Saturday, June 8, 2013

Total Cost of Epsilon E-Mail Data Breach Could Reach $225M, Including Up to $45M in Lost Business, According to New Report by CyberFactors


Cost of having a data breach. Aivars Lode Avantce

Total Cost of Epsilon E-Mail Data Breach Could Reach $225M, Including Up to $45M in Lost Business, According to New Report by CyberFactors
Epsilon and Amazon episodes demonstrate how risk associated with cloud security issues is not being adequately addressed, company says
NEW YORK--(BUSINESS WIRE)--E-mail services firm Epsilon will face years of repercussions and up to $225 million in total costs as a result of its recent data breach, a massive event that indicates the often overlooked risk of cloud-based computing systems, according to a research report released today by CyberFactors™, a cyber risk analytics and intelligence company.
“While the attractiveness of the cloud model is hard to refute, the economics of business risk for cloud providers and their customers can no longer be ignored”
The recent breakdown of Amazon’s cloud computing services that disrupted services to popular sites like Foursquare and Quora is another example of a cloud failure that could prove extremely costly in the long run – and a hint of more troubles on the horizon, CyberFactors asserted in its CyberBrief on Epsilon.
According to research conducted by CyberFactors, the Epsilon breach may have affected 75 companies or 3% of Epsilon’s customers, not 2% as previously reported, and could eventually cost these companies as much as $412 million, for a total event cost of $637 million. Further, CyberFactors conservatively estimated the number of affected e-mails in the Epsilon breach at 60 million.
The total cost of the Epsilon breach – including forensic audits and monitoring, fines, litigation and lost business for provider and customers – could eventually run as high as $3 billion to $4 billion, according to CyberFactors, given that the compromised e-mail addresses could be used by hackers and phishers to gain access to sites that contain consumers’ personal information.
“While the attractiveness of the cloud model is hard to refute, the economics of business risk for cloud providers and their customers can no longer be ignored,” said Regina Clark, Research and Analytics Director, CyberFactors. “With the cost of technology failures rising at an accelerated rate, the Epsilon event suggests a much more profound financial risk environment is now upon us. Cloud companies would be wise to think more like banks, insurance companies and hedge funds, and not just aggregators of the world’s precious data and technology dependencies.”
Some other results of CyberFactors research on the Epsilon breach:
  • 51% of the costs related to the Epsilon data breach will occur in year one, 42% in year two, and 7% in year three and thereafter
  • Loss of revenue related to customer churn as part of the Epsilon breach fallout could range from $6.1 million if just 1% of customers left, to $30.7 million if there were 5% churn.
  • CyberFactors research shows that since 2005, data events have cost individual affected companies in the range of $5.5 million to $12.8 million, depending on the industry and assuming no liability claims.
About CyberFactors
CyberFactors™ is a business and investment of CyberRiskPartners, LLC and was founded by veterans of the cyber security, financial services, technology and insurance industries. CyberRiskPartners, LLC is an investment and risk capital company for cyber security, risk and analytics platforms. For more information, please visit http://www.cyberfactors.com; follow us on Twitter @CyberFactors.


Oracle, Dell, CSC, Xerox, Symantec accused of paying ZERO UK tax


These sort of stories will open up competition to new technologies and players that reduce costs. Aivars Lode Avantce

