowned in silver from Potosí and died broke anyway. This is what happened to Weimar Germany. To Hungary in 1946. To Zimbabwe. And to Argentina eight times over.

This is what will happen to the United States of America in the year 2029.

2029: The End of America : Why the Age of Paper Money Is Ending And How to Survive the Coming Global Monetary Reset

Tell me what you think of today’s Journal: porterstansberrydirect@gmail.com

Good investing,

Porter Stansberry
Stevenson, Maryland

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3 Things To Know Before We Go…

1. The dollar illusion. Between April 2021 and April 2026, nominal retail sales rose 24.3% – but in real terms, growth was essentially zero. Americans aren’t buying more – they’re paying more for the same basket. With nearly 7% mortgage rates, 4% inflation, and a dollar that buys roughly 30% less than it did in early 2020, lower-income consumers are running out of gas – and, yes, the cost of that is up 50% in the last three months as well.

2. Google goes big on AI agents. At its annual I/O developer conference yesterday, Google unveiled the Gemini 3.5 model family, a redesigned Search bar – billed as the biggest Search upgrade in nearly 30 years – and Gemini Spark, a 24/7 personal AI agent that lives across Gmail, Docs, and Sheets to execute multi-step tasks on your behalf. And it’s steadily gaining AI-platform market share.

3. Big insider buying in Amrize. Jan Jenisch has been buying the dip, investing more than $2.3 million in Amrize (AMRZ) shares so far this week. The CEO of the North American building solutions firm, a December Complete Investor recommendation, has now invested more than $63 million of his own money into the stock since the company was spun off from global construction firm Holcim last June. Most of these purchases were made near the current share price of around $50, a level where Janisch clearly sees tremendous value.

Chart Of The Day… ExxonMobil (XOM)

The Strait of Hormuz closure has driven shares of Complete Investor recommendation ExxonMobil (XOM) up for seven straight sessions – closing 1.3% higher yesterday and pushing its year-to-date gains to 33%. Now with experts cautioning that the full effects of the closure haven’t yet hit the market, inventories could plummet and drive oil prices – and XOM shares – even higher.

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Mailbag

“Warren’s Mistakes”

Tom G. writes:

Porter,

I am reading your book, Warren’s Mistakes. Very good, and you make such a compelling argument. I have two questions:

1. Why do you think Warren decided to change his buying practices after such a long, successful time?

2. Have you heard any feedback from either Warren or any of his many spokespersons about what you have been writing about him in recent years?

Just curious!!

Porter Comment:

1. I explain it in the book. Warren is a collector. When his collection became so large that he could no longer promise investors an economic return, he chose to keep his collection. A very human decision, in my opinion.

2. Yes, many years ago, when I told Warren that I was writing this book, he declined to be involved.

“Some Confusion”

Ralph G. writes:

Hi Porter,

I have been one of your long-time followers from the early days of Stansberry Research, and am currently a lifetime subscriber to Complete Investor and Tech Frontiers.

I have been following your Daily Journal and viewed the most recent video presentation featuring you, Erez, Marty, and Ross. For some time now, you have emphasized that once the 10-year Treasury yield goes above 4%, you should exercise caution. And once it surpasses 5%, well, that is the red line for which you have told us to get out of stocks.

Yet in the most recent issue of Complete Investor, it is pretty much business as usual, with new “buy” recommendations. There is a bit of a disconnect in this for me.

Either you think:

1. These buys are relatively immune to the crash you think is coming – which they most likely are not

2. You’re thinking we have six or more months before the crash occurs so let’s squeeze out some gains while we can

3. You’re thinking something else, and if so, I’m curious what that is

I usually buy what you recommend and have done well (not sure I’ve ever thanked you). And I love your writing style. However, in your current Complete Investor, it seems like you’re asking us to roast marshmallows on the edge of an approaching forest fire.

My discomfort is not only because I’m 76 years old (that is part of it for sure). Just doesn’t make sense to move into a house when the roof appears to be caving in.

I would appreciate any comments you might have.

Porter Comment: Ralph –

You’re exactly correct: our most recent recommendation is “roasting marshmallows” on the edge of a forest fire.

But we have a recommended list that incorporates many different levels of risk. Everything from ultra-safe stocks like Mitsui & Co. (MITSY), ExxonMobil (XOM), and Chubb (CB) to things like Uber Technologies (UBER), Alphabet (GOOG), and Nvidia (NVDA) that are clearly more speculative.

We believe our most recent recommendation, like Google and Nvidia, has an extremely valuable moat and will play an incredible role in the artificial intelligence build-out over the next decade – as we detail in the newsletter.

It is easy to see the risk of buying stocks when there’s so much speculative froth in the markets. It is harder to see the risks of missing out on the “melt-up.” In Japan, in the 1980s, stocks went to 90x earnings.

My point: we can’t know the future, but we can help you prepare to thrive, no matter what happens. To me, that means always giving you all of the information I’d most want if our roles were reversed.

Our last issue’s recommendation – while perhaps too risky and aggressive for you – could easily turn out to be our most valuable insight this year.

“Your Thoughts On The Great Taking”

Don H. writes:

I’ve previously heard rumblings along these lines but dismissed them. Now I’m not so sure …

David Rogers Webb, the former hedge fund manager of Varus and author of The Great Taking, describes how property rights of securities have been corrupted and that individuals are not the rightful owners of their securities. When the engineered collapse occurs, the banks will assume ownership… the great taking.

Are you familiar with this? And what is your understanding of what the current bank regulations allow?

Porter Comment: In the U.S., investors are beneficial owners of securities through a broker or bank in “street name.” That doesn’t mean the broker “owns” the security. It doesn’t appear on their balance sheet and they can’t use it as collateral, etc. Webb conflates record ownership, beneficial ownership, and creditor claims in insolvency. U.S. law recognizes property interests through intermediaries. In other words, the legal structure is not “you own nothing,” but rather “you own through a legal and operational chain that introduces intermediary risk.” What’s the intermediary risk? It is not a seizure of your property. The risk is, in a severe intermediary failure, rehypothecation, commingling, custody errors, or insolvency mechanics could make recovery slower, messier, or less complete than retail investors assume. That is a legitimate concern, but it is incredibly rare and nothing at all like Webb’s apocalyptic framing.

Let me give you a real world example.

MF Global, the commodities brokerage run by former New Jersey Governor Jon Corzine, collapsed in October 2011 after a bad bet on European debt. About $1.2 billion in customer funds went missing when the firm violated segregation rules by dipping into customer accounts. Corzine famously told Congress he didn’t know where the money was. Customers eventually recovered funds through a trustee-managed bankruptcy under SIPC (Securities Investor Protection Corporation) and CFTC (Commodity Futures Trading Commission) oversight, though recovery was slow. The firm broke the law and the customers were harmed. Corzine, by the way, never faced a criminal charge and only paid a $5 million fine. There’s no justice in America. But that doesn’t mean that your brokerage firm can simply seize your assets.

Three Analysts Explain Debasement From Different Vantage Points

Inside today’s Daily Journal…

• Essay: The Dollar Ain’t What It Used To Be

• The (commodity) costs of war

• Where hedge funds are investing

• Public debt and the price of bonds

• Chart Of The Day… Credit Acceptance

• Today’s Mailbag

Editor’s note: Porter is hosting his first of many Mastermind events at his farm in Maryland today – a day-long group discussion about investing, portfolio management, and wealth creation. Porter will return to the Journal tomorrow.

Porter & Co. analysts are aligned on one common thesis… That in one way or another we are due for a major financial reset. Porter invited each of them to discuss the melt-up and eventual meltdown – and each offered a way you can benefit from it.

But each analyst has also highlighted a longer-term threat to the economy and to the U.S. Over the last three weeks, three Porter & Co. analysts – Tech Frontiers editor Erez Kalir, Distressed Investing’s Marty Fridson, and Porter himself – have warned of a major structural change to the American economy… and therefore to the global economy.

First it was Marty, who told readers in an April Daily Journal…

The U.S. government has spent its way into a collapse of the sovereign U.S. Treasury debt regime…

Tighter banking regulations following the Global Financial Crisis raised the cost for banks to provide dollar funding to the rest of the world. As a result, Marty wrote, the premium paid by foreigners for directly accessing dollars went up.

Even with those added costs, the rest of the world still wants dollars, and the Fed has been creating those dollars with seemingly no limit. Neither the euro nor the Chinese yuan is on the verge of usurping its place in global trade… yet.

For U.S. Treasury bonds, on the other hand, a grim future has already arrived, Marty explained…

Up until 2023, Treasury bills, which are issued with maturities of one year or less, still enjoyed their special privilege, yielding less than comparable foreign obligations. No longer, thanks to the Treasury flooding the market with this near-cash type of paper. Between 2013 and 2019, the amount of Treasury bills outstanding expanded by 52%. In the next six years the amount ballooned 171%.

There’s no mystery about the Treasury’s increasing reliance on these very short-term obligations. At most times, T-bills represent cheaper funding than bonds, which have maturities of up to 30 years. At certain times during the last 20 years, the gap has been as great as two percentage points. That means the government can save taxpayers billions of dollars by issuing shorter-dated debt.

The problem is that the Treasury could have to replace a large portion of its debt at a difficult time in the market, when borrowing costs are higher.

Given these disturbing facts, he concluded, it’s not surprising that America’s debt has already lost its elite investment status. He also warned that we should not be complacent about the foreigners’ longstanding love affair with the dollar. There have already been some rumblings of discontent.

If the dollar falls off its pedestal sooner rather than later, he concluded, don’t say you haven’t been warned.

Erez took us back 70 years when the British government did not heed the warning when the integrity of its own currency was being undermined.

In 1956, Britain had launched a military attack to maintain its control of the Suez Canal, which Egypt had determined to put under its control.

At the time, Erez explained, Britain still clung to the illusion that its currency, pound sterling, remained the global reserve.

But sterling’s position as the world’s dominant currency had been eroding for decades… losing ground to the ascendent U.S. greenback. And in this crucial moment of geopolitical crisis, Britain depended on foreign capital to support sterling’s stability in the foreign exchange markets. When President Dwight Eisenhower signaled that U.S. support for sterling would be withdrawn, the rest of the world’s capital followed.

It was a financial disaster for Britain. The sterling eventually collapsed. Historians often describe the moment as the end of the British Empire. That’s not quite right, of course, as empires rarely end in a single moment.

Ray Dalio, founder of the world’s largest hedge fund, Bridgewater Associates, has spent decades carefully studying the rise and fall of empires – the Dutch, the British, and now the American.

Erez described Dalio’s framework this way…

In the beginning, a powerful nation dominates key trade routes – controlling key maritime trade routes makes a nation’s currency the one everyone wants to use. Subsequently, reserve currency status enables that nation to borrow from the rest of the world more cheaply. Cheap borrowing helps reinforce the nation’s military strength – and so the cycle continues.

But as that dominant power borrows more, it becomes complacent, believing it can continue to borrow in perpetuity. As is happening in the U.S. now, its debt grows out of control. Soon, foreign creditors begin to question the currency. The currency’s reserve status erodes, causing borrowing costs to rise, and the military weakens. The empire falls into a terminal decline.

Erez explained…

In this downward spiral, the crucial moment isn’t when the hegemon weakens – it’s when the world realizes it has weakened.

Which brings us to the current situation in the Middle East. The U.S.’s role in the closure of the Strait of Hormuz is causing devastating injury to the dollar. For one, the world is seeing that the U.S. can’t keep the most important maritime trade route in the world open. In addition to that, the Hormuz closure is wreaking havoc on the economies of U.S. allies. And it’s providing a boost for China’s currency, as a shadow fleet of cargo carriers was able to transit the Strait carrying shipments paid for using the yuan.

What’s happening in the Middle East is not going to lead to the replacement of the dollar now – just as the Suez crisis didn’t immediately lead to the end of the British pound. It is however a sign of the slow erosion of the dominance of the greenback as the global reserve currency.

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And while Erez details the erosion of trust in the dollar from a global perspective, Porter details that erosion of trust from within the dollar’s ecosystem… from Americans who rely on the dollar for their daily lives. In Porter’s new book 2029: The End of America, he writes this…

No CEO in the country can get his people to come back to work. They will not come back. And they cannot be made to come back. Why not? Because everyone, at some level they cannot articulate, understands that the pay isn’t real. They understand that the raise they got last year was eaten by the grocery store. They understand that the 401(k) that grew 8% grew less than gold did, which means it actually shrank. They understand that the house they bought in 2015 for $400,000 and that is “worth” $700,000 now is actually worth fewer ounces of gold than it was when they bought it. They understand that their labor – the one irreplaceable, nonrenewable thing they have to sell – is being paid for in a unit of measure that is shrinking under their feet. So they stop giving it. Not all of it. Just some of it. They show up three days because they have to. They keep the other four for themselves. They tell themselves they’re “setting boundaries.” What they are actually doing is the most rational thing a worker can do when the currency has failed: they are withholding effort from an economy that is no longer offering them a fair exchange.

