A rare “behind-the-scenes” look at Stansberry Research’s most advanced trading system

From Sean Goldsmith in the S&A Digest:
 
You’ve likely seen an e-mail from us about a "$900,000 website" developed by Steve Sjuggerud – the big-wave surfing, guitar-playing financial guru from S&A…
 
For years, Steve has been working with a Ph.D. in mathematics, Dr. Richard Smith, to develop a computer program to wrangle an almost unimaginable amount of market data into useful and profitable trading systems. The goal was to provide you, our reader, with the kind of technical, proprietary data analysis large hedge funds use to consistently beat the market.
 
These hedge funds spend millions, even tens of millions, of dollars on the brainpower and data behind their trading systems. And they go to great lengths to ensure nobody outside the firm (in some cases, even employees at the firm) know the strategies they’re using.
 
At S&A… we strive to make this kind of high-quality research and analysis available to everyone. We’ve spent nearly $1 million to build a sophisticated set of proprietary programs that quantify the strategies Steve developed over his career. (We spend $200,000 a year just on data.) These systems can now scan a vast array of market data and yield buy/sell signals.
 
The result is a service called True Wealth Systems – a high-end trading service based on decades of Steve’s financial knowledge and Dr. Smith’s mathematical prowess. And our system tells you EXACTLY when to get in and out of a trade.
 
Unfortunately, like the hedge funds, we can’t share the specific details of the trading strategies Steve uses in True Wealth Systems. Sharing the specifics would make them much less effective… even useless. (Of course, we share the results and the recommendations with subscribers… just not the process.)
 
To date, Steve has developed more than three-dozen tradable systems. They monitor investment opportunities in every corner of the market: commodities, currencies, stocks… you name it. That way, we’re always able to make money somewhere…
 
In today’s Digest, I’d like to share some of the results of this work… and how True Wealth Systems has helped produce huge returns for our readers…
 
To start, let’s take a look at a recommendation from the January 2012 issue of True Wealth Systems
 
A little more than a year ago… Steve recommended going long drug stocks. Using the True Wealth Systems programs to study nearly 60 years of history, he found a signal for buying drug stocks based on price-to-earnings ratios and dividend yields.
 
When displaying historical results, Steve used Johnson & Johnson (JNJ) as a proxy for the sector. Between 1957 and 1972, JNJ returned 3,569%. In its next bull market (1984-1999), JNJ returned 2,393%.
 
As Steve pointed out in that issue…
 

It is true that the drug companies will grow slower today than they did 20 years ago. But that is fully priced into these stocks right now. Drug stocks today are just as cheap as they were back in 1984, when they took off for thousands of percent gains over a massive 15-year bull market.

 

Based on dividends, you could argue that drug stocks are a better deal today than they were back in 1984.

 

Back in 1984, interest rates were much higher than they are today. At the time, nobody in their right minds would have considered the 4% dividend on drug stocks as competitive with the double-digit interest rates you could have earned by buying government bonds. Even boring bank CDs were paying double-digit interest rates back then.

 
At the time of the issue, drug stocks were yielding nearly double that of the wider market… and more than double the yield on 10-year Treasurys. The stocks had to rally, or government bonds had to crash (meaning yields rise)…
 
Here’s the actual chart from that issue showing how the True Wealth Systems signal would have traded drug stocks going back to 1975… When the line is green, the signal says investors should be in drug stocks. When the line turns red, that means investors should be out of the sector…
 
 
The drug-stock signal would have had investors in "buy" mode 62% of the time, based on history. And it compounded investor capital at 22% a year when in buy mode – an extraordinary compound annual gain.
 
In the January 2012 issue, Steve used this signal to recommend shares of the ProShares Ultra Health Care Fund (RXL). His subscribers have already made 63% on the position in a little more than a year.
 
The system also works on short-term trades… In August 2011, True Wealth Systems generated sell signals on everything but gold…
 
In the next month, U.S. stocks fell 6% (a huge one-month drop). Other countries’ stock markets fell even more. But gold rose 12%. And the True Wealth Systems gold recommendation of PowerShares Deutsche Bank Gold Double Long exchange-traded note (DGP) was up 25%.
 
True Wealth Systems also flashed "buy" on homebuilders in December 2011… Today, readers are up nearly 100% on the fund Steve recommended as a result. Steve has used his system to help subscribers profitably trade biotech, steel, Italy, the S&P 500, and Singapore, to name a few.
 
And remember, the best part is, True Wealth Systems tells you exactly when to get in and out of the trade (based on sophisticated analysis of decades of data).
 
And in his latest issue, Steve recommended what he calls the U.S. Treasury’s "stock option" program. In short, as a result of the financial crisis, the U.S. government was left holding "warrants" on banks worth billions of dollars.
 
Most warrants act like call options… They give the owner the right to buy a share of stock for a set price at any time before the expiration date. But warrants last for years, whereas most options expire in months.
 
But the government doesn’t want to own these warrants, so it’s started selling them on the stock market. True Wealth Systems picked up on this opportunity. These warrants are cheap… And while bank stocks have ripped higher, the warrants have stayed flat.
 
Based on the analysis of historical data, Steve believes one of these warrants could return 907% by 2018… And the underlying stock only needs to reach its historical price-to-book ratio for these gains to be possible.
 
Steve calls True Wealth Systems his "life’s work" and "the culmination of everything I’ve learned in the investing world in the past 19 years." It’s a true passion for him… And it’s making our readers money.
 
Crux Note: If you’d like to access Steve’s True Wealth Systems strategies, click here to learn more about a subscription.
 
More on trading:
 
 
× Subscribe to Crux
Want more posts like these?
Comments
Like us on Facebook?
Crux Contributors