  
By | Paul Kunert 8th January 2013 15:03

Oracle, Dell, CSC, Xerox, Symantec accused of paying ZERO UK tax

MPs reel off more 'unethical' titans 'avoiding bills on industrial scale'
Tech giants Oracle, Xerox, Dell, CSC and Symantec paid no corporate tax in the UK last year despite pocketing nearly £500m from public-sector IT contracts, it was claimed last night.
According to a study undertaken by Charlie Elphicke, Conservative MP for Dover, the five US behemoths banked taxpayers' cash and had a combined UK sales figure of £7bn, yet "paid no corporate tax whatsoever". The Tory revealed his findings during a House of Commons debate on tax avoidance.
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Corporation tax is paid on profit and was set at 24 per cent in 2012, although organisations can use legal loopholes to minimise their payments.
Elphicke told Parliament that according to his research, ten tech companies, which he did not list in totality, received £1.8bn in public funds but coughed up just £78m in tax on UK earnings of £3.3bn, "resulting in a tax liability of £879m".
"We are seeing big business tax avoidance on an industrial scale. To me, it is unacceptable, unethical and irresponsible. We urgently need reform," he told fellow MPs on the record.
"No government contracts should be awarded to businesses that are fleecing our tax system, and the government should examine how much UK tax companies pay when deciding who gets plum government contracts."
According to Elphicke:
  • Oracle paid no UK corporation tax last year because the firm claimed it made no profit in Blighty despite turning over £1.4bn. Oracle has a global operating margin of 32 per cent that would have equated to profits of £446m.
  • Microsoft was also given a special mention as it inked about £700m worth of government IT contracts and had revenues of roughly £2.35bn in our country. Its projected profits - based on the company's 40 per cent margin - were therefore £945m, which would have resulted in a tax bill of £246m but it actually stumped up £19m.
  • IBM was also of "concern" as it turns over about £4bn in the UK and profits were estimated at £642m. But its declared profits for the country were £327m, so it paid £41m tax rather than £167m.
Frank Field, Labour MP for Birkenhead, said HMRC taxmen should issue "kitemarks" for firms believed to have paid a "fair share of taxes", thus creating a "white list" of suppliers suitable for the public sector.
Tax receipts from big biz in the UK fell by a fifth from £26bn in fiscal 2011 to £21bn in fiscal 2012. The Commons debate effectively moved the spotlight further afield from Amazon, Google and Starbucks, whose executives were forced to defend their firms' tax chicanery at a Public Accounts Select Committee hearing in November.
But last night Ian Swales, Lib Dem MP for Redcar, singled out more corporations - including Vodafone,Accenture, CSC and Apple - as well as the massive online bazaars. Various companies under-fire for their lightweight tax payments have insisted they are following the letter of the law and have denied any wrongdoing.
More online giants in the MPs' firing line
"Our high streets are now subject to global competition," Swales told the House last night. "Most retailers are competing not only with the unstoppable rise of the internet but with offshore-based giants such as Amazon and eBay. The list of national and local UK businesses that cannot compete will get longer and longer: Comet was the latest to go broke, just before Christmas, probably costing the UK taxpayer £50m."
Swales said $13trn in cash is piling up in tax havens across the world which was the total GDP of the US and Japan - or "enough to buy the entire London stock market four times over".
John McDonnell, Labour MP for Hayes and Harlington, voiced disbelief that Capgemini coughed up just £308,000 in corporation tax last year on profits of £38m when it is the lead contractor for HMRC's £8bn Aspire project.
"That company is employed by HMRC but avoids the tax that HMRC seeks to use it to collect. It is extraordinary," he said.
Similarly, Accenture has a £9.6m* deal with HMRC to provide tech support, and forked out £2.8m in corporation tax on profits of £82m in the UK.
"It was employed by HMRC and awarded a massive contract, and then used those resources to avoid paying tax. You couldn’t make it up, but it is happening regularly," McDonnell claimed.
Swales also suggested Her Majesty's tax collectors build a "national tax system operating in an international world" to police the UK's financial borders and enforce transparency to tap into "consumer power" as witnessed recently with Starbucks: the "coffee" chain agreed to cough up £10m in tax over the next two years irrespective of profits it makes in a bid to protect its brand after outcry at its zero-tax bill.
But according to Caroline Lucas, Green MP for Brighton, HMRC's ability to "crack down" on tax avoidance will be restricted by the government's decision to cut the department's headcount by 40,000 from 2005 levels.
The government's ability, or indeed willingness, to shut tax loopholes was also questioned by Michael Meacher, Labour MP for Oldham West and Royton, who introduced some party politics.
"A conventional view and a charitable view is that the government do the best they can, but are outgunned and outmanoeuvred by all those smart tycoons and multinationals who employ an army of accountants and lawyers to run rings round the flat-footed regulators and tax inspectors who are always behind the curve," he told the House.
"That is, in my view, a pastiche of the truth. The reality is that the government … far from cracking down on tax dodgers, not only turning a blind eye to all but the most egregious examples of tax misfeasance, but actually promoting some of the most brazen examples of tax avoidance." ®
Updated to add
* Accenture has contacted us to say that its contract with HMRC is worth £9.6m, not the £9.6bn stated by Hansard - the official Parliamentary record that claims to provide an "edited verbatim report of proceedings of both the House of Commons and the House of Lords".

How Funding Works – Splitting The Equity Pie With Investors


This is the theory for how funding should work. Not the reality though. Aivars Lode Avantce


How Funding Works – Splitting The Equity Pie With Investors
Anna Vital  /  May 9, 2013
A hypothetical startup will get about $15,000 from family and friends, about $200,000 from an angel investor three months later, and about $2 Million from a VC another six months later. If all goes well. See how funding works in this info-graphic:

First, let’s figure out why we are talking about funding as something you need to do. This is not a given. The opposite of funding is “bootstrapping,” the process of funding a startup through your own savings. There are a few companies that bootstrapped for a while until taking investment, like MailChimp and AirBnB.
If you know the basics of how funding works, skim to the end. In this article I am giving the easiest to understand explanation of the process. Let’s start with the basics.
Every time you get funding, you give up a piece of your company. The more funding you get, the more company you give up. That ‘piece of company’ is ‘equity.’ Everyone you give it to becomes a co-owner of your company.
Splitting the Pie
The basic idea behind equity is the splitting of a pie. When you start something, your pie is really small. You have a 100% of a really small, bite-size pie. When you take outside investment and your company grows, your pie becomes bigger. Your slice of the bigger pie will be bigger than your initial bite-size pie.
When Google went public, Larry and Sergey had about 15% of the pie, each. But that 15% was a small slice of a really big pie.
Funding Stages
Let’s look at how a hypothetical startup would get funding.
Idea stage
At first it is just you. You are pretty brilliant, and out of the many ideas you have had, you finally decide that this is the one. You start working on it. The moment you started working, you started creating value. That value will translate into equity later, but since you own 100% of it now, and you are the only person in your still unregistered company, you are not even thinking about equity yet.
Co-Founder Stage
 As you start to transform your idea into a physical prototype you realize that it is taking you longer (it almost always does.) You know you could really use another person’s skills. So you look for a co-founder. You find someone who is both enthusiastic and smart. You work together for a couple of days on your idea, and you see that she is adding a lot of value. So you offer them to become a co-founder. But you can’t pay her any money (and if you could, she would become an employee, not a co-founder), so you offer equity in exchange for work (sweat equity.) But how much should you give? 20% – too little? 40%? After all it is YOUR idea that even made this startup happen. But then you realize that your startup is worth practically nothing at this point, and your co-founder is taking a huge risk on it. You also realize that since she will do half of the work, she should get the same as you – 50%. Otherwise, she might be less motivated than you. A true partnership is based on respect. Respect is based on fairness. Anything less than fairness will fall apart eventually. And you want this thing to last. So you give your co-founder 50%.
Soon you realize that the two of you have been eating Ramen noodles three times a day. You need funding. You would prefer to go straight to a VC, but so far you don’t think you have enough of a working product to show, so you start looking at other options.
The Family and Friends Round: You think of putting an ad in the newspaper saying, “Startup investment opportunity.” But your lawyer friend tells you that would violate securities laws. Now you are a “private company,” and asking for money from “the public,” that is people you don’t know would be a “public solicitation,” which is illegal for private companies. So who can you take money from?
  1. Accredited investors – People who either have $1 Million in the bank or make $200,000 annually. They are the “sophisticated investors” – that is people who the government thinks are smart enough to decide whether to invest in an ultra-risky company, like yours. What if you don’t know anyone with $1 Million? You are in luck, because there is an exception – friends and family.
  2. Family and Friends – Even if your family and friends are not as rich as an investor,  you can still accept their cash. That is what you decide to do, since your co-founder has a rich uncle. You give him 5% of the company in exchange for $15,000 cash. Now you can afford room and ramen for another 6 months while building your prototype.
Registering the Company
To give uncle the 5%, you registered the company, either though an online service like LegalZoom ($400), or through a lawyer friend (0$-$2,000). You issued some common stock, gave 5% to uncle and set aside 20% for your future employees – that is the ‘option pool.’ (You did this because 1. Future investors will want an option pool;, 2. That stock is safe from you and your co-founders doing anything with it.)
The Angel Round
 With uncle’s cash in pocket and 6 months before it runs out, you realize that you need to start looking for your next funding source right now. If you run out of money, your startup dies. So you look at the options:
  1. Incubators, accelerators, and “excubators” – these places often provide cash, working space, and advisors. The cash is tight – about $25,000 (for 5 to 10% of the company.) Some advisors are better than cash, like Paul Graham at Y Combinator.
  2. Angels – in 2013 (Q1) the average angel round was $600,000 (from the HALO report). That’s the good news. The bad news is that angels were giving that money to companies that they valued at $2.5 million. So, now you have to ask if you are worth $2.5 million. How do you know? Make your best case.  Let’s say it is still early days for you, and your working prototype is not that far along. You find an angel who looks at what you have and thinks that it is worth $1 million. He agrees to invest $200,000.
Now let’s count what percentage of the company you will give to the angel. Not 20%. We have to add the ‘pre-money valuation’ (how much the company is worth before new money comes in) and the investment
$1,000,000 + $200,000=              $1,200,000  post-money valuation
(Think of it like this, first you take the money, then you give the shares. If you gave the shares before you added the angel’s investment, you would be dividing what was there before the angel joined. )
Now divide the investment by the post-money valuation $200,000/$1,200,000=1/6= 16.7%
The angel gets 16.7% of the company, or 1/6.
How Funding Works - Cutting the Pie
What about you, your co-founder and uncle? How much do you have left? All of your stakes will be diluted by 1/6. (See the infographic.)
Is dilution bad? No, because your pie is getting bigger with each investment. But, yes, dilution is bad, because you are losing control of your company. So what should you do? Take investment only when it is necessary. Only take money from people you respect. (There are other ways, like buying shares back from employees or the public, but that is further down the road.)
Venture Capital Round
Finally, you have built your first version and you have traction with users. You approach VCs. How much can VCs give you?   They invest north of $500,000. Let’s say the VC values what you have now at $4 million. Again, that is your pre-money valuation. He says he wants to invest $2 Million. The math is the same as in the angel round. The VC gets 33.3% of your company. Now it’s his company, too, though.
Your first VC round is your series A. Now you can go on to have series B,C – at some point either of the three things will happen to you. Either you will run out of funding and no one will want to invest, so you die. Or, you get enough funding to build something a bigger company wants to buy, and they acquire you. Or, you do so well that, after many rounds of funding, you decide to go public.
Why Companies Go Public?
There are two basic reasons. Technically an IPO is just another way to raise money, but this time from millions of regular people. Through an IPO a company can sell stocks on the stock market and anyone can buy them. Since anyone can buy you can likely sell a lot of stock right away rather than go to individual investors and ask them to invest. So it sounds like an easier way to get money.
There is another reason to IPO. All those people who have invested in your company so far, including you, are holding the so-called ‘restricted stock’ – basically this is stock that you can’t simply go and sell for cash. Why? Because this is stock of a company that has not been so-to-say “verified by the government,” which is what the IPO process does. Unless the government sees your IPO paperwork, you might as well be selling snake oil, for all people know. So, the government thinks it is not safe to let regular people to invest in such companies. (Of course, that automatically precludes the poor from making high-return investments. But that is another story.) The people who have invested so far want to finally convert or sell their restricted stock and get cash or unrestricted stock, which is almost as good as cash. This is a liquidity event – when what you have becomes easily convertible into cash.
There is another group of people that really want you to IPO. The investment bankers, like Goldman Sachs and Morgan Stanley, to name the most famous ones. They will give you a call and ask to be your lead underwriter – the bank that prepares your IPO paperwork and calls up wealthy clients to sell them your stock.  Why are the bankers so eager? Because they get 7% of all the money you raise in the IPO. In this infographic your startup raised $235,000,000 in the IPO – 7% of that is about $16.5 million (for two or three weeks of work for a team of 12 bankers). As you see, it is a win-win for all.
Being an Early Employee at a Startup
Last but not least, some of your “sweat equity” investors were the early employees who took stock in exchange for working at low salaries and living with the risk that your startup might fold. At the IPO it is their cash-out day.
Inspired by: How to Fund a Startup, Paul Graham