That is the crisis of meaning in action. It is not laziness. It is not a generational character flaw. It is a perfectly logical response to two generations of monetary debasement. When money stops being a reliable store of value, time itself stops feeling valuable. Why pour your real effort into anything if the reward is just going to be inflated away, or taxed away, or both? Why sacrifice for your corporation? Why sacrifice for your community? Why sacrifice for your own family, when everything around you suggests that sacrifice is for suckers and the game is rigged for people with access to the money printer? Without a reliable currency, there is no way for human beings to cooperate at scale. I mean that as a technical statement, not a moral one. Cooperation runs on trust. Trust runs on a unit of measure that stays the same from one day to the next. Break the unit of measure and you break cooperation, and once you break cooperation, the entire architecture of a free society — the voluntary exchanges, the long-term commitments, the marriages and mortgages and business partnerships — starts to come apart.

Porter’s book is quickly moving up on the best-seller list on Amazon – it is now #11 in its category. To get a copy of 2029: The End of America, click here.

Tell me what you think of today’s Journal: porterstansberrydirect@gmail.com

Good investing,

Porter & Co.
Stevenson, Maryland

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We do not, however, make any representations about their investment ideas, nor will we warrant them as equal to our own.

Porter & Co. also may disagree with the ideas presented by our sponsors but we understand there’s more than one way to skin a cat. With that said, you can check out what Jared is predicting by clicking here.

3 Things To Know Before We Go…

1. The Iran war inflation tax is spreading. As Porter wrote last Friday, the Persian Gulf isn’t just the world’s gas station – it’s the world’s food supply. The same petrochemical complex shipping crude and liquefied natural gas (“LNG”) also ships the nitrogen, sulfur, and phosphate inputs that feed roughly half the planet. Fertilizer shipments in the first month of the war fell 56%, and unlike crude, there is no strategic reserve to draw down. Energy prices might fall if the Strait of Hormuz opens, but food prices will not anytime soon.

2. Hedge funds go all-in on chip stocks. Global hedge funds now hold a record 19% of their assets in semiconductor stocks – double the amount since the start of 2026. By comparison, hedge funds had only 2% of their assets in this group during the 2022 bear market. Meanwhile, software stocks make up just 2% of hedge fund assets. The professional investment community has gone all-in on the same trade: selling software and buying chip stocks.

3. Paying the price for public debt. A massive government debt binge has bond markets flashing critical warning signs – pushing yields to multi-decade highs. Driven by geopolitical conflicts, rapidly aging demographics, and lingering pandemic-era stimulus, the global pile of sovereign debt is surging relative to GDP. As a result, borrowing costs are escalating sharply for governments, corporations, and consumers, threatening to choke off economic growth.

Chart Of The Day… Credit Acceptance (CACC)

Shares of subprime lender Credit Acceptance (CACC) have struggled since we first recommended them in Complete Investor more than three years ago, but with a steady loan portfolio and significant reduction in credit loss provisions, investors have liked what they have seen. Shares are up 25% year to date.

Poll Results… The Mid-Term Elections And The Market

Yesterday we reported that mid-term election years are usually a coin flip for the performance of the S&P May through October. Then we asked readers: “Where will the S&P 500 land on October 30, 2026?” Clearly there is no consensus… 30% anticipate “a large dip” of 10% or more between now and then while 27% expect “a melt-up” of 10% or more. Others are in the middle: with 21% seeing the market being up less than 10% and 23% seeing it down less than 10%.

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Mailbag

“Bitcoin And Ethereum”

Linda N. writes:

Hi Porter!

Thank you for writing 2029… I am deeply sad about how our currency is being destroyed. Obviously, the damage has been intentional and done over several decades, so most are unable to recognize the pattern.

I feel I have very little time to make some wise decisions and purchases. Since you do not give personal investment advice and you suggest a company or individual who shares your mindset? I have met with a few local men and women in the Phoenix area and I’ve not found a good fit.

(I purchased three copies of your book, and I need three more! Is it available anywhere else besides Amazon?)

In a recent Daily Journal, you say “Bitcoin, specifically, is increasingly behaving like a digitally native form of monetary scarcity – gold for the internet age. In a world of accelerating fiat debasement, scarce digital assets may become profoundly important stores of value.”

Is the “buy up to” price for Bitcoin still <$50,000 – do you think Bitcoin will ever go that low or is now a good time to buy?)

Thank you for this wonderfully informative book, along with everything else you publish. I look forward to reading your work every day.

Porter Comment: Hi Linda –

I’m glad you enjoyed the book.

I have a RAI (registered investment advisory) firm that I founded a decade ago and that is familiar with my research and the ideas in this book. The firm is called Stansberry Asset Management.

I didn’t write the book to advertise the firm (obviously – I don’t mention it). But if you need help with your investing, I would call them.

“Comments On Erez’s Monday Journal”

Bob H. writes:

Bonjour Daily Journal,

Whilst I agree fully with Erez’s take on the concern, I suspect that a U.S.-centric view is not the only one. Western Europe is worse off since any significant growth depends on resources and energy which WE lack. Or maybe I could mention that several significant Asian countries are even worse prepared for the Endgame.

Compared to other parts of the world, the U.S. may be the best-looking horse at the glue factory.

“2029: The End Of America”

Adrianah S. writes:

I want to thank you for writing this book. It was the greatest history on this subject I have ever read. I cried through most of it, because I am 81 years of age and remember a lot of it and how much pain and sorry it brought. It also helped me release so much of the pain because I have always blamed myself for so much of what happened to me. I was always mad at Nixon, because I lost my job and could never get another one I loved as much. I was aware of his meeting and we all thought that what you said in the book was true. There were a couple of people who jumped off of the buildings.

The knowledge of how history has repeated itself in so many ways was explained so well.

And there doesn’t seem to be anything to stop such a disaster.

Please note: The investments in our “Porter & Co. Top Positions” should not be considered current recommendations. These positions are the best performers across our publications – and the securities listed may (or may not) be above the current buy-up-to price. To learn more, visit the current recommendations page of the relevant service, here. To gain access or to learn more about our current recommendations, call our Customer Care team at 888-610-8895 or internationally at +1 443-815-4447.

America’s Four Options For Avoiding Collapse

Inside today’s Daily Journal…

• Essay: Approaching The Endgame

• Holding assets softens inflation blow

• Golden moment for gold profits

• China selling its Treasuries

• Chart Of The Day… SpaceX

• Poll: Mid-term elections and the market

• Today’s Mailbag

Editor’s note: Although Erez Kalir ordinarily focuses on technology, blockchain, and biotech issues in Porter & Co.’s Tech Frontiers, Porter turned the Journal over to him today so Erez could tell the story of America’s slow descent into what he calls “the Endgame”… when the U.S. can no longer scale the mountains of debt it has accumulated. He lays out four potential ways out…

In 1944, as World War II raged across Europe and the Pacific, delegates from 44 Allied nations gathered at the Mount Washington Hotel in Bretton Woods, New Hampshire, to design the postwar financial order. The United States emerged from those negotiations financially on top of the world. Our industrial base was intact. Our gold reserves were unmatched. Our economy represented nearly half of global GDP.

The arrangement forged at Bretton Woods was elegant in its simplicity: the dollar would become the world’s reserve currency, convertible into gold at $35 per ounce. Other currencies would anchor themselves to the dollar. And because the dollar sat at the center of global trade, the United States gained something extraordinary: the ability to finance itself more cheaply than any empire in history.

For decades, that “exorbitant privilege,” as the French foreign minister described the U.S. position, seemed inexhaustible.

Then came 1971, when President Richard Nixon closed the “gold window” and severed the dollar’s final tether to gold. America’s debt began its long upward spiral… first slowly… then rapidly… then exponentially.

Today, America’s fiscal situation is well within the zone from which there is no painless exit. Indeed, the U.S. is almost certainly already in the chapter that may ultimately be remembered as the Endgame.

Let me explain…

The United States federal debt now stands at roughly $40 trillion – more than 120% of GDP. Historically, America has reached debt levels this extreme only once before: during World War II, when debt briefly surged above 119% of GDP in 1946 as the nation financed a global war for survival.

But there’s a crucial difference between then and now.

In 1946, we possessed the youngest industrial workforce in the world, a manufacturing base untouched by war, and a demographic boom just beginning. Debt was high, but the country’s growth trajectory was even higher. We could effectively grow our way out of the problem – and we did.

Today, the opposite is true.

The U.S. faces aging demographics, rising entitlement costs, persistent fiscal deficits, and an economy increasingly dependent on debt-financed consumption. More ominously, the debt itself has become self-reinforcing: the government must now borrow staggering sums simply to pay interest on prior borrowing.

Stan Druckenmiller, the greatest macro investor of his generation, indeed perhaps of all time, has warned repeatedly that America’s fiscal trajectory is unsustainable. And the numbers explain why. Interest expense on the federal debt has now become one of the largest items in the federal budget, surpassing defense spending and rapidly converging with Medicare and Medicaid combined.

Pause for a moment to appreciate the absurdity of that sentence.

The United States government is increasingly borrowing money to pay interest on money it already borrowed.

That is not a stable equilibrium – it’s a debt spiral.

And once countries enter debt spirals of this magnitude, there are only four ways out.

The first is austerity: Slash spending, raise taxes, and restore fiscal discipline. Politicians occasionally pretend this remains possible. It is not. No modern American administration, Republican or Democrat, has demonstrated the slightest willingness to impose the level of austerity necessary to stabilize a $40 trillion debt load. The math is simply too brutal. Meaningful austerity would require politically toxic cuts to Social Security, Medicare, defense spending, or all three simultaneously. It would likely trigger a severe recession and possibly a depression. Democracies rarely choose this path voluntarily. America certainly will not.

The second possibility is outright default: This, too, won’t happen. The United States borrows in its own currency. Unlike Argentina, Greece, or Zimbabwe, America does not owe debt in a foreign currency it cannot print. Treasury default would detonate the global financial system and destroy the dollar’s reserve currency status overnight. Washington will choose virtually any alternative before permitting that outcome.

The third path is growth: In theory, sufficiently rapid economic growth could outpace the debt burden. This is what happened after World War II. But once again, the arithmetic is merciless. Nominal GDP growth would need to remain sustainably above the government’s borrowing costs for many years while deficits simultaneously narrowed. In an aging, indebted society growing at roughly 2% real GDP annually, that outcome borders on fantasy.

Which leaves only the fourth and last option – one we already know well: Money printing.

Not explicitly, perhaps. Not in language central bankers will use publicly. But effectively and functionally, the Endgame leads to the same place: the monetization of government debt.

Many investors believe this process must inevitably culminate in a collapse of the Treasury market itself – a violent upward spiral in long-dated Treasury yields as buyers refuse to finance America’s deficits.

I don’t believe that will happen.

Why?

Because the Federal Reserve will never allow it to happen.

Instead, when the pressure becomes sufficiently acute, the Fed will almost certainly impose some form of yield-curve control.

Yield-curve control (“YCC”) sounds exotic, but the concept is straightforward. The central bank sets a ceiling on Treasury yields and enforces it by printing money to purchase bonds whenever necessary.

Imagine the Fed effectively standing up and announcing:

Any sellers of 10-year or 30-year Treasuries? We’re your bid. We will buy as much as necessary to keep yields below this level.

That is yield curve control.

And despite sounding radical, it’s not theoretical. The Federal Reserve itself implemented YCC after World War II, pegging long-term Treasury yields to help the U.S. manage its enormous wartime debt burden. More recently, the Bank of Japan deployed YCC for years to suppress Japanese government bond yields amid Japan’s own debt super-cycle.

Ben Bernanke, the former Fed Chair and perhaps the world’s foremost scholar of monetary crises, wrote extensively about such policies and their historical precedents. The new Fed Chair, Kevin Warsh, emerged intellectually from the Bernanke era and is deeply familiar with both the theory and historical YCC implementation.

Investors should not underestimate how quickly the policy consensus can shift once debt servicing costs become politically intolerable.

But there’s a catch: The Fed can control Treasury yields, even at the long end of the yield curve. It cannot simultaneously preserve the purchasing power of the dollar. That’s the price of the Endgame.

When the Fed intervenes to limit yields, it does so by creating new dollars to absorb Treasury supply. The bond market remains orderly because the central bank becomes the buyer of last resort. Treasury yields stay artificially suppressed. But the currency absorbs the pressure instead. In effect, the government escapes default not by refusing to pay its debts, but by repaying them in increasingly diluted dollars.

This is why sophisticated investors increasingly understand that the real risk is not Treasury default. The real risk is dollar debasement.

So how should investors prepare?

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Three essential hedges:

1. Gold and precious metals. Gold has survived every monetary regime in human history because it cannot be printed by politicians or central bankers. When confidence in fiat currencies erodes, gold tends to reassert its monetary role with astonishing speed.

2. Bitcoin and Ethereum, or what I’ve described in Tech Frontiers as the “blockchain blue chips.” Many traditional investors still dismiss digital assets as speculative toys. Those investors are misunderstanding the deeper story. Bitcoin, specifically, is increasingly behaving like a digitally native form of monetary scarcity – “gold for the internet age.” In a world of accelerating fiat debasement, scarce digital assets may become profoundly important stores of value.

3. Real assets: productive real estate, infrastructure, energy assets, and hard commodities. In inflationary monetary regimes, tangible assets tend to preserve purchasing power far better than financial claims denominated in paper currency.

None of this means the Endgame arrives tomorrow. Empires and monetary systems rarely collapse suddenly. As an Ernest Hemingway character famously observed in his novel The Sun Also Rises, a man goes broke, “gradually, then suddenly.”

