Dear Mr. Berko: What can you tell me about Porter Stansberry's credentials and newsletter? Yahoo Finance has been excerpting his comments. Some sound exciting, but others sound scary. I might subscribe to his newsletter if you think his ideas are worth paying for. — LD, Bloomsburg, Pa.
Dear LD: Porter is on the move again. After several years of obscure activity, Porter, who once predicted that oil would rise to $360 a barrel by 2011, has been predicting the collapse of the Dow Jones industrial average yearly for 12 years and the crash of the dollar since 1999. Porter recently paid big dollars for expensive lineage on Yahoo Finance, and he's racing full-throttle to put his newsletter in the public eye.
I know zip about Porter's business background prior to 1999. I don't even know whether Porter Stansberry's real name is Porter Stansberry! Short of hiring a private eye, it's hard to tell whether Porter is married, whether he graduated from college or what credentials he has to qualify him as a financial seer. But I do know that if you write the names of 500 public companies, put them in a stovepipe hat and blindly pick 20 names a week, you'll eventually pick a winner. If you brag only about those winners and smartly publicize them, fairly soon investors will give you guru status and buy your newsletter. You can fool all of the people most of the time and most of the people all the time.
Porter markets a newsletter primarily to morons, dummies and frantic get-rich-quick fools who believe in the tooth fairy and the goodness of mankind and think Moses is the real man on the moon. And by golly, that seems to cover a lot of today's Americans. Selling newsletters is Porter's job. He's the master of sensational hype and clever exaggeration that has a distant ring of probability, sufficient to persuade a few thousand financially illiterate boneheads to purchase his advice. Meanwhile, Hulbert Financial Digest — an independent, impartial and authoritative rating service that arms subscribers with facts and the performance record of practically every stock market newsletter — conspicuously ignores Porter.
I first heard Porter Stansberry's name in 2002. A reader of mine, who was a subscriber to his financial email service, was told that if she sent him a substantial check, he would provide her with inside information "from a senior executive inside" a company. Thousands of suckers took the bait, and Porter encouraged them to buy the stock, promising they would "make a fortune." The letter writer was led to believe she could turn her $11,000 into $100,000 within a dozen months. No way, Mary Kay! Would you be comfortable doing business with a scamp like this? Well, the Securities and Exchange Commission finally got involved and declared that Porter had "engaged in an ongoing scheme to defraud public investors by disseminating false information." The judge ruled that his actions had involved "deliberate fraud," and finally, in 2007, Porter was ordered to pay $1.5 million in fines and restitution.
Another grand Porter scam was a company called VaxGen. In 2003, via a barrage of emails and marketing letters, Porter told subscribers that VaxGen was developing an AIDS vaccine and recommended the stock because it was "the only realistic chance to make 50 times (their) money in the short term." VaxGen fell like a rock from a high alp, and today it's an empty shell with no significant operations. Are you comfortable with recommendations from this monger?
Now Porter predicts that by 2016, there will be a stock market correction of 50 percent and $1 trillion in bond defaults. He also says the U.S. will enter into a steep recession next year. So Porter prepared a book called "America 2020," a 238-page "survival blueprint" with a foreword by former Rep. Ron "Bonehead" Paul, costing $180. It's a hoot to read, detailing how to get 1,000 percent returns on silver, how to get money out of the U.S. without reporting it to the government, where to live during a U.S. crisis, how to open a foreign bank account online, etc. — everything you need to know if the U.S. collapses. Porter's recommendations make good fiction.
Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, FL 33775, or email him at [email protected] To find out more about Malcolm Berko and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.