Why Big Data Marketing Needs To Get A Whole Lot Bigger



Big data giving insight into consumer behavior. Aivars Lode Avantce

Why Big Data Marketing Needs To Get A Whole Lot Bigger  
In the old days, marketers sought to identify a target consumer and then would spend millions to catch her at the right time, in the right place, with the right message.  Success was like winning the lottery, you were never quite sure what you had until the results were in.
In the digital age, we identify a target market; bombard them with banner ads, online videos and tweets.  If we get a good response, we bombard them some more.  Has anything really changed?
The truth is that while media has been transformed, marketing practice has not kept pace.  We throw budgets into different buckets, but the decision-making process remains much the same.  You develop a theory of the case, test it in-market and then, if it goes well, do it some more.  A true digital revolution in marketing has yet to take hold, but it has begun.
Who Is The Consumer, Really?
An often-repeated lament in marketing, has been that we waste half of our advertising budget, but just don’t know which half.  It continues to resonate because we all know that increasing marketing efficiency is a great way to improve profitability.
Conceptually, the simplest way to increase efficiency is to prevent wastage. By targeting the right consumer at the right time, the right place with the right message, we can get the most out of a marketing budget.  In other words, fish where the fish are.  Put your time, effort and money where they can do the most good.
In practice, however, targeting becomes more problematic.  If 60% of your consumers are women, should you ignore men?  If 35% of your consumers are 18-24, does that really mean that you should spend all your money on college students?  A recent Catalina study found that over half of brand sales come from outside the demographic target.
We need to stop thinking about target consumers and start thinking in terms of consumer networks. Just because the daughter buys it, doesn’t mean the mother (or father or brother) won’t and beyond consumers themselves, there are advocates and detractors that can affect a purchase as well.  They all matter.
Consumer Journey Or Drunkard’s Walk?
Another popular marketing concept is the consumer journey.  (Here’s  McKinsey’s version).  In this view, prospects begin totally unaware of the wonderful brand experiences that await them until they are led on a fabulous adventure in which they consider, evaluate and purchase on a never-ending quest to becoming advocating consumers.
In reality, our behavior looks nothing like that.  I might plan on having a hamburger for lunch until my friend mentions that she’s on a diet and we opt to go for salads.  Then we hear a colleague rave about a new Tex-Mex restaurant and decide to go there until a client emergency has us hunkering down in a conference room and ordering pizza.
So our path-to-purchase looks less like a guided tour and more like a drunkard’s walk, in which we stumble around, bouncing from innate preferences to brand impressions to peer recommendations to personal experiences before we land on any particular purchase decision.
The Limits of a Statistical Approach
The use of simplistically blunt methods such as target consumers and sales funnels wasn’t so much a product of self-delusion as it was a marriage of convenience between available technology and the need for accountability. We never thought our models were a perfect depiction of reality, but developed techniques to suit the tools we had.
With a small, but controlled sample, you can extrapolate out to large populations and the error will be somewhat manageable and measurable for a limited amount of variables.  The problem is that in acomplex system, different factors interact with each other in often unpredictable and counterintuitive ways.  Micromotives often result in macrobehavior.
This issue isn’t exclusive to marketing, but occurs in many fields.  The study of epidemics, for instance, has historically used statistical models with some effect, but much was left to be desired.  More recently, they have begun to use new models with an agent-based approach, where whole populations are simulated.
One company, Concentric, is now applying similar techniques to marketing that incorporate a wide range of data sources, including qualitative and quantitative factors, in order to simulate the marketplace.  This creates a far more accurate depiction than using econometrics to optimize one KPI or another.  It also allows more flexibility.
Testing “What Ifs”
In the future, this type of agent-based modeling approach will become standard.  Instead of spending hours in conference rooms arguing the merits of targeting techniques, the “consumer mindset” or what the Marketing Director overheard his daughter and her friends say, we will come up with “what if” scenarios and test them virtually.
The models will never be perfect.  They will not account for emerging factors that we haven’t encountered before, nor will they calculate existing ones with absolute accuracy.  What they will do is help us weed out failed approaches before we spend money on them.  They will also alert us to significant market changes through post-analysis.
Most of all, an agent-based simulation approach will increase our understanding of how the marketplace works.  By continually asking “what if” and testing our notions in simulation, we can continually run experiments and learn from them, at negligible cost.
Flipping The Funnel
Amazon has taken a different approach to big data and simulations.  Instead of worrying about the consumer journey, its enormous scale and heavy IT investment make Amazon a market simulation unto itself.  The insights they gain are then deployed to offer you what you want, when you want it, through on-site optimization and email marketing.
The strategy has paid off and Amazon dominates online retail, accounting for 45% of desktop visits and almost 60% of mobile traffic.  It’s becoming more and more difficult for any company without a strong big data effort to compete in e-commerce and even those that do make the investment have a hard time matching Amazon’s data quality.
BloomReach is looking to close that gap.  It offers offers its own big data solutions to companies ranging from Drugstore.com to Nieman Marcus to Crate and Barrel.  By monitoring search engines and social media, BloomReach’s algorithms can identify consumer intent and can even create pages that match that intent with retailers’ inventory.
Much like agent-based simulation, this represents a fundamentally different approach to marketing.  Rather than trying to surmise what’s going on by extrapolating from a small sample, big data solutions allow you to track the marketplace and adapt to changes in real time.
From the “Big Idea” to the Big Simulation
Throughout its history, marketing has always been driven by visionary ideas. A big, bold concept, backed by significant media investment, could mean the difference between a hit product and a flop.  It was exciting, but risky.  No amount of research or rigor could change the fact that you were, to a large degree, taking a leap of faith.
However, in the information age, we are no longer required to believe, only to imagine, test and observe.  Instead of dreaming up big ideas and testing them in-market, we can test them in a virtual marketplace built by real-world, real-time data.  If our wild hunch falls flat, all we lose are some bits and bytes.
Concentric has put together a nice set of case studies which report a 90% model accuracy andForrester found that BloomReach delivers conversion increases of 60%.  We are, in effect, entering a new simulation economy that looks very much like the real one except that the cost of failure is negligible while the rewards of success remain massive.
And that’s the beauty of marketing driven by big data simulations, it allows us to dream bigger than ever.  We can now go and test our wildest ideas, tweak them and then turn them into realities.


How the "Pros" Make Their Living... at Your Expense


A good article on the strategies that groups use to influence individuals on how to invest. Aivars Lode Avantce

How the "Pros" Make Their Living... at Your Expense
By Porter Stansberry
Thursday, May 23, 2013
Why does anyone believe "buy and hold" works?