But the direction of travel is becoming increasingly difficult to mistake.

The Endgame is coming, eventually.

Will you be ready?

Tell us what you think of today’s Daily Journal: porterstansberrydirect@gmail.com.

Erez Kalir
Berkeley, California

Porter invited Erez, Distressed Investing editor Marty Fridson, and other Porter & Co. analysts to join him for an urgent summit called The Final Melt-Up where they explored all of this in much greater detail – and all the analysts join forces to lay out a step-by-step plan for navigating today’s treacherous market.

This all-hands broadcast was released last week, and if you haven’t watched it yet, please go here now because this may be one of the most important events Porter has ever organized.

Together, the entire team joins Porter to lay out exactly how to both safeguard your wealth and grow it during this Final Melt-Up.

Watch it here now.

3 Things To Know Before We Go…

1. Assets shield investors from inflation. Roughly 55% of consumers with no stock holdings cited high prices as the reason for worsening personal finances – but only 40% of those with significant stock holdings flagged high prices as a concern. The resulting 15-percentage-point gap is the second widest divergence in over 10 years. This is the Cantillon Effect in real time – and the political response to widening divergence is itself bullish for hard assets.

2. Mining margins lead other sectors. A surge in commodity prices – with gold above $4,500 per ounce against costs of only $1,600 – has turned the industry into a rare profit machine. The median margin for the top 20 precious- and base-metals miners has climbed to 31%, nearly double the 17% median for S&P 500 tech companies and the highest of any sector in the global economy.

3. China’s selling spree in Treasuries. China’s U.S. Treasury holdings have dropped to $650 billion, the lowest levels since 2008. This continues a decade-long liquidation, which began in 2016 when China held $1.3 trillion in Treasuries. The accelerated selling coincided with the start of a record-setting bear market in U.S. government debt. America needs to sell more debt as its major buyer is stepping away from the market, which could lead to “higher for longer” borrowing costs for Uncle Sam.

Chart Of The Day… SpaceX IPO

Elon Musk’s rocket business SpaceX is expected to raise as much as $75 billion in its initial public offering (“IPO”) as soon as next month, which would make it the largest IPO in history by far – roughly 2.5x larger than the previous record holder, Saudi Aramco. The company is also reportedly targeting a valuation of up to $2 trillion, which would make it the seventh-largest public company in the world, behind only Nvidia (NVDA), Alphabet (GOOG), Apple (AAPL), Microsoft (MSFT), Amazon (AMZN), and Taiwan Semiconductor Manufacturing (TSMC).

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Mailbag

“2029: The End of America”

James M. writes:

Porter,

I have been reading your work since 2008, when I joined Stansberry Research. It was a great investment. I still receive their material every week, although some of the players have changed.

Recently, Dan Denning or Tom Dyson recommended your new book. I got it, and I think it is great. The chapter on debt driving the gold pricing cycle was a completely new viewpoint for me. This really opens up a new way of looking at investments. Many things you recommended over the years are the backbone of the thinking in the book. Thanks for writing the book, and I wish you continued success.

Porter & Co. Comment: Thanks for sharing your thoughts. To get a copy of Porter’s book 2029: The End of America, which James writes about, click here. And please leave your own review.

“Corporate Bond Question”

Kathy D. writes:

Porter, reading Friday’s Daily Journal, “The Second Shock Coming Out Of Hormuz,” my alarm bells went off louder since I invested in a number of corporate bonds recommended by an affiliate two years ago. Am I understanding correctly that it would be unwise to own any corporate bonds? I know many of your readers are sophisticated investors, but if you could take a moment to say a few more words about this for those of us new to the corporate bond world, it would lessen my anxiety.

This is one of your most direct and best newsletters concerning the impending ramifications of the war with Iran yet. Thank you!

“Friday’s Essay: The Second Shock Coming Out Of Hormuz”

Kevin L. writes:

Porter,

Friday’s Daily Journal essay was a great look at the world food chain. I have not come across any financial personnel (TV, print, radio, online) who have this take on the situation, and I mean that in a positive way.

I understand your timeline: the end of June for the Strait of Hormuz to be opened. But the impact should mean Trump has at least some understanding of this and will therefore do whatever it takes to get the Strait of Hormuz open, including obliterating the surrounding area. He still has at least four weeks to get this done.

With that said, I am 75% in cash and holding three different put positions on the QQQs.

“Questions About The Trading Club”

Leslie V. writes:

Hi Ross,

I am massively impressed with the first-year performance of The Trading Club, so hats off to you on this great performance. Now for the question. To take nothing away from the great result, but the market was mostly rising, which certainly helped most of your great picks, and this has me asking:

1. When you did all your testing prior to launching The Trading Club, did you test it in conditions that were less favorable? If you did, what were the results like?

2. You have rightfully been advising your followers that you see a market correction at some point in the not-too-distant future. I totally agree, and it has me wondering what changes in strategy you will employ in a falling market. I am sure all your grateful followers would appreciate you addressing this in advance of the pull-back, to give them confidence.

Again, my thanks for a great service and great result. Well done.

Ross Comment: Thank you for the kind words. Yes we’ve had a great run so far in The Trading Club, up 32.9% (as of today) in just under a year since launching on May 30, 2025.

And as much as I’d love to take all the credit for these returns, you correctly point out that the overall bull market has done a lot of the heavy lifting.

The same bull market was in place during the trial period where we experimented with the “beta” version of this trading strategy. So the reality is, we cannot rely on these historical returns to provide any indication of how The Trading Club strategy will perform when the tide inevitably shifts and today’s bull market gives way to the bear.

However, the one thing I can say is that I’m no stranger to bear market trading. I first started investing in 2005 and have now lived through the 2008 Financial Crisis, the 2018 “taper tantrum” panic, the 2020 COVID collapse, the 2022 tech bear market as well as the 2025 Liberation Day declines. And more recently, we navigated the recent volatility created by the outbreak of war with Iran with relative success in The Trading Club.

And each of these experiences has taught me one thing: markets can do the unexpected, and often when you least expect it. That’s why we built this strategy with durability above all else. By using things like put options, which can deliver outsized returns during a bear market that can potentially offset losses elsewhere in the portfolio. And by using things like covered calls, designed to generate consistent income and create a cash buffer that will also dampen downside risk. Finally, we’ve constructed a portfolio with a diverse basket of uncorrelated stocks, so that the entire portfolio is moving up and down based on the overall market.

All that said, when a real bear market inevitably strikes, there’s no getting around the fact that our portfolio will very likely take on losses. Our goal, however, is not to completely avoid this risk. The truth is that any strategy that eliminates all risk will also come with limits on long-term upside.

Instead, our goal is to better manage that risk versus a typical buy-and-hold strategy. That way, we aim to not only survive the bear market by limiting the downside, but to be in a position to capitalize on the incredible bargains unleashed during a market panic.

As always, we can’t guarantee exactly what the future will look like or how our strategy will perform. But one thing you can count on is that we’re putting our own money behind our ideas, and showing you every step of the way. So whether we win, lose, or draw you can know that we have skin in the game alongside you.

Please note: The investments in our “Porter & Co. Top Positions” should not be considered current recommendations. These positions are the best performers across our publications – and the securities listed may (or may not) be above the current buy-up-to price. To learn more, visit the current recommendations page of the relevant service, here. To gain access or to learn more about our current recommendations, call our Customer Care team at 888-610-8895 or internationally at +1 443-815-4447.

Why The Next Crisis From The Persian Gulf Will Be Measured In Bushels, Not Barrels

Inside today’s Daily Journal…

• Essay: The Second Shock Coming Out Of Hormuz

• The rise of the 10-year note

• Big drop in the Korean stock market

• The UAE goes around the Strait

• Chart Of The Day… Silver

• Today’s Mailbag

Editor’s note: Porter’s newest book, 2029: The End of America is moving up the best-sellers list at Amazon. It’s now ranked #11 in its category. If you enjoy Porter’s deeply historical and fact-based analysis of our country’s problems, you’ll love this book. Please get a copy and leave a review.

Everyone is focused on oil, but they should be worried about food.

Global oil inventories fell by 250 million barrels in March and April. JPMorgan warned stockpiles in the wealthy world could drop to “operational stress levels” next month and to an “operational floor level” by September. Oil prices are going to go higher because everyone knows the Persian Gulf is the world’s gas station. Most people don’t know it is also the world’s chemistry set.

The same petrochemical plants in Qatar, Saudi Arabia, the UAE, Kuwait, and Iran that ship crude oil and liquefied natural gas (“LNG”) also ship out the nitrogen, sulfur, and phosphate inputs that feed roughly half the planet.

The Persian Gulf accounts for at least 20% of global seaborne fertilizer exports. The Middle East supplies 46% of globally traded urea. Iran by itself is the world’s second-largest urea exporter. The Strait of Hormuz handles nearly half of global seaborne sulfur trade. It also carries about one-third of seaborne methanol. These Gulf commodities are the primary engine of global food supply.

Natural gas is processed into ammonia. When combined with CO₂, it creates urea, the world’s most widely used nitrogen fertilizer for crop growth. Sulfur (a byproduct of gas and oil refining) is converted into sulfuric acid. This acid is the essential solvent used to dissolve phosphate rock to create phosphate fertilizers. Methanol is primarily a fuel, but it also serves as a critical processing agent and precursor for various specialized agricultural chemicals and formaldehyde-based fertilizer coatings that control nutrient release.

In summary, the Gulf provides both the energy (gas) to create nitrogen and the acid (sulfur) to unlock phosphorus – the two critical fertilizers that feed the entire world.

Shipping intelligence firm Kpler reported that fertilizer loadings in the first month of the war fell to roughly 1.5 million metric tons (“mt”), from about 3.4 million in the same period of 2025. That is a 56% drop in one month, on a product that does not store as well as crude oil and does not have a strategic reserve to draw down.

Sulfuric acid is a critical leverage point for the world’s economy. It is the most widely used industrial chemical. It is the feedstock for phosphate fertilizers. You cannot make DAP or MAP without it. DAP is the most widely used phosphorus fertilizer in the world. MAP, the world’s other main fertilizer, is used in areas where alkaline levels are high.

The real crisis – the food crisis – didn’t really begin until May 1. That’s when China, the world’s largest exporter of sulfuric acid, banned all sulfuric acid exports.

A lot of poor people are about to starve.

India’s exposure, in particular, is terrifying because 80% of India’s ammonia comes through the Persian Gulf. India is 60% dependent on imports for its fertilizer needs overall. And India is gearing up for the kharif planting season – rice, cotton, maize – that begins in June with the monsoon.

Bangladesh is the next domino. Bangladesh imports roughly 1.7 million tonnes of urea, 700,000 tonnes of TSP, 1.5 million tonnes of DAP, and 1.2 million tonnes of MOP (muriate of potash) a year — and the USDA describes its DAP and MOP markets as “fully” or “mostly” import-dependent. The country’s 170 million people get their rice from this imported fertilizer.

A 28% urea price increase in three weeks doesn’t matter much to a Maryland soybean farmer hedging on the Chicago Board Of Trade (“CBOT”) futures exchange. It is a different sentence when 60% of your country’s fertilizer is imported, 80% of your ammonia comes through the Strait of Hormuz, your harvest is single-cycle and rain-fed, and your purchasing power is already gutted. And there’s no diesel, either.

If urea and DAP are not on the docks in Mumbai, Chittagong, and Karachi by mid-June, the yield damage is locked in for this crop year. The famine would hit Southeast Asia by the end of the year.

We already know what will happen because, in April 2021, the Rajapaksa government of Sri Lanka banned chemical fertilizer imports. The government intended to make the country the world’s first 100% organic farming nation. The country went from being a rice exporter to importing 783,420 tonnes of rice at the peak of the crisis at a cost of $292.5 million – its first large-scale rice imports in decades. Sri Lankan rice output has still not returned to its pre-ban peak of 3 million metric tons. The food inflation that followed contributed to the country’s worst economic crisis in over 70 years.

That was one country that went seven months without global fertilizer. It is hard to imagine what will happen to the people of Southeast Asia if the Persian Gulf isn’t completely re-opened in the next month.

And rising food prices won’t only be a problem in Asia.

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Wheat, like all cereal grains, is a nitrogen-hungry crop. The single largest variable cost in growing wheat is fertilizer, and the single largest component of fertilizer cost is nitrogen. When urea doubles, the cost to grow next year’s crop goes up 25%–35%, depending on the producer’s contract structure. On Wednesday, U.S. wheat futures jumped 4.1% in a single session to close at $6.58 a bushel. Year-to-date, wheat is up roughly 30%. The breakout on the chart is the kind of base breakout any seasoned commodity trader would recognize as the start of a major move.

Because of an early heat dome across Kansas, Oklahoma, and the Texas panhandle, 34% of the winter wheat crop is already forming grain heads. This means that the crop is maturing two to three weeks early. Wheat plants that “head out” early produce smaller kernels, less starch, lower test weights, and dramatically lower yields per acre. But that’s not the real problem. The real problem is that American farmers planted the smallest wheat acreage since 1919.

Not since World War I, not since cars began to outnumber horses, has the United States, the world’s breadbasket, planted this little wheat. We are growing the smallest crop in 107 years, on the worst-rated acreage in a decade, in the middle of a Plains drought.