The mutual-fund industry, which has boomed since the 1980s, used a bunch of faulty academic research to "prove" you couldn't time the markets.
Why would they promote the idea that you can't time the markets? Because they get paid based on assets under management. They need you to leave your money with them, good times or bad. No matter what, a mutual-fund manager isn't going to return your money and tell you, "Sorry, it's just not a good time to buy stocks…" So they have to invent a world where it is always a good time to buy stocks.
You undoubtedly know their mantra: buy and hold. But it's all a lie.
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Apple, Intel, Microsoft, and a host of others are throwing hundreds of millions of dollars toward a tiny group of tech stocks that are creating the "holy grail" of computer technology.
Small-cap and technology expert Frank Curzio has spent months analyzing this burgeoning new trend, and he's recently identified one tiny firm that he believes will soon explode.
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---------------------------------
Please take a moment to look carefully at this chart…
These are the daily closing prices of the Templeton Russian & East Europe mutual fund (TRF) over a 15-year period. This is one of the oldest and most established emerging-market mutual funds. This is the kind of fund people invest in heavily through 401(k) allocations.
It is a closed-end fund. It trades like a corporation – like a regular, publicly listed stock. Sometimes it trades at a premium to its net assets and sometimes at a discount. That attracts traders and speculators.

In this one investment vehicle, we have both sides of the investment world. Typical individual investors (lemmings, if you will) are dripping capital into this fund, month after month, regardless of the premium or discount and oblivious of critical factors in the marketplace.

Meanwhile, the world's best investors follow this fund closely… waiting. They are like sharks. They know this is one of the most reliably volatile funds in the world… and one of the easiest to trade successfully.

So in this one fund, you have a good litmus test to compare the two major philosophies of investing. Should you buy and hold? Should you pour capital into your 401(k) blindly each month? Or should you time the markets? Should you know the factors that lead funds like TRF to soar to absurd levels and then crash?

Looking at this chart, you easily can see the fund peaked twice in 2006 – once in the spring and again at the end of 2006/beginning of 2007. Both of these times, TRF was trading at such an extremely high premium that we noticed it immediately.

Here's exactly what we said at the time:
It is a closed-end fund. It trades like a corporation – like a regular, publicly listed stock. Sometimes it trades at a premium to its net assets and sometimes at a discount. That attracts traders and speculators.
In this one investment vehicle, we have both sides of the investment world. Typical individual investors (lemmings, if you will) are dripping capital into this fund, month after month, regardless of the premium or discount and oblivious of critical factors in the marketplace.

Meanwhile, the world's best investors follow this fund closely… waiting. They are like sharks. They know this is one of the most reliably volatile funds in the world… and one of the easiest to trade successfully.

So in this one fund, you have a good litmus test to compare the two major philosophies of investing. Should you buy and hold? Should you pour capital into your 401(k) blindly each month? Or should you time the markets? Should you know the factors that lead funds like TRF to soar to absurd levels and then crash?

Looking at this chart, you easily can see the fund peaked twice in 2006 – once in the spring and again at the end of 2006/beginning of 2007. Both of these times, TRF was trading at such an extremely high premium that we noticed it immediately.

Here's exactly what we said at the time:
In this one investment vehicle, we have both sides of the investment world. Typical individual investors (lemmings, if you will) are dripping capital into this fund, month after month, regardless of the premium or discount and oblivious of critical factors in the marketplace.
Meanwhile, the world's best investors follow this fund closely… waiting. They are like sharks. They know this is one of the most reliably volatile funds in the world… and one of the easiest to trade successfully.

So in this one fund, you have a good litmus test to compare the two major philosophies of investing. Should you buy and hold? Should you pour capital into your 401(k) blindly each month? Or should you time the markets? Should you know the factors that lead funds like TRF to soar to absurd levels and then crash?

Looking at this chart, you easily can see the fund peaked twice in 2006 – once in the spring and again at the end of 2006/beginning of 2007. Both of these times, TRF was trading at such an extremely high premium that we noticed it immediately.

Here's exactly what we said at the time:
Meanwhile, the world's best investors follow this fund closely… waiting. They are like sharks. They know this is one of the most reliably volatile funds in the world… and one of the easiest to trade successfully.
So in this one fund, you have a good litmus test to compare the two major philosophies of investing. Should you buy and hold? Should you pour capital into your 401(k) blindly each month? Or should you time the markets? Should you know the factors that lead funds like TRF to soar to absurd levels and then crash?

Looking at this chart, you easily can see the fund peaked twice in 2006 – once in the spring and again at the end of 2006/beginning of 2007. Both of these times, TRF was trading at such an extremely high premium that we noticed it immediately.

Here's exactly what we said at the time:
So in this one fund, you have a good litmus test to compare the two major philosophies of investing. Should you buy and hold? Should you pour capital into your 401(k) blindly each month? Or should you time the markets? Should you know the factors that lead funds like TRF to soar to absurd levels and then crash?
Looking at this chart, you easily can see the fund peaked twice in 2006 – once in the spring and again at the end of 2006/beginning of 2007. Both of these times, TRF was trading at such an extremely high premium that we noticed it immediately.

Here's exactly what we said at the time:
Looking at this chart, you easily can see the fund peaked twice in 2006 – once in the spring and again at the end of 2006/beginning of 2007. Both of these times, TRF was trading at such an extremely high premium that we noticed it immediately.
Here's exactly what we said at the time:
Here's exactly what we said at the time:
With emerging market speculation heating up again, TRF is trading for a 24% premium right now. If that premium climbs any higher, we predict another obliteration. – Brian Hunt, DailyWealth, December 21, 2006
We published that note in December 2006. By March 2009, it had lost more than 90% of its value.
Perhaps more importantly to any long-term, buy-and-hold investor, the decline we foresaw in the fund would have wiped out more than 100% of the accumulated capital gains, assuming you invested as much as 15 years earlier.

Now… I'd like you to look at the chart one more time. Look at what happened to the fund in the first half of 2009. It went nearly straight up.

On April 17, 2009, we told subscribers to buy Russian stocks. Instead of using TRF, Steve Sjuggerud recommended a nearly identical Scudder Fund, the Central Europe and Russia Fund (CEE). Both went up 150% from their March lows.

So if you followed the buy-and-hold strategy in Russian stocks over the last 15 years, you would have made a very small amount of money – or lost money, depending on when you sold your shares. On the other hand, if you applied a few of our secrets, you could have easily traded this fund for more than 100% gains in only a few weeks. And if you watch this fund, you'll be able to make trades like this three or four times each decade. If you watch other similar funds, you'll be able to make trades like this once or twice a year.

And let me tell you one more thing about this situation. In January 2007, when TRF was widely overvalued and when most individual investors were clamoring to buy shares – despite the premium valuation – we checked to see if we could sell the fund short. We knew it was going to collapse and wanted to profit directly as it fell. But we couldn't. Why not? Because other professionals had a
lready borrowed all of the available shares to short.

In other words, while 401(k) investors were buying and holding a time bomb, Wall Street's pros were lined up, waiting to take their money.

That's why we call "buy and hold" "buy and fold." That's what happens. People think they're investors when they buy. But sooner or later, the pain gets so bad and the loss is so big they panic and sell. Wall Street wins.

Would you have been able to continue buying the Templeton Russia Fund through the collapse of 2008? Not many people could. Instead, they chase hot sectors and investment fads and buy in at the worst possible time. Then after prices collapse, sooner or later, the pain and fear become unbearable, and they liquidate their investments – usually at the exact bottom.

Believe me, the pros know that's what individual investors are going to do. That's how they make their living.

Meanwhile, the big mutual-fund companies spend millions on "buy and hold" advertising each year. They give more millions to academic researchers – all of whom "prove" you can't time the market.

According to these folks, we shouldn't have been able to do the kind of trading we did with the Templeton Russia & East Europe Fund. They would tell you we didn't have any real edge against the other investors in the fund. They would tell you we just got "lucky" – despite the fact that we do these kinds of trades year after year.

And when researchers study actual mutual-fund returns, the results are nothing like the averages you find in the prospectus. Most people who invest in mutual funds never make more than 5% a year on average because they buy the wrong funds at the wrong times and sell at exactly the wrong times. And anyone who was buying stock mutual funds over the last 15 years most likely lost money overall.

Buy and hold doesn't work for two reasons: It ignores valuation and sentiment and it ignores human nature.

Even if buy and hold did work, it would be a less-than-optimal strategy because, as should be readily apparent to everyone who watches the stock market, the market isn't as "efficient" as so many academics claim.

The intellectual rationale for buy and hold is the idea that securities prices instantly reflect all the information available. You can't get an advantage on the market. The best investors can hope to do, therefore, is to get the market's average return. And the only sure way to do this is to buy an index fund, year after year, and hold it forever.

This idea – that information is reflected accurately and instantly in the market – is preposterous. In the first place, lots of people trading stocks don't know what they're doing. They can't accurately handicap stock prices because they don't know the first thing about valuation.

But even more than this, most of what's important to stock prices is unknowable. Nobody knows what the future holds for things like interest rates and economic growth. People's emotions about these unknowable variables – what we call "sentiment" – make a far bigger impact on stock prices than the latest earnings report. And people's emotions are anything but rational or efficient.

You can dramatically increase your returns in common stocks if you're simply more disciplined about when you make major investments. You only want to commit a substantial amount of capital when both valuation and sentiment are in extremely bullish ranges. In short, you want to buy when stocks are cheap and most people are afraid to buy them.

Unfortunately, these opportunities don't arise often in U.S. blue-chip stocks. But you can almost always find these conditions somewhere or in some part of the U.S. market.

Regards,

Porter Stansberry

Perhaps more importantly to any long-term, buy-and-hold investor, the decline we foresaw in the fund would have wiped out more than 100% of the accumulated capital gains, assuming you invested as much as 15 years earlier.
Now… I'd like you to look at the chart one more time. Look at what happened to the fund in the first half of 2009. It went nearly straight up.

On April 17, 2009, we told subscribers to buy Russian stocks. Instead of using TRF, Steve Sjuggerud recommended a nearly identical Scudder Fund, the Central Europe and Russia Fund (CEE). Both went up 150% from their March lows.

So if you followed the buy-and-hold strategy in Russian stocks over the last 15 years, you would have made a very small amount of money – or lost money, depending on when you sold your shares. On the other hand, if you applied a few of our secrets, you could have easily traded this fund for more than 100% gains in only a few weeks. And if you watch this fund, you'll be able to make trades like this three or four times each decade. If you watch other similar funds, you'll be able to make trades like this once or twice a year.

And let me tell you one more thing about this situation. In January 2007, when TRF was widely overvalued and when most individual investors were clamoring to buy shares – despite the premium valuation – we checked to see if we could sell the fund short. We knew it was going to collapse and wanted to profit directly as it fell. But we couldn't. Why not? Because other professionals had already borrowed all of the available shares to short.

In other words, while 401(k) investors were buying and holding a time bomb, Wall Street's pros were lined up, waiting to take their money.

That's why we call "buy and hold" "buy and fold." That's what happens. People think they're investors when they buy. But sooner or later, the pain gets so bad and the loss is so big they panic and sell. Wall Street wins.

Would you have been able to continue buying the Templeton Russia Fund through the collapse of 2008? Not many people could. Instead, they chase hot sectors and investment fads and buy in at the worst possible time. Then after prices collapse, sooner or later, the pain and fear become unbearable, and they liquidate their investments – usually at the exact bottom.