U.S. farmers didn’t plant less wheat because they wanted to. They planted less wheat because they couldn’t afford to plant it. The total cost per acre (seed, DAP, diesel, crop insurance premiums, equipment, labor, repairs, hauling, storage) to grow a wheat crop is roughly $685. The breakeven price for wheat, on a typical 45-bushel-per-acre Kansas yield, is therefore $15.20 a bushel. But wheat closed Wednesday at $6.58.

The American wheat farmer has been losing money on every acre for three straight years, even with crop-insurance subsidies and disaster payments propping up the income statement. Now the bank loans are coming due, the land is being foreclosed, and the equipment is being repossessed. U.S. farm bankruptcies are up 46% year-over-year (“YOY”), the steepest jump since the 2008-2010 collapse and the second-steepest in 40 years. Chapter 12 filings – the bankruptcy code provision specifically designed for family farmers – accelerated again in Q1 2026. Every farm that goes under takes acreage off the board. Sometimes permanently. Because the consolidation buyers are corporate operators who plant corn and soybeans (more profitable, easier to mechanize) instead of wheat.

This is how a supply shock builds. Not in a single bad-weather event. But in a multi-year squeeze where the marginal producer is wiped out one season at a time, until the only ones left can charge whatever the market will bear.

As supplies of food and other commodities tighten, prices will rise – far more than anyone expects. The U.S. Producer Price Index (“PPI”) is up 6% YOY already. Those increases will filter into consumer prices over the next 90 days, and they will keep rising. We’re facing the kind of inflationary shock we haven’t seen since the 1970s with a bond market that’s still pricing in inflation rates below 3% for the next decade.

War isn’t good for bonds. And there’s an entire generation of Americans who haven’t ever seen anything like what’s about to happen to the fixed-income markets. If the Gulf remains closed through the end of June, I think we’ll see 10-year yields above 6% – and rising. That’s not on anyone’s bond-market bingo card today.

In 2022, the bond market experienced a 237-basis point rise in 10-year yields as the massive COVID inflation was priced into the bond market. That produced a 13% loss in the investment-grade fixed-income markets (Bloomberg U.S. Aggregate Fixed Income Index). That was the worst year in the history (1976) of the index and wiped out $3.4 trillion in capital. That index doesn’t include high-yield bonds or muni bonds. If you include the losses in that part of the bond market, the total losses exceeded $4 trillion.

But as you probably know, there’s been a massive debt issuance boom. The bond market is now much larger than it was in 2022. Today a 150-basis point move higher in the 10-year Treasury yield (from 4.5% to 6.0%) would see losses of around $3 trillion in Treasuries, over $1 trillion in agency mortgage bonds, and over $1.2 trillion in investment-grade corporate bonds… plus another $1 trillion in everything else… for around $7 trillion in losses.

Long-term rates over 6% would push margin rates at brokerage firms to 10% or more. How much of the $1.3 trillion in margin debt would remain outstanding at those rates? Not much.

We’re heading into a huge crisis for the world and for our bond markets with a government that doesn’t seem to want an off ramp. Meanwhile, the stock market is trading at all-time, peak bubble levels. This is, without a doubt, the worst risk-to-reward set up I have ever seen in the stock market across my entire 30-year career. If there’s a happy ending here for investors, it will be a miracle.

How to hedge against these risks? Own the businesses that can convert cheap American energy into everything the world is now short. I’ve talked about many of these businesses before and they’ve all recently increased their profit forecasts, dramatically.

#1. Venture Global (VG) – a 52% increase to 2026 EBITDA guidance. Operates Calcasieu Pass and Plaquemines LNG export terminals, taking Henry Hub gas and selling cargos at international prices. Q1 revenue $4.6 billion (up 59% YoY), 130 cargos (up 111% YoY), 481 trillion British thermal units sold.

# 2. CF Industries (CF) – 64% YOY Q1 adjusted EBITDA. Largest North American nitrogen fertilizer producer. Takes Henry Hub gas, makes ammonia/urea/UAN, captures global nitrogen prices.

#3. ExxonMobil (XOM) – America’s leading integrated energy producer and the leading Permian Basin operator. Has the single largest opportunity to reap the rewards of huge global price increases. Analysts expect ExxonMobil’s 2026 earnings per share to grow 64% to 71% YOY, driven by the Hormuz-disrupted global pricing on every commodity Exxon sells. XOM was our first Complete Investor recommendation this year and our best idea from our “long energy” call for 2026.

#4. Targa Resources (TRGP) – 5.5% to 2026 EBITDA guidance midpoint. Permian-focused natural-gas liquids (“NGL”) producer-exporter. Fractionates at Mont Belvieu (Cedar Bayou complex in Texas), exports liquefied petroleum gas (“LPG”) through Galena Park on the Houston Ship Channel. Owns the molecules – does not just transport them.

Tell me what you think of today’s Journal: porterstansberrydirect@gmail.com

Good investing,

Porter Stansberry
Stevenson, Maryland

I invited Distressed Investing analysts Marty Fridson and Andrew Lipman, Tech Frontiers’ Erez Kalir, Trading Club’s Ross Hendricks, and Justin Brill (who shares details of a new Porter & Co. advisory) to join me for an urgent summit called The Final Melt-Up where we explored the state of the markets in much greater detail – and we all joined forces to lay out a step-by-step plan for navigating these treacherous times.

This all-hands broadcast was just released yesterday and if you haven’t watched it yet, please go here now because this may be one of the most important events we’ve ever organized and I was thrilled to be a part of it.

Together, the entire team joins Porter to lay out exactly how to both safeguard your wealth and grow it during this Final Melt-Up.

Watch it here now.

Presented by Jared Dillian Money

Ex-Lehman trader Jared Dillian breaks down exactly which beloved Wall Street trade he’s taking the other side of, and why it’s the kind of contrarian call that has made Porter Stansberry name him one of his favorite newsletter writers.

Click here to learn more about The Daily Dirtnap, and see exactly which trade Jared is on the other side of right now…

Editor’s Note: This post is sponsored by our friends at Jared Dillian Money. We only accept advertising from publishers we know to offer well-researched ideas vetted by a legal team, excellent customer service, and reasonable refund policies.

We do not, however, make any representations about their investment ideas, nor will we warrant them as equal to our own.

Porter & Co. also may disagree with the ideas presented by our sponsors but we understand there’s more than one way to skin a cat. With that said, you can check out what Jared is predicting by clicking here.

3 Things To Know Before We Go…

1. The 10-year Treasury yield pushed back above 4.5% this morning. Just as Porter predicted earlier this week, the benchmark climbed to 4.58%, its highest level in nearly a year, after the April consumer price index (“CPI”) recorded its largest increase since 2023. We’re now within striking distance of the 5% “out of the pool” level where Porter has warned he will recommend selling stocks to raise cash. However, the 4.5% threshold has triggered two White House interventions over the past 13 months – so don’t be surprised if the Trump administration attempts to talk rates down again with some positive headlines over the weekend.

2. South Korea’s KOSPI Index plunged 6% after touching 8,000 for the first time. Samsung Electronics, which together with SK Hynix accounts for 42% of the index, crashed nearly 9% as the company’s labor union announced an 18-day, 45,000-worker strike starting May 21. Chinese President Xi warned U.S. President Trump at the Beijing summit that Taiwan could push the two countries into “conflict,” and the KOSPI’s P/E reached an historically rich 30 after an 80%-plus year-to-date rally.

3. The UAE looks to bypass Hormuz. Abu Dhabi National Oil is accelerating a second pipeline to the Gulf of Oman, supplementing its existing 1.5 million barrel per day line that has kept UAE crude moving since Iran shut the Strait of Hormuz in late February. This new capacity won’t arrive in time to ease the current supply disruption, but it permanently shrinks Iran’s leverage in the next standoff – and, with Saudi Arabia expanding its Red Sea pipeline in parallel, it signals that the Persian Gulf’s biggest producers are quietly removing the Strait as a geopolitical weapon.

Chart Of The Day… Silver Gains Momentum

The gold-to-silver ratio fell to 54 in May – the second-lowest reading since February 2023. With silver up 20% to $87 per ounce while gold lags, the market is pricing in a widening structural deficit fueled by industrial demand for solar, electric vehicles, and AI semiconductors. The ratio has now fallen nearly 49% from its 2025 peak, signaling that silver is reclaiming its role as a leader in precious metals.

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Mailbag

“Comparing Time”

Phillip B. writes:

You have been comparing our current situation to just before 2000, but I started looking at it from the Reagan years. We had just gotten through a weak foreign-policy President and high inflation. The Reagan administration came in and started to cut regulations and taxes. We had about 18 months of iffy market, then it started taking off. I see the same thing now. Trump started out cutting back regulations that had a throttling effect, got through tax cuts and, whether you agree with his foreign policy or not, you can’t deny that he isn’t much more aggressive than Biden. So we had a slow start at first, then things started kicking in. The difference I see is that Reagan’s market took longer to get robust. Obviously, I don’t have the research capability like you, but it’s something I see that is similar. We were up quite a bit at the end of it all, maybe history will rhyme.

“Gold Counsel”

Robert S. writes:

Porter,

Thank you for your very insightful analysis. I am a Lifetime Member of Porter & Co. and also at Stansberry.

I read the statement in your recent Daily Journal about “gold tends to lag on the way up, and lead on the way down,” except this time, gold is hitting all-time highs while Bitcoin is falling.”

My question is – I have lots of gold equities. In this circumstance, should people cash them in and take cover in short-term T-bill-type debt until they have gone down during the general liquidation as a place that people can get capital in the storm? Or since they have gone up during the lead-up to this, should people continue to hold them?

Porter Comment: Gold is well above my model’s forecast range, currently. It’s had a huge move up. I expect its current correction will continue this year. But I can’t offer you any sensible advice about your gold stocks – I don’t know what you own, I don’t know the tax consequences of selling, and I don’t know how they fit into your portfolio or your strategy. (Also, it is against SEC regulations for me to offer anyone any specific advice about their holdings. We offer investment research to the public at-large, not to any individual.)

“2029: The End Of America”

Leslie V. writes:

Hi Porter,

I have just finished reading your latest book: 2029: The End of America, which both scared me a little and encouraged me a great deal. In the chapter relating to long-term investing in lumber, you didn’t specify any particular stocks you thought would be good candidates to buy, something you did for gold investing. Is there a reason for this?

Porter Comment: Is this a joke? Chapter 8 is the entire history of investing in timber. It discusses all of the publicly traded timber stocks and details a trading strategy that has produced 20% annual gains. How did you miss that, I wonder? In fact, I think Chapter 8 is the single best solution for dealing with this very risky market. I hope you’ll read it.

Please note: The investments in our “Porter & Co. Top Positions” should not be considered current recommendations. These positions are the best performers across our publications – and the securities listed may (or may not) be above the current buy-up-to price. To learn more, visit the current recommendations page of the relevant service, here. To gain access or to learn more about our current recommendations, call our Customer Care team at 888-610-8895 or internationally at +1 443-815-4447.

When (And Why) Violent Reversals Spell Opportunity In Distressed Debt

Inside today’s Daily Journal…

• Essay: From 4¢ On The Dollar To A 2,134% Return

• Money supply grows and grows and grows

• Nvidia outpaces silver

• Selling chips to China

• Chart Of The Day… Cerebras (CBRS)

• Today’s Mailbag

Editor’s note: Porter has turned the Journal over to Marty Fridson, lead analyst for Porter & Co.’s Distressed Investing. For nine consecutive years, Marty was ranked No. 1 in high-yield strategy. He has written seven books, the most recent of which is The Little Book Of Picking Top Stocks… and Marty is such a legend that there is a recently published book about corporate finance that devotes an entire chapter to him. We excerpted last year in the Daily Journal.

Here’s Marty…

Great news!…

For the first time ever, Porter & Co.’s analysts are united in their expectation of a violent reversal in stock prices that could wipe out decades of responsible savings and investments.

After you recover from your double take, consider this fuller statement: “That’s great news for distressed-debt buyers!” The best opportunities to build wealth in these securities come about precisely when investors totally capitulate.

According to conventional investing wisdom, “Bonds serve as a foundational component of an investment portfolio primarily to provide stability, income, and diversification.” That doesn’t describe the bonds that my Distressed Investing team has recommended during the past few years of positive growth in the economy and volatile but upward-trending equity prices. They’ve behaved more like growth stocks, with some returning over 40% by the time we recommended selling them.

During severe downturns, many of these bonds act like meme stocks – in a good way. Let’s see what that means.

The accompanying chart shows one-year total returns on some of the most deeply depressed corporate bonds as of March 9, 2009. That was the low point for such securities during the Great Recession. (The S&P 500 bottomed out three days earlier.)

The group’s top performer – Michaels Stores 13% maturing 11/1/2016 – was priced at $40 on a $1,000 face value… that’s four cents on the dollar. (In the standard bond-market notation used in the table, that appears as 4, with par value denoted as 100.) Over the next 12 months, the price shot up all the way to $830 (or 83 in bond-market lingo). Taking into account the income received during the period (based on an incredible beginning current yield of 13 ÷ 4 = 325%), as well as reinvestment income, the Michaels Stores bond delivered an almost unfathomable 2,134% total return.