Believe me, the pros know that's what individual investors are going to do. That's how they make their living.

Meanwhile, the big mutual-fund companies spend millions on "buy and hold" advertising each year. They give more millions to academic researchers – all of whom "prove" you can't time the market.

According to these folks, we shouldn't have been able to do the kind of trading we did with the Templeton Russia & East Europe Fund. They would tell you we didn't have any real edge against the other investors in the fund. They would tell you we just got "lucky" – despite the fact that we do these kinds of trades year after year.

And when researchers study actual mutual-fund returns, the results are nothing like the averages you find in the prospectus. Most people who invest in mutual funds never make more than 5% a year on average because they buy the wrong funds at the wrong times and sell at exactly the wrong times. And anyone who was buying stock mutual funds over the last 15 years most likely lost money overall.

Buy and hold doesn't work for two reasons: It ignores valuation and sentiment and it ignores human nature.

Even if buy and hold did work, it would be a less-than-optimal strategy because, as should be readily apparent to everyone who watches the stock market, the market isn't as "efficient" as so many academics claim.

The intellectual rationale for buy and hold is the idea that securities prices instantly reflect all the information available. You can't get an advantage on the market. The best investors can hope to do, therefore, is to get the market's average return. And the only sure way to do this is to buy an index fund, year after year, and hold it forever.

This idea – that information is reflected accurately and instantly in the market – is preposterous. In the first place, lots of people trading stocks don't know what they're doing. They can't accurately handicap stock prices because they don't know the first thing about valuation.

But even more than this, most of what's important to stock prices is unknowable. Nobody knows what the future holds for things like interest rates and economic growth. People's emotions about these unknowable variables – what we call "sentiment" – make a far bigger impact on stock prices than the latest earnings report. And people's emotions are anything but rational or efficient.

You can dramatically increase your returns in common stocks if you're simply more disciplined about when you make major investments. You only want to commit a substantial amount of capital when both valuation and sentiment are in extremely bullish ranges. In short, you want to buy when stocks are cheap and most people are afraid to buy them.

Unfortunately, these opportunities don't arise often in U.S. blue-chip stocks. But you can almost always find these conditions somewhere or in some part of the U.S. market.

Regards,

Porter Stansberry

Now… I'd like you to look at the chart one more time. Look at what happened to the fund in the first half of 2009. It went nearly straight up.
On April 17, 2009, we told subscribers to buy Russian stocks. Instead of using TRF, Steve Sjuggerud recommended a nearly identical Scudder Fund, the Central Europe and Russia Fund (CEE). Both went up 150% from their March lows.

So if you followed the buy-and-hold strategy in Russian stocks over the last 15 years, you would have made a very small amount of money – or lost money, depending on when you sold your shares. On the other hand, if you applied a few of our secrets, you could have easily traded this fund for more than 100% gains in only a few weeks. And if you watch this fund, you'll be able to make trades like this three or four times each decade. If you watch other similar funds, you'll be able to make trades like this once or twice a year.

And let me tell you one more thing about this situation. In January 2007, when TRF was widely overvalued and when most individual investors were clamoring to buy shares – despite the premium valuation – we checked to see if we could sell the fund short. We knew it was going to collapse and wanted to profit directly as it fell. But we couldn't. Why not? Because other professionals had already borrowed all of the available shares to short.

In other words, while 401(k) investors were buying and holding a time bomb, Wall Street's pros were lined up, waiting to take their money.

That's why we call "buy and hold" "buy and fold." That's what happens. People think they're investors when they buy. But sooner or later, the pain gets so bad and the loss is so big they panic and sell. Wall Street wins.

Would you have been able to continue buying the Templeton Russia Fund through the collapse of 2008? Not many people could. Instead, they chase hot sectors and investment fads and buy in at the worst possible time. Then after prices collapse, sooner or later, the pain and fear become unbearable, and they liquidate their investments – usually at the exact bottom.

Believe me, the pros know that's what individual investors are going to do. That's how they make their living.

Meanwhile, the big mutual-fund companies spend millions on "buy and hold" advertising each year. They give more millions to academic researchers – all of whom "prove" you can't time the market.

According to these folks, we shouldn't have been able to do the kind of trading we did with the Templeton Russia & East Europe Fund. They would tell you we didn't have any real edge against the other investors in the fund. They would tell you we just got "lucky" – despite the fact that we do these kinds of trades year after year.

And when researchers study actual mutual-fund returns, the results are nothing like the averages you find in the prospectus. Most people who invest in mutual funds never make more than 5% a year on average because they buy the wrong funds at the wrong times and sell at exactly the wrong times. And anyone who was buying stock mutual funds over the last 15 years most likely lost money overall.

Buy and hold doesn't work for two reasons: It ignores valuation and sentiment and it ignores human nature.

Even if buy and hold did work, it would be a less-than-optimal strategy because, as should be readily apparent to everyone who watches the stock market, the market isn't as "efficient" as so many academics claim.

The intellectual rationale for buy and hold is the idea that securities prices instantly reflect all the information available. You can't get an advantage on the market. The best investors can hope to do, therefore, is to get the market's average return. And the only sure way to do this is to buy an index fund, year after year, and hold it forever.

This idea – that information is reflected accurately and instantly in the market – is preposterous. In the first place, lots of people trading stocks don't know what they're doing. They can't accurately handicap stock prices because they don't know the first thing about valuation.

But even more than this, most of what's important to stock prices is unknowable. Nobody knows what the future holds for things like interest rates and economic growth. People's emotions about these unknowable variables – what we call "sentiment" – make a far bigger impact on stock prices than the latest earnings report. And people's emotions are anything but rational or efficient.

You can dramatically increase your returns in common stocks if you're simply more disciplined about when you make major investments. You only want to commit a substantial amount of capital when both valuation and sentiment are in extremely bullish ranges. In short, you want to buy when stocks are cheap and most people are afraid to buy them.