Three other bonds in the group returned more than 1,000% as the debt market recovered. The returns of all 10 bonds exceeded 400%. And this wasn’t the result of a turnaround by one particular sector of the economy. These huge winners were spread across a wide range of industries.

How can bond prices ever descend to levels low enough so that they can rise high enough to produce such stratospheric returns? After all, bonds rank ahead of stocks in distribution of remaining company asset value in the event of a bankruptcy. That’s supposed to protect holders on the downside.

A clue to this conundrum lies in the fact that the prices of some of the bonds shown above rose five-fold to 20-fold despite being downgraded by the credit rating agencies. The capital gains didn’t arise primarily from fundamental improvements in the companies’ balance sheets or operations. Neither did these issues rally for the reason that bonds as a group ordinarily rise on a given day, namely a drop in interest rates. After all, when yields go down, bond prices go up, The Wall Street Journal regularly reminds its readers. The benchmark 10-year U.S. Treasury rate increased from 2.89% on March 9, 2009, to 3.70% on March 10, 2010.

No, the astronomical price rises you see in the chart resulted from a subsiding of the all-out panic that characterized the credit market at its low point during the Great Recession. In early 2009, capital had fled the corporate debt market on a massive scale. Under normal conditions, fund managers would have jumped in if they saw a bond dropping even a couple of points below a reasonable estimate of its fundamental value.

But now they weren’t looking for that kind of opportunity to grind out an edge of a few basis points over their benchmarks. They were solely concerned with damage control, hoping to avoid a crushing blow to their performance so severe that their future marketing efforts would never be able to overcome it.

With no other bidders on the scene, distressed-debt buyers saw a feast prepared before them. This was the sort of environment they dream about through all the lean years in between recessions and financial crises.

Let me hasten to add that even though the debt market was far less discriminating than usual in 2008-2009, it was certainly not the case that you could have bought any distressed bond at random and made out like a bandit. Many of the extremely low-priced bonds of that period defaulted, even though none of the ones in the chart did.

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But here’s the good news: You didn’t need to achieve a 100% success ratio or buy bonds that were trading at blood-chilling levels like four cents on the dollar to make out extraordinarily well from March 9, 2009, to March 9, 2010. Over that interval, the ICE BofA U.S. High Yield Distressed Index, consisting of bonds with yields 10 percentage points or more above comparable U.S. Treasury yields, delivered a total return of 147%. That was twice as high as the S&P 500’s 72% total return.

This was a rare instance where just being average entitled you to pat yourself on the back for having had the foresight and conviction to deploy capital in a decidedly out-of-favor sector of the financial market.

Here’s more good news… we sometimes recommend a combination of a distressed bond and the same company’s stock. We call it “topping off.” The bond market tends to be ahead of the stock market in recognizing that the worst has passed for a company, so the stock can often extend the gain after the bond has gotten back in line with its intrinsic value. Several of the issuers displayed in the chart are privately owned companies, so our “topping off” strategy wouldn’t have been applicable in those cases. But Rite Aid’s stock delivered a 625.81% return during the measurement period covered in the chart and, in the 20 days after its end, rose another 44.74%.

To profit from the comparable opportunities that will likely arise when investors head for the hills in the blowout we expect, stay tuned to Distressed Investing.

The way to prepare for that devastating event is to keep some dry powder in your portfolio and be ready to seize the day.

Porter invited me, my Distressed Investing colleague Andrew Lipman, and other Porter & Co. analysts to join him for an urgent summit called The Final Melt-Up where we explore all of this in much greater detail – and join forces to lay out a step-by-step plan for navigating today’s treacherous market.

This all-hands broadcast was just released today and if you haven’t watched it yet, please go here now because this may be one of the most important events we’ve ever organized and I was thrilled to be a part of it.

Together, the entire team joins Porter to lay out exactly how to both safeguard your wealth and grow it during this Final Melt-Up.

Watch it here now.

Tell us what you think of today’s Journal: porterstansberrydirect@gmail.com

Good investing,

Martin Fridson
New York, New York

3 Things To Know Before We Go…

1. Global money supply hits a record $121.9 trillion – the debasement continues. Global M2 money supply is up $17.1 trillion (16%) over the past two years. U.S. M2 alone climbed $1 trillion over the last year to a record $22.7 trillion, with February’s near-$200 billion jump tripling the H2 2025 average. And today the S&P 500 crossed 7,500 for the first time. The only rational response is to own scarce assets and anything that can’t be inflated away.

2. Nvidia surpasses silver in value. Nvidia (NVDA) is now the second-largest asset in the world – surpassing silver’s $5.07 trillion valuation (and well below gold’s $32 trillion) – reaching a staggering $5.52 trillion market cap. With this surge driven largely by a massive shift in capital toward AI infrastructure, Alphabet (GOOG) sits less than 4% away from also surpassing silver and becoming the second company in history to hit the $5 trillion mark.

3. Jensen Huang joins Trump in Beijing in a bid to unlock chip sales. The Nvidia CEO was a late addition to President Trump’s China delegation, in hopes of striking a deal to sell the company’s earlier-generation H200 AI chips in the country. The U.S. cleared roughly 10 Chinese buyers – including Alibaba, Tencent, ByteDance, and JD.com – to purchase the chips months ago, but Beijing has stalled sales over tampering concerns, and no chips have shipped to date. China is estimated to be a $50 billion annual market for Nvidia.

Chart Of The Day… Cerebras Systems

Next-generation chipmaker Cerebras Systems (CBRS) became the largest pure-play artificial intelligence initial public offering (“IPO”) in history today, trading as high as $385 per share – valuing the company well over $100 billion – more than 100% above its already higher-than-expected IPO price of $185.

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Mailbag

“Concerns About Financial Market Bubble

Alexander L. writes:

Hi,

I am a subscriber to Porter Stansberry’s Complete Investor and read his articles whenever they come through via email.

I have also invested based on Porter’s recommendations.

I was alarmed by Wednesday’s Journal and wanted to ask a few questions. Currently, my portfolio is spread amongst high-performing semiconductor stocks, stocks related to the space industry, gold royalty stocks, silver/copper mining stocks, and energy stocks.

I am concerned about the effect the bursting bubble will have on my investments, and seek some guidance regarding which ones I should potentially sell in the coming days.

Would it be prudent to take profits made from semiconductor stocks now and sell? If the Mag 7 (in whom I have not invested) are reliant on credit, will the picks and shovels companies supplying materials/chips for AI also go down with them?

Next, is it worth retaining my gold royalty stocks, or are they also due to fall as the bubble bursts? I keep reading articles about the gold bull run ramping up, rather than coming to an end.

Next, is it worth retaining my energy stocks, or are they also due to fall as the bubble bursts?

Next, is it worth retaining my silver and copper stocks, or are they also due to fall as the bubble bursts?

Finally, an article by Porter a couple of days ago promoted the value of not packing and retaining/holding shares long-term instead of panic selling. This seems starkly at odds with Wednesday’s article predicting an impending bubble?

How might I reconcile these two Porter perspectives in order to maintain my portfolio?

Porter Comment: You know, we’re going to get a thousand varieties of this email. With everyone asking about this or that stock, this or that strategy, etc. What should I do now…?!? I completely understand. But I wish you would all understand: we’ve told you every single thing we’d want to know, from you, if our roles were reversed. I have done that faithfully – right and wrong – for 30 years. I tell it as straight as I can, and in the exact same way I would want you to tell it to me. I do not change – as you’d know if you’ve been reading me for 30 years.

Here are the resources we’ve built to help you:

#1. We’ve given you the most well-proven, resilient portfolio structure that has ever been built: Porter’s Permanent Portfolio. We’ve told you, down to every single position, what we would own, at what percentage, to make sure that your assets are safe. This is a non-correlated (to the stock market) strategy that’s designed to provide equity-like returns with much less risk. It is what we recommend, first and foremost, to retired investors.

#2. To folks with more risk tolerance: we have the Better Than Buffett Index. It’s working and we’re publishing a complete update this week. And we have other specialty products to guide you to outstanding individual investments, like Marty’s Distressed Investing. It’s working gang-busters – almost 30% a year in mostly bonds! We have Erez Kalir’s buy list in tech and biotech: Tech Frontiers is returning around 40% a year. We have our Best Buys – which have been delivering 30% annual gains in ultra-high quality stocks. I sincerely don’t know of a better research group, anywhere, that does as good of a job as we do researching high-quality investments. And please, if you think that’s wrong, tell me who does better work than us. I want to read them!

#3. We have said, again and again and again, that no one – and certainly not us – can predict the future. “I’ve got two balls. Neither of them are crystal.” We have no idea how far this bubble might run. Japanese stocks got to 90x earnings. That could happen here, too. But I am fairly certain this bubble will not come to a good end. And I am fairly certain the top is in – or close. I think it’s prudent to be aware of the risks, and as I’ve said, be ready to sell. I’ve told you – and everyone else – that I will alter our Permanent Portfolio allocation (stocks / bonds / gold / cash) when, or if, the 10-year yield goes over 5%.

But, I’m open to suggestions! Tell me what more we could / should do for our subscribers? We love all of you. And we are doing our best. Market bottoms are easy and riskless. Market tops are impossible. If you’re wrong – either way – you’ll lose a lot of money. My strong advice: err on the side of liquidity.

“Velocity Not Valuation Defines A Bubble”

Nathan S. writes:

I own 6,200 shares of SOXL [a semiconductor index fund], which has seen a nearly 13,000% gain since I purchased it. I have been a nervous wreck this week, thinking I should sell it all. And run. After reading your recent Daily Journal, I think I have no time to waste!

I also own a sizable amount of real gold and silver coins, which, as you know, have seen fabulous gains over the years. Not stocks, I have the bullion, well hidden. No capital gains!

I also took your advice and purchased undeveloped real estate, as you were doing in Florida a few years ago.

I’m not feeling well physically, so I almost didn’t read your email today.

I am a retired physician, but I have made my fortune in investments and retired early. Never have I used a professional financial advisor. A financial advisor would have recommended me to sell SOXL years ago.

Porter Comment: It was a brilliant strategy.

Two things have been certain since about 1980:

1. The world is going digital. Everything, sooner or later, is going to end up on a chip.

2. The world’s governments are going to print.

The two best investments: chips and gold.

Bravo!

And, I’m fairly certain, it will continue to work, over time.

But – and I do not know when – there is virtually certain to be a major financial correction, for the reasons that I’ve outlined.

I hope you’ll read my book. I think it would really help: 2029: The End Of America

But, sincerely, congratulations on your investment wisdom. Brilliant.

“The Bubble Is Forming A Top”

Matt V. writes:

Terrific memo, Porter. A sobering historical reminder about how this must end sooner or later and how it is never different this time. I’m keeping stops tight, building up dry powder, stockpiling ammo, canned meat, and alcohol. I’m a horse meeting water.

One question though: If P&C companies hold bonds… they have claims on productive assets, right? So if there is an epic crash, won’t the bond holders get to foreclose and take those assets at pennies on the dollar? Yeah, it will be a short-term blip. But in the long run the seized assets should do well? Kind of like the railroads being sold off for pennies on the dollar? Although perhaps the bondholders were the ones taking the hit then?

Porter Comment: Matt, I think you’re way off base, unfortunately. Property and casualty (P&C) firms don’t ordinarily buy distressed debt like you’re imagining. In fact, they are usually the forced sellers that people like Marty make a killing on. I hope you’ll read the book (2029: The End of America). I’ve updated a strategy I learned from Steve Sjuggerud 20 years ago. It’s an asset that always grows, consistently at the same rate, forever. It’s much safer than a bond. It is completely immune to war, central banks, and technology. And it is, unquestionably, the most resilient store of wealth that has ever existed. I can show you how to earn 20% a year with it. It also happens to be in a perfect buying window right now. Here’s the Amazon link.

Please note: The investments in our “Porter & Co. Top Positions” should not be considered current recommendations. These positions are the best performers across our publications – and the securities listed may (or may not) be above the current buy-up-to price. To learn more, visit the current recommendations page of the relevant service, here. To gain access or to learn more about our current recommendations, call our Customer Care team at 888-610-8895 or internationally at +1 443-815-4447.

Velocity, Not Valuation Defines A Bubble

Inside today’s Daily Journal…

• Essay: The Greatest Financial Market Bubble Is Forming A Top

• PPI comes in (super) hot

• Good days for Google

• Pulling from strategic oil reserves

• Chart Of The Day… Franco-Nevada

• Today’s Mailbag

We’re living through the biggest financial mania in history.

On April 24, the Semiconductor Index (SOX) closed higher for the 18th consecutive session. That’s the longest daily winning streak in the 32-year history of the index.

The move eclipsed a 15-day run in 2014. But that move only produced a 7.8% gain. During the April rally, the SOX rose 47%. The move was led by Intel (INTC), which has gone up 129% in the last six weeks.

Forgive the math, but I need to quantify these extraordinary moves.

The Semiconductor Index (SOX) has annualized volatility of 30% to 35%. Thus, the expected volatility over any 18-day period is approximately 1.2% to 1.5%. A 47% gain in 18 days is 4.1 standard deviations away from the mean. In a normal distribution, this kind of four-sigma event occurs less than 0.01% of the time, or roughly once every 40 to 50 years of trading days.

Something is happening in the markets that is not normal. And what comes next will not be normal, either.

On May 4, the SOX made an all-time high – and then closed below its opening price for the session. A daily reversal in overbought territory – with bearish relative strength index (“RSI”) divergence and a stochastic line-cross at extremes – is a classic sign of a top.

Then, yesterday, May 12, the index dropped 3.01% in a single session to close at 11,717. But the Nasdaq is still reaching new highs. That divergence – leadership rolling over while the broad index extends – is not a bullish setup.

It is the precise dynamic that preceded March 2000.

And guess what? On May 5, the weekly ratio of the VanEck Semiconductor ETF (SMH) to the Nasdaq-100 (QQQ) hit a 26-year peak – its highest level since May 2000, exactly two months after the dot-com bubble peaked in March 2000.

There are two other factors you must understand.

1. This top formed as the economy is experiencing rising inflation and an oil-price shock. April consumer price index (“CPI”) rose 3.8% year-over-year (“YOY”), with energy increasing 17.9% and gasoline 28.4%. Higher inflation will lead to higher bond yields. Falling bond prices will trigger a panic out of financial assets and cause a recession. As I’ve been forecasting all year, the 10-year U.S. Treasury yield will go above 5% and, when that happens, stock prices will fall.

2. What enabled this massive bubble and what will make its collapse far worse than most people expect, is this: credit has been mis-priced for far, far too long. Credit is way too cheap and far too much has been borrowed. The ICE BofA U.S. High Yield Option-Adjusted Spread closed May 11 at 2.79% – roughly half its post-1996 average. The margin debt of FINRA member firms – FINRA oversees brokers and trading in the U.S. – hit $1.22 trillion in March, up 38.7% YOY. Money is virtually free.

Market conditions like these: extremely cheap credit, wildly surging markets, and extremely overvalued stocks have appeared together before.

But only three times.

The U.S. cyclically adjusted price-to-earnings (“CAPE”) ratio currently sits at 40. Three prior comparison points exist in the modern record. In 1929: 21x. In 1972: 21x. At the dot-com peak in March 2000: 35x. The historical mean is 17.

The 2026 reading is the highest sustained CAPE in the history of U.S. equity markets.

But that’s not why it’s a bubble.

Most investors think a bubble is defined by the absolute level of valuation. It isn’t. It’s defined by the velocity of the deviation from trend. When prices move two standard deviations above their normalized growth path – not their nominal high, their trend – the asset has reverted to the trend line every time.

The trend, not the prior high. The arithmetic: a reversion from CAPE 40 to a historical mean CAPE of 17 implies a price decline of roughly 58%.

These mean reversions aren’t pleasant. They are violent because the leverage that drove the move up must be unwound, quickly. The selling isn’t conviction selling. It’s margin selling. Which brings us to credit.

The financial press treats the artificial intelligence (“AI”) rally as an earnings story. It is not. It is a credit story, and the credit cycle just turned.

The four largest hyperscalers – Amazon (AMZN), Alphabet (GOOG), Meta (META), and Microsoft (MSFT) – have collectively guided to between $610 billion and $725 billion of capital expenditure in 2026. Total data center spending is currently projected to reach $3 trillion by 2029.

That’s roughly 10% of U.S. GDP!

Some of that is being paid from cash flow. But most is not.

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Data center debt issuance hit $625 billion in 2025, 4x the $166 billion issued in 2023. Oracle (ORCL) alone has accumulated roughly $100 billion of debt. It closed a $16 billion financing on a single Michigan data center in April. Meta is preparing as much as $25 billion in new investment-grade bonds.

CoreWeave (CRWV) is the cleanest case study of how financing has built this bubble. It has raised $28 billion in equity and debt in the last 12 months.

The company closed an $8.5 billion delayed-draw term loan in March. That was the first investment-grade financing in history secured by GPU hardware and customer contracts, rated A3 by Moody’s. Before March 2026, no one had ever managed to convince Moody’s to give an investment-grade rating to a loan backed only by GPU chips. Historically, GPUs were considered too volatile, too short-lived, and too easily made obsolete to support an investment-grade rating. And Moody’s gave this line of credit an A3 rating – that’s three notches into investment grade. That’s the kind utilities and railroads get.

The bond matures in March 2032. That’s a six-year maturity against assets (Hopper-generation GPUs) that Nvidia (NVDA) is already several development cycles past. This is a six-year loan against an asset with a two-to-four-year life span. The cash flows depend on payments from a company (OpenAI) that, by its own backers’ projections, is going to lose $35 billion in 2027.

OpenAI was valued at $30 billion in January 2023. Today: $750 billion. Anthropic: $4 billion in April 2022, $350 billion today. Total AI venture capital raised in 2025 alone: more than $200 billion – 60% of all U.S. venture capital deployed that year.

Where did all of the money come from…?

The Federal Reserve has held real interest rates suppressed for the better part of two decades. Cheap credit creates the illusion that capital is infinite. When capital appears infinite, every project looks accretive at the margin – including the marginal data center that will never earn its cost of capital. This is malinvestment in the precise sense that Austrian economist Ludwig von Mises used the word.

The signal price – the price of money – is broken. So entrepreneurs allocate capital toward projects whose returns are visible only under the false price. When the price normalizes, the projects don’t just become marginal. They become uneconomic in bulk.

And nothing creates malinvestment – aka, bubbles – like revolutionary technology!

Let’s compare the AI bubble to the railroad bubble. Total U.S. railroad track mileage more than doubled between 1850 and 1857. Guess how?

The number of chartered American banks doubled over roughly the same period. Outstanding bank loans jumped 36% in a single year, 1854. The contemporary press identified the cause with characteristic frankness. The New York Herald in June 1857:

Paper bubbles of all descriptions, a general scramble for western lands… What can be the end of all this but another general collapse like that of 1837, only upon a much grander scale?

The trigger arrived August 24, 1857: a single bank branch – the Ohio Life Insurance and Trust Company’s New York office – told depositors it could not pay them their money. The news traveled by Samuel Morse’s telegraph, which had not existed a decade earlier. By the end of 1858, U.S. GDP had fallen 2%, and a generation of railroad lines – Michigan Central, Erie and Pittsburgh, Fort Wayne and Chicago – were in bankruptcy.

The railroads were not a fad. They were the most important infrastructure of the 19th century. They remade the geography of American commerce. They were also, in 1857, dramatically overbuilt against the actual demand for commercial and passenger traffic. The technology was correct. The credit-financed pace of deployment was not.

That is the definition of malinvestment. The underlying productive innovation is real. The capital allocation against it is not. The error is one of velocity, not direction.

We saw this play out again with radio. (For the kids reading who have never used a radio, this was an early form of wireless social networking.)

RCA was the Nvidia of the Jazz Age. The stock traded at $5.825 in 1921 and at $420 by 1928, before a 5-for-1 split. Post-split, RCA peaked at $114.75 in September 1929. By May 1932, it traded at $2.625 – a decline of 98%. The 1920s gain was 200-fold. The collapse erased it entirely.

RCA had real cash flows. Total U.S. radio equipment sales rose 14-fold from $60 million in 1922 to $843 million in 1929 – an expansion justified by consumer adoption. The technology was, again, correct. But the financing and the velocity weren’t.

The 1929 mania was financed by what was then referred to as “call money” – broker margin loans that could be revoked at any time. When the call came, the leverage worked in reverse. The parallel to today’s margin debt – $1.22 trillion, up 38.7% in 12 months – isn’t an analogy. It is the same phenomenon.

And as I’ve told you before, the era that I believe is most like our current macroeconomic situation: the Nifty Fifty of 1972.

The Nifty Fifty were not speculative junk. They were the most successful operating businesses in America. Through 1972, the group averaged over 22% annual earnings growth across the prior five years. They were good businesses: average return on equity was over 22% These were IBM, Kodak, Coca-Cola, Johnson & Johnson, Xerox, Procter & Gamble, and others – the dominant franchises of their era. They were “one decision” stocks. All you had to do was decide to buy them and your fortune was assured.

At year-end 1972, the average P/E of the Nifty Fifty was about 43. They had compounded 28% per year for five years. Then OPEC raised oil prices in October 1973.

From 1973 through 1977, the Nifty Fifty compounded at negative 4.4% annually. And within the Nifty Fifty, the stocks with the highest starting P/E ratios produced the lowest subsequent returns. Value matters. Maybe not this week. Maybe not this month. But over time, it is the most important variable. The shareholders who paid 1972 prices did not recover for a generation.

Finally, there’s the tech bubble most of you lived through.

In March 2000, Cisco Systems (CSCO) briefly became the most valuable company in the world, with a market capitalization north of $500 billion at peak. P/E ratio: near 200. By 2001, Cisco had lost 77.4% of that market capitalization. It took 25 years – until December 10, 2025 – for the stock to close at a new record high.

Sun Microsystems peaked at roughly $200 billion in market capitalization. Oracle bought what was left for $7 billion in 2010. Scott McNealy, Sun’s co-founder, said this in a 2002 Business Week interview:

At 10 times revenue, to give you a 10-year payback, I have to pay you 100% of revenue for 10 straight years in dividends. That assumes I can get that by my shareholders. That assumes I have zero cost of goods sold, which is very hard for a computer company. That assumes zero expenses, which is really hard with 39,000 employees. That assumes I pay no taxes, which is very hard. And that assumes you pay no taxes on your dividends, which is kind of illegal… What were you thinking?

Sun’s investors at 10x revenue lost 95% of their money. Palantir Technologies (PLTR) today trades at over 100x sales. Tesla (TSLA) trades at over 300x earnings – and earnings are down 61% with negative revenue growth.

What led to the collapse of the 2000-era tech bubble: velocity and credit led to enormous amounts of unused capacity.

In late 2002, consulting firm TeleGeography estimated that of the long-haul fiber installed during the boom in Europe and North America, only 10% was carrying any signal at all. And among the fibers that were lit, only 10% of available wavelengths were in use. Roughly 99% of the installed capacity was unused.

The credit-financed buildout – premised on the claim, repeated by every analyst on the Street, that internet traffic was doubling every 100 days – was off by almost two orders of magnitude. Actual internet traffic doubled every 12 months. The claim was wrong by a factor of 30.

The technology worked. And it changed the world over the next 20 years. But the capital deployed against that growth was off by 30x. The picks-and-shovels providers – Nortel, Lucent, Cisco, JDS Uniphase, Sun – collapsed.

Now overlay that on what’s happening today.

Investors have stretched server depreciation schedules from the three years they used in 2020 to six years today. That accounting choice added billions to reported earnings.

Meta has extended the useful life of its servers three times in three years – from 4.0 to 4.5 to 5.0 to 5.5 years – at each step booking a non-cash reduction in depreciation expense. In January 2025 alone, Meta’s extension reduced reported depreciation by $2.9 billion.

In the same quarter, Amazon did the opposite. It shortened server life from six years back to five, took a $700 million operating income hit. Amazon’s CFO cited “the increased pace of technology development, particularly in the area of artificial intelligence and machine learning.”

The same physical asset – a GPU rack – is being depreciated over five years at one hyperscaler and 5.5 years at another. The accounting choice produces a $3.6 billion earnings quality gap. The asset itself is identical.

The reality is that Nvidia is on an annual product cadence now: Hopper 2022, Blackwell 2024, Rubin 2026, Rubin Ultra 2027. Hopper rental rates have already fallen 70% in 18 months – from roughly $8 to $10 per GPU-hour in 2024 to $2.85 to $3.50 today.

Hyperscalers are reporting earnings based on the assumption that today’s GPU will be earning revenue in 2030. The market is paying valuations based on those earnings.

Meanwhile, Nvidia’s product roadmap explicitly assumes the same GPU will be functionally obsolete for its primary workload by 2028. Both things cannot be true. The reconciliation will be a write-down.

And then there is the cash flow itself.

Microsoft’s remaining performance obligations – the contracted future revenue commitments on which its 26% cloud growth narrative depends – total $625 billion. Of that, 45% is concentrated in a single customer: OpenAI. OpenAI will lose $17 billion in 2026 and $35 billion in 2027. Microsoft has invested billions in OpenAI, so that OpenAI can pay Microsoft for Azure. Likewise, Nvidia has committed to invest $100 billion in OpenAI so OpenAI can buy Nvidia products.

See the problem?

This is the same vendor-financing structure that destroyed Nortel and Lucent in 2001. They sold equipment to telecoms by lending the telecoms the money to buy it. The revenue was booked immediately. When the telecoms went under, the receivables were uncollectible and the inventory was worthless.

Total AI revenue is estimated at less than $50 billion annually. Total AI investment is north of $1 trillion. The ratio is 50 to 1, financed in part by six-year debt against two-year assets.

This is not going to end well.

The Austrian credit-cycle indicators are warning us that the bubble is deflating.

Bitcoin hit an all-time high of $126,198 on October 6, 2025. On May 11, 2026, it traded at $81,224 – down 36% from the high and 22% YOY.

Bitcoin tends to lead the credit cycle on the way up and on the way down. Gold tends to lag credit on the way up and to lead defaults on the way down. The divergence over the last six months – gold making new highs while Bitcoin sells off 36% and equities ripped vertically into a key reversal – is not normal.

It is what the leading edge of a credit contraction looks like.

The 1857 panic produced a 2% GDP decline in 1858 – and eliminated half a generation of railroad capital structure. Tracks that survived were bought for cents on the dollar. Railroad investors who held on the way down lost almost everything. Investors who showed up with cash bought the productive infrastructure of the country for two decades of compounded returns.

The 1929 mania produced an 89% decline in the Dow over 34 months. RCA fell 98%. The technology survived. The shareholders did not.

The 1972 mania broke on the OPEC oil embargo and produced a 50% two-year decline in the highest-quality businesses in America. The franchises continued. The investors who bought at 43x earnings did not recover their purchasing power for a generation.

The 2000 mania produced a 78% decline in the Nasdaq Composite and required 15 years to recover. Cisco took 25 years to recover. The internet was real. The capital allocated to the internet via Cisco’s stock was not.

In every case, the technological premise of the bubble was correct. The price paid for it was not. And in every case, the reversion was not a “breather” or a “pullback.” It was a violent, leverage-driven realignment to a normalized earnings stream.

The trigger is always the marginal piece of credit that someone declined to roll.

In 1857, it was a single Ohio insurance company’s branch office in New York. In 1929, it was call money. In 1973, it was OPEC. In 2000, it was the failure of vendor-financed telecoms to make their interest payments.

Here’s a picture of this bubble that you should put on your wall:

• A 18-day vertical run in semiconductors

• 30% concentration of the index in seven stocks

• $725 billion of capex, in one year, from four companies

• $625 billion of data center debt in a single year

• Six-year A-rated loans against two-year assets

• The 22% YOY decline in Bitcoin into new all-time highs in gold

• CAPE of 40

• The high-yield spread of 2.79%

That’s what a bubble looks like.

And the top is in.

Tell me what you think of today’s Journal: porterstansberrydirect@gmail.com

Good investing,

Porter Stansberry
Stevenson, Maryland

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Presented by Paradigm Press

Oil Prices Could Send These Three Stocks Soaring

If the turmoil in the Middle East has you rushing to buy oil stocks right now – STOP and read this.

The biggest gains from the last oil crisis didn’t come from oil companies.

The top-performing energy stocks were tiny. Practically unknown. And every major oil company in America was completely dependent on them.

Today, it’s the exact scenario— except the scale is roughly 13,000 times larger.

That’s why I just vetted three of these companies in this exact same position.

But this time it’s not just oil that’s driving them higher…

Trump’s latest initiative could lead this sector to a major surge.

Editor’s Note: Keep in mind, we only accept advertising from publishers we know to offer well-researched ideas vetted by a legal team, excellent customer service, and reasonable refund policies. Paradigm Press is one such partner. We do not, however, under any circumstances make any representations about their investment ideas or strategies, nor will we warrant them as equal to our own. We do recognize that the markets are tempestuous and, at times, ideas that we may not endorse prove valuable.

3 Things To Know Before We Go…

1. A hot PPI brings rate hikes back to the table. The producer price index (“PPI”) surged to 6.0% in April versus the 4.9% expected – the hottest increase since January 2023, likely leading to more inflation going forward. Now, if firms pass costs through, CPI stays hot and the Fed stays tight… or raises interest rates. Meanwhile, as the chart reveals, the consumer is already five years deep in higher prices for nearly everything.

2. Google is building the future on Earth – and in space. Two announcements this week show Alphabet (GOOG), up 68% since its Complete Investor recommendation, has the broadest AI footprint in tech. Google recently unveiled its next-generation laptop platform, integrating Gemini AI agents with Android. Second, Google confirmed talks with SpaceX about using its rockets to put data centers into space.

3. U.S. oil exports have kept a lid on prices so far… Record net exports of 5.9 million barrels per day (“bpd”) – up more than 2.5 million bpd since March – have slowed the rise in oil prices from Strait of Hormuz supply disruptions. But roughly half of that increase has come from the Strategic Petroleum Reserve (“SPR”), which last week released a record 1.23 million bpd and holds the lowest level since the 1980s – so more is not likely to flow. This gives President Trump another month or two to end the war in Iran before markets start to price in a supply cliff.

Chart Of The Day… Franco-Nevada (FNV)

Franco-Nevada (FNV) delivered a solid Q1 performance yesterday, with revenue climbing 10% YOY to $305 million and EPS of $0.85, coming in 8% ahead of analyst expectations. Total GEOs (gold equivalent ounces) outperformed despite ongoing production pauses at one of its largest assets, Cobre Panama – a signal that its diversified royalty portfolio remains a premier hedge in a high gold price environment.

Mailbag

“More Details On ‘Getting Out Of The Pool’”

Tom G. writes:

Porter,

Thank you so much for your updates. It is very much appreciated.

I would like to have you clarify one thing though. As the events begin to happen as you have been calling, and they are happening, we should “get out of the pool” because we are in for a heck of a correction. Are you also talking about Porter’s Permanent Portfolio and Complete Investor portfolio to liquidate? Then the biotech stocks that Tech Frontiers editor Erez Kalir has suggested probably will get hit up hard also if rates go up. We purchased them at a time when we were anticipating interest rates going down.

I would assume the gold royalty companies should do quite well when we get the big correction in the stock market.

Am I thinking correctly?

Thanks, Porter

Porter Comment: If we see rates (10-year US Treasury interest rates) move above 5%, I will recommend increasing the cash portion of Porter’s Permanent Portfolio from 25% to 50%, by liquidating the property and casualty (P&C) insurance allocation. We will have to adjust the ratings across the Complete Investor list of recommendations and likewise with Erez’s portfolio.

“Replacing MSFT With GOOG”

Wayne H. writes:

Would it be prudent to replace MSFT with GOOG in Porter’s Permanent Portfolio since Erez thinks MSFT is better as a short than long position?

Porter Comment: Probably, but, as a rule, we do not make adjustments to the Permanent Portfolio until the annual rebalancing in September.

“Your Thoughts On Intel”

Dave S. writes:

I never heard of Cerebras [which Porter wrote about in Monday’s Daily Journal] before. Sounds like something that will tame the other chipmakers a bit. Speaking of that, what is going on with Intel (INTC)? Do they have some special chip up their sleeve too?

Thanks for the info and keep it coming.

Porter Comment: When there’s 10% of GDP capital spending on data centers over a five-year period, everything in the space is going to go up. The question is: what will the return on those investments be…?

Please note: The investments in our “Porter & Co. Top Positions” should not be considered current recommendations. These positions are the best performers across our publications – and the securities listed may (or may not) be above the current buy-up-to price. To learn more, visit the current recommendations page of the relevant service, here. To gain access or to learn more about our current recommendations, call our Customer Care team at 888-610-8895 or internationally at +1 443-815-4447.

The Quiet, Unstoppable Power Of Compounding

Inside today’s Daily Journal…

• Essay: No Reason To Panic

• Loading up on leverage

• Venture Global finds its groove

• No surprise… inflation is back

• Chart Of The Day… British American Tobacco (BTI)

• Today’s Mailbag

Editor’s note: Last month Porter & Co. partnered with Emmet Savage and his team at MyWallSt – providing access to Emmet’s two main services, Prophet and Nova… And the results have been remarkable – the three most recent stocks recommended in Prophet, for example, have delivered an average return of 35% over three weeks.

Today, Porter turns the Journal over to Emmet one last time to reflect on his investment philosophy.

Here is Emmet Savage from MyWallSt…

My investing strategy has been forged over 30 years, in which I’ve seen one lost decade, two bubbles, three major stock market crashes, countless corrections, and incessant warnings, naysayers, doubters, and talking heads calling for the end of days.

Despite all that, the second half of my investing career has included one of the most enduring bull runs we’ve been lucky enough to experience. Year after year, I have been buying companies I believe in – rain or shine, red days or green – and am now at a point where I am proud to say I have created generational wealth for myself and my family… and my readers.

Throughout that time, the one constant I have been able to rely on is my temperament. When you sit at a screen during a period of intense market volatility, the urge to “do something” is overpowering. The financial media feeds you a non-stop loop of panic. During these times, a voice in your head whispers… pull your money out, sit on the sidelines, and wait for the dust to settle.

It sounds logical. It sounds safe. But history tells a completely different story: timing the market is not only impossible, it is one of the most costly mistakes an investor can make.

Decades of experience through all market cycles have made me realize that doing nothing is a superpower. And the data backs it up. If you look back over the past 30 years, missing just the 10 best days of the market would have cut your total returns in half. If you missed the 30 best days, your returns would have been slashed by an incredible 84%.

In practice, avoiding the market’s bad days almost always means missing out on its greatest highs. According to historical data compiled by Hartford Funds, an astonishing 76% of the stock market’s best days have occurred during a bear market or during the first two months of a bull market.

Think about what that means. The very moments when the market feels the most terrifying, unpredictable, and volatile are exactly when it stages its most explosive recoveries. If you panic and retreat to cash, you aren’t protecting your wealth – you’re locking in your losses and locking yourself out of the rebound.

True investing is about giving your money the time it needs to grow. When you remain fully invested through all market cycles, your returns begin to generate their own returns. That is the real magic – that is the quiet, unstoppable power of compounding. But compounding demands an uninterrupted timeline. Every time you jump in and out of the market, you reset the clock and destroy that momentum.

The market will always give you a reason to be afraid. There will always be a new geopolitical crisis, an economic downturn, or a terrifying headline. Our partnership with Porter & Co launched in the middle of war in Iran and one of history’s greatest energy shocks. There was a very real temptation to postpone until we hit calmer waters, but that would have gone against everything that got me to this point. Forging ahead rewarded subscribers with incredible returns out of the gate, with our three latest additions to Prophet delivering an average return of 35% in less than three weeks.

Our top three performers in Nova surpass that with an incredible 49% average return since April 1.

I’m acutely aware that these aren’t normal market conditions, but I’m just as aware that hesitation and market timing could have led to our subscribers missing out on these gains. The secret to creating generational wealth isn’t a flawless economic forecast; it’s the discipline to be patient.

Stop trying to time the market. Maximize your time in the market. Stay the course, ride out the volatility, and let compounding do the heavy lifting. Thirty years from now, you and your family will be profoundly glad you did.

Just take it from those who have already made the plunge:

I am so pleased with Prophet. Thank you for helping me gain access to this dynamic investment opportunity. I am up 12% in two weeks, and have covered my lifetime subscription fee by time and a half. – Charles G.

With three closed winners and 10 open winners, I am currently up $5,908.19, so at the moment I’ve covered my $4,000 lifetime subscription and I didn’t invest all that much money… Since it was Porter recommending these guys, I chose the lifetime subscription – a great choice. – Keith M.

I’m up 15% since 4/16 with the Prophet portfolio. – Lee B.

I have recouped my subscription fee in the first weeks of following the recommendations of Prophet. I am very curious to see the results moving forward. Thank you for bringing this very interesting research to us. – Lori C.

Emmet Savage

MyWallSt

Editor’s note: The partnership with MyWallSt officially closed last week. But because of its tremendous popularity with readers – as shown by the testimonials above – we have reopened access to Prophet and Nova for a limited time. Click here to get the details.

Tell us what you think of today’s Journal: porterstansberrydirect@gmail.com

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Presented By Crowdability

The SpaceX Text Message You Were Never Supposed to See

A Wall Street insider just revealed that the SpaceX IPO may be coming sooner than expected.

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Editor’s Note: Keep in mind, we only accept advertising from publishers we know to offer well-researched ideas vetted by a legal team, excellent customer service, and reasonable refund policies. Crowdability is one such partner. We do not, however, under any circumstances make any representations about their investment ideas or strategies, nor will we warrant them as equal to our own. We do recognize that the markets are tempestuous and, at times, ideas that we may not endorse prove valuable.

3 Things To Know Before We Go…

1. Investors load up on leverage. The average investor is using a record 86% of the available margin debt in their brokerage accounts, up from 60% in the last decade. Meanwhile, the assets under management in leveraged exchange-traded funds (“ETF”) have soared to a new all-time high of $38 billion, up four-fold since 2024. The rampant use of leverage puts the market at risk of a violent unwind, as falling prices could cause a cascade of margin calls and forced stock sales.

2. Venture Global raises guidance by 50%. Complete Investor recommendation Venture Global (VG) just delivered one of the cleanest beats of LNG earnings season. The liquefied natural gas (“LNG”) exporter reported Q1 earnings per share of $0.19, blowing past the $0.12 estimate, with revenue up 59% to $4.6 billion as exports surged 111%. Management raised full-year earnings guidance by 50%. This is what happens when the build cycle hits the cash flow cycle during the strongest global LNG demand environment in history.

3. Inflation jumps to a near three-year high on rising energy prices. This morning, the Bureau of Labor Statistics (“BLS”) reported its consumer price index (“CPI”) rose 0.6% in April and 3.8% year-over-year (“YOY”) – the biggest annual increase since May 2023, and above the 3.7% economists expected. Energy accounted for more than 40% of the gain, with gasoline up 5.4% on the month and 28.4% from a year ago. With inflation well above the Fed’s 2% target, hopes of a 2026 rate cut are effectively dead.

Chart Of The Day… British American Tobacco (BTI)

The Complete Investor team recommended British American Tobacco (BTI) in March 2025 – seeing it as a leader in the growing trend of smokeless products and nicotine pouches. The premise has held… BTI shares are up 63% since that recommendation just over a year ago.

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Mailbag

“SpaceX IPO”

Cameron D. writes:

As SpaceX’s IPO is coming at the end of June, what is the best move now to get ahead of the IPO?

How does the IPO work? When will the ticker symbol be available to the public, and what is the best strategy at the opening bell?

Porter & Co. Comment: To learn more about the opportunity from our partner Crowdability, which is offering pre-IPO access to SpaceX, click here.

“I Love Reading You”

Tommy P. writes:

Dear Porter,

I will be quick. I’m gonna be 65 this year. I started reading about stocks just a few years ago. Of all the reading I do, I love reading you the most!!! Your knowledge amazes me. I love watching your videos even more! I just want to say thank you for sharing and for your insight into everything. Intelligence like yours is rare, and I just hope you don’t plan on retiring anytime soon. You are the best!

Porter Comment: Tommy—

Many thanks for your kind note.

And no, no plans to retire. At 53, I have three sons – 18, 15, and 4. My wife and I are expecting our first daughter in June.

That’s a lot to keep working for!

If you haven’t yet, I hope you’ll check out my two new books on Amazon: 2029: The End Of America and Warren’s Mistakes.

“Why Can’t The U.S. Produce Helium?”

Lynda T. writes:

If Qatar can produce all this helium, why can’t the U.S. produce it? We have all these companies that export LNG, so what is the difference? From what I can glean, it is a byproduct of natural gas.

Porter Comment: Correct, helium is produced as a byproduct of natural gas by a handful of large industrial gas companies. The biggest is ExxonMobil (XOM). It operates the Shute Creek Gas Plant at La Barge (Wyoming), which is the largest single helium source in the U.S., producing about 1.4 billion cubic feet of liquefied helium per year, roughly 20% of global supply. In 2025 Linde (LIN), a British-based global air products company, announced a new world‑scale helium storage cavern in Beaumont, Texas, with a capacity of more than 3 billion cubic feet. It is one of only three dedicated helium salt caverns in the world. The question isn’t whether or not America can produce enough gas for the world, it is at what price. The other big problem is distribution to Asia, where helium is a key component of semiconductor manufacturing.

Please note: The investments in our “Porter & Co. Top Positions” should not be considered current recommendations. These positions are the best performers across our publications – and the securities listed may (or may not) be above the current buy-up-to price. To learn more, visit the current recommendations page of the relevant service, here. To gain access or to learn more about our current recommendations, call our Customer Care team at 888-610-8895 or internationally at +1 443-815-4447.

The Perfect Recipe: Inflation + Booming Tech Spending Meets Global Commodity Collapse

Inside today’s Daily Journal…

• Essay: The Full AI Mania Approaches

• Markets way outpace wages

• The Asian market collapse

• Data centers might lower costs

• Chart Of The Day… Oil Inventories

• Today’s Mailbag

Imagine if the peak of the internet bubble occurred just before the COVID market panic. That’s what’s shaping up in the markets this summer.

Let me start with the big initial public offering (“IPO”) this week.

Cerebras Systems (CBRS) is a next-gen artificial-intelligence (“AI”) chipmaker scheduled to go public on Thursday, May 14. Most AI already runs on specialized computer chips, but Cerebras Systems has built the most integrated chip sets that are designed specifically for inference – inference is the “thinking and responding” part of AI, when it generates answers, images, or predictions for users.

AI computer systems, like the kinds built by Nvidia (NVDA), are massively parallel. They use thousands of cores working together. The problem? They constantly have to pass information back and forth across bridges. That shuffling eats up time, burns extra energy, and creates bottlenecks – especially when the AI is in its inference phase, which is its busiest phase.

To facilitate this kind of compute power, Cerebras builds large silicon wafers – big, round silicon wafers – and turns the whole thing into one enormous processor called the Wafer-Scale Engine (“WSE-3”). All the processing power that’s needed for inference, the fast memory storage, and the connections stay right there on a single piece of silicon. This design gives it enormous speed and energy efficiency. The result is their CS-3 system: a compact, rack-sized AI supercomputer you can plug into a data center.

Companies don’t just buy the chip – they get the full package: hardware, easy-to-use software, and support. And it works: Cerebras claims its systems can handle AI inference up to 20 times faster than top competing setups, while using less power per answer generated.

I suspect this IPO could unleash a massive speculative bubble.

The AI boom is still in its early innings, and everyone is hunting for alternatives to Nvidia’s dominance. Cerebras offers a truly differentiated technology that big players (like OpenAI, which launched ChatGPT) are already buying in bulk. With explosive growth, a clear moat (it’s extremely hard for anyone to copy wafer-scale chips), and a massive backlog of orders ($25 billion), the story is compelling. Cerebras’ technology could become the go to for inference.

Nvidia’s software ecosystem is still the industry standard. But with proven technology, paying customers, and perfect timing in the AI gold rush, Cerebras looks like one of those rare hardware plays that could deliver outsized returns.

Remember, when the AI capex spending boom finally ends (and it will), many of these AI hardware firms will see their share prices fall 80% or more.

Apple (AAPL) is a more conservative way to invest in the AI boom.

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Like Cerebras’ wafers, Apple’s chips use a “unified memory” architecture. In a regular computer, the main processor and the graphics processor each have their own separate memory banks, so data has to be copied back and forth constantly. Apple puts everything – processor, graphics, and a dedicated AI engine – on the same chip and lets them share one fast, shared memory pool. No wasteful copying. This makes Apple’s devices incredibly efficient and responsive for on-device AI tasks: things like real-time photo editing, voice assistants, or even running surprisingly large AI models right on your laptop without draining the battery or sending data to the cloud.

The big difference is scale and purpose. Apple’s chips are optimized for personal, edge computing – small, power-sipping tasks on consumer gadgets where privacy matters (your data never leaves the device) and you want instant responses. They’re fantastic for everyday inference on iPhones or Macs, and Apple has even started using similar silicon in its own data centers for some cloud-based AI.

I believe, like every other digital technology I’ve seen develop over the last 50 years, more of the AI compute functions will become distributed. Think about your iPhone. About 25 years ago, the world’s most powerful supercomputer was ASCI Red – a massive, warehouse-sized machine that cost tens of millions of dollars, sucked up enormous amounts of electricity, and could perform roughly 3.1 trillion calculations per second (what engineers call teraflops). It was used for nuclear-blast simulations and national security work. A current iPhone 17 Pro, with its A19 Pro chip, has a dedicated Neural Engine (Apple’s built-in AI accelerator) that can handle 35 trillion operations per second – 10x the ACSI Red supercomputer.

My point is, over time, I’m confident that Apple’s moat – its enormous global distribution platform (the iStore), its installed user base, and its consistent ability to stay ahead of key technological changes – will end up being much more valuable over time than Cerebras. That probably won’t matter next week. Or next month. But it will matter over the next decade.

And then there’s the Iran War.

The Strait of Hormuz crisis is not simply an oil supply shock. It is a simultaneous disruption of oil, liquefied natural gas (“LNG”), helium, fertilizers, sulfur, aluminum, jet fuel, diesel, and the shipping infrastructure that carries manufactured goods around the globe.

The International Energy Agency says,

it is the largest supply disruption in the history of the global oil market.

There’s been a 95% decline in shipping traffic, removing around 20 million barrels of oil and refined products per day from global markets. There’s already permanent damage to 17% of Qatari LNG production. And we’ve seen commodity prices soar – spanning oil (+57% year-over-year), LNG (+51%), urea fertilizer (+75%), helium (+100%), and jet fuel (+100% in Europe).

For now, the market is full speed ahead, not letting this commodity disruption slow things down, but that won’t last much longer.

Asia – which received 80% of the Strait’s oil flows – faces the sharpest, most acute energy shortages in history. Small open economies like the Philippines, Vietnam, and Pakistan will collapse within weeks. The economic superpowers of East Asia – Japan, South Korea, and China – will, under a longer disruption, likewise face an existential energy crisis. Europe faces a structural LNG deficit lasting into the 2030s due to Qatari infrastructure damage. This summer will see enormous jet fuel and diesel price premiums, and, eventually, food inflation arriving in late 2026. Germany, Europe’s industrial engine, has already halved its growth forecast.

The biggest challenge will, eventually, be food. The fertilizer shortfall, already embedded in 2026 spring planting, will produce food inflation regardless of what happens to oil prices in the second half of this year.

The helium picture is even worse than most coverage acknowledges. Iran’s retaliatory strikes on Qatar’s Ras Laffan facility shut 33% of global helium production. Helium stored in Qatar will evaporate after roughly six weeks. It can’t be replaced quickly or easily.

The macro effects of these problems are not hypothetical. They are already appearing in factory closures and airline route cuts. The lagged effects on food prices and manufacturing costs are still months away from their full realization, but they will happen.

U.S. inflation data comes out this week – the consumer price index (“CPI”) tomorrow and the producer price index (“PPI”) on Wednesday. Look for big increases that should drive 10-year bond yields back above 4.5%. Don’t forget my “get out of the pool” threshold of 5% on the 10-year U.S. Treasury note. If inflation takes off, it won’t come back soon. And the bond market will get killed. That isn’t bullish for the stock market.

Tell me what you think of today’s Journal: porterstansberrydirect@gmail.com

Good investing,

Porter Stansberry
Stevenson, Maryland

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Presented by Jared Dillian Money

Ex-Lehman trader Jared Dillian breaks down exactly which beloved Wall Street trade he’s taking the other side of, and why it’s the kind of contrarian call that has made Porter Stansberry name him one of his favorite newsletter writers.

Click here to learn more about The Daily Dirtnap, and see exactly which trade Jared is on the other side of right now…

Editor’s Note: This post is sponsored by our friends at Jared Dillian Money. We only accept advertising from publishers we know to offer well-researched ideas vetted by a legal team, excellent customer service, and reasonable refund policies.

We do not, however, make any representations about their investment ideas, nor will we warrant them as equal to our own.

Porter & Co. also may disagree with the ideas presented by our sponsors but we understand there’s more than one way to skin a cat. With that said, you can check out what Jared is predicting by clicking here.

3 Things To Know Before We Go…

1. Wages in the dust. Since 1980, the value of the stock market has increased 16x faster than the average hourly wage. If wages had kept pace with the S&P 500, workers would be earning $523 per hour… instead of the actual $37. This surge in asset valuations has occurred alongside a stagnation in real wages, as workers grapple with the compounding pressure of a silent depression where the cost of living and the price of entry into the market far outpace the growth of the average paycheck.

2. India braces for fallout from the Iran War. In a national address on Sunday, India’s Prime Minister Narenda Modi called on citizens to help address the country’s energy shortage – encouraging increased use of public transport, carpooling, and working from home. India imports nearly 85% of its oil and gas, and is part of a growing list of countries facing acute energy shortages from the disruption in shipping traffic through the Strait of Hormuz.

3. Data centers could actually lower U.S. electricity bills. Conventional wisdom says the AI buildout will push power bills higher. But new large loads could actually spread the grid’s fixed costs across more paying customers, thus lowering rates rather than raising them. Grid-optimization firm GridCARE – in San Antonio, Texas – estimates that adding one gigawatt of flexible data-center load to the local utility’s existing system there would generate $123 million in annual revenue at zero incremental cost – enough to cut system-wide annual rates 4.4%, or $64 per customer. It seems the AI boom could become a rate-cutter nationwide.

Chart Of The Day… Oil Inventories Are Plunging

In January, Complete Investor named energy as its investment theme for the year. This chart below from JPMorgan Chase (JPM) crystalizes the critical shortage of global oil inventories due to the closure of the Strait of Hormuz. Within a month, the world could fall below the minimum level required to keep pipelines and refineries operating. In this crisis, there will be investment opportunities… Keep an eye on the nine recommendations in Complete Investor’s “Energy & Commodities” section.

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Mailbag

“I’m Pleased To Be Associated With Prophet”

Charles G. writes:

I am so pleased to be associated with Prophet. Thank you for helping me gain access to this dynamic investment opportunity. I am up 12% in two weeks, and have covered my lifetime subscription fee by time and a half. Thank you for all you have done for my family and me through Stansberry Research and Porter & Co.

“Better Than Berkshire Portfolio”

Sheryl S. writes:

I just read your write-up on The Better than Berkshire Index. As a retired person, is one better owning Better Than Berkshire, the Capital Efficient Index, or the Lindy Index for the equity portion of our portfolio?.

I appreciate your opinion.

Porter Comment: That all depends!

It’s a great question, by the way.

They all have a different focus, but all of them are very high-quality, low-beta approaches to investing in stocks.

I’ll run down some 10-year dynamics on these portfolios and show you how they’ve done. Past results aren’t perfect, but they show, somewhat, how these portfolios may respond to various market conditions.

“Your Thoughts On Amrize’s Earnings”

Mario M. writes:

Any updates on Amrize after their earnings report? Thank you.

Porter Comment: Amrize (AMRZ) reaffirmed its full-year guidance on April 29, reporting a 4.7% revenue increase to $2.18 billion. While Q1 earnings of -$0.16 EPS narrowly missed estimates, the company’s Building Materials segment saw a massive 41.7% jump in adjusted EBITDA, fueled by the integration of the West Texas-based PB Materials acquisition. To sweeten the pot for shareholders, the board authorized a $1 billion share-repurchase program and declared its first quarterly dividend of $0.11 per share. With price increases and fuel surcharges implemented in April to counter cost inflation, management expects margins to strengthen.

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