Unfortunately, these opportunities don't arise often in U.S. blue-chip stocks. But you can almost always find these conditions somewhere or in some part of the U.S. market.

Regards,

Porter Stansberry

On April 17, 2009, we told subscribers to buy Russian stocks. Instead of using TRF, Steve Sjuggerud recommended a nearly identical Scudder Fund, the Central Europe and Russia Fund (CEE). Both went up 150% from their March lows.
So if you followed the buy-and-hold strategy in Russian stocks over the last 15 years, you would have made a very small amount of money – or lost money, depending on when you sold your shares. On the other hand, if you applied a few of our secrets, you could have easily traded this fund for more than 100% gains in only a few weeks. And if you watch this fund, you'll be able to make trades like this three or four times each decade. If you watch other similar funds, you'll be able to make trades like this once or twice a year.

And let me tell you one more thing about this situation. In January 2007, when TRF was widely overvalued and when most individual investors were clamoring to buy shares – despite the premium valuation – we checked to see if we could sell the fund short. We knew it was going to collapse and wanted to profit directly as it fell. But we couldn't. Why not? Because other professionals had already borrowed all of the available shares to short.

In other words, while 401(k) investors were buying and holding a time bomb, Wall Street's pros were lined up, waiting to take their money.

That's why we call "buy and hold" "buy and fold." That's what happens. People think they're investors when they buy. But sooner or later, the pain gets so bad and the loss is so big they panic and sell. Wall Street wins.

Would you have been able to continue buying the Templeton Russia Fund through the collapse of 2008? Not many people could. Instead, they chase hot sectors and investment fads and buy in at the worst possible time. Then after prices collapse, sooner or later, the pain and fear become unbearable, and they liquidate their investments – usually at the exact bottom.

Believe me, the pros know that's what individual investors are going to do. That's how they make their living.

Meanwhile, the big mutual-fund companies spend millions on "buy and hold" advertising each year. They give more millions to academic researchers – all of whom "prove" you can't time the market.

According to these folks, we shouldn't have been able to do the kind of trading we did with the Templeton Russia & East Europe Fund. They would tell you we didn't have any real edge against the other investors in the fund. They would tell you we just got "lucky" – despite the fact that we do these kinds of trades year after year.

And when researchers study actual mutual-fund returns, the results are nothing like the averages you find in the prospectus. Most people who invest in mutual funds never make more than 5% a year on average because they buy the wrong funds at the wrong times and sell at exactly the wrong times. And anyone who was buying stock mutual funds over the last 15 years most likely lost money overall.

Buy and hold doesn't work for two reasons: It ignores valuation and sentiment and it ignores human nature.

Even if buy and hold did work, it would be a less-than-optimal strategy because, as should be readily apparent to everyone who watches the stock market, the market isn't as "efficient" as so many academics claim.

The intellectual rationale for buy and hold is the idea that securities prices instantly reflect all the information available. You can't get an advantage on the market. The best investors can hope to do, therefore, is to get the market's average return. And the only sure way to do this is to buy an index fund, year after year, and hold it forever.

This idea – that information is reflected accurately and instantly in the market – is preposterous. In the first place, lots of people trading stocks don't know what they're doing. They can't accurately handicap stock prices because they don't know the first thing about valuation.

But even more than this, most of what's important to stock prices is unknowable. Nobody knows what the future holds for things like interest rates and economic growth. People's emotions about these unknowable variables – what we call "sentiment" – make a far bigger impact on stock prices than the latest earnings report. And people's emotions are anything but rational or efficient.

You can dramatically increase your returns in common stocks if you're simply more disciplined about when you make major investments. You only want to commit a substantial amount of capital when both valuation and sentiment are in extremely bullish ranges. In short, you want to buy when stocks are cheap and most people are afraid to buy them.

Unfortunately, these opportunities don't arise often in U.S. blue-chip stocks. But you can almost always find these conditions somewhere or in some part of the U.S. market.

Regards,

Porter Stansberry

So if you followed the buy-and-hold strategy in Russian stocks over the last 15 years, you would have made a very small amount of money – or lost money, depending on when you sold your shares. On the other hand, if you applied a few of our secrets, you could have easily traded this fund for more than 100% gains in only a few weeks. And if you watch this fund, you'll be able to make trades like this three or four times each decade. If you watch other similar funds, you'll be able to make trades like this once or twice a year.
And let me tell you one more thing about this situation. In January 2007, when TRF was widely overvalued and when most individual investors were clamoring to buy shares – despite the premium valuation – we checked to see if we could sell the fund short. We knew it was going to collapse and wanted to profit directly as it fell. But we couldn't. Why not? Because other professionals had already borrowed all of the available shares to short.

In other words, while 401(k) investors were buying and holding a time bomb, Wall Street's pros were lined up, waiting to take their money.

That's why we call "buy and hold" "buy and fold." That's what happens. People think they're investors when they buy. But sooner or later, the pain gets so bad and the loss is so big they panic and sell. Wall Street wins.

Would you have been able to continue buying the Templeton Russia Fund through the collapse of 2008? Not many people could. Instead, they chase hot sectors and investment fads and buy in at the worst possible time. Then after prices collapse, sooner or later, the pain and fear become unbearable, and they liquidate their investments – usually at the exact bottom.

Believe me, the pros know that's what individual investors are going to do. That's how they make their living.

Meanwhile, the big mutual-fund companies spend millions on "buy and hold" advertising each year. They give more millions to academic researchers – all of whom "prove" you can't time the market.

According to these folks, we shouldn't have been able to do the kind of trading we did with the Templeton Russia & East Europe Fund. They would tell you we didn't have any real edge against the other investors in the fund. They would tell you we just got "lucky" – despite the fact that we do these kinds of trades year after year.

And when researchers study actual mutual-fund returns, the results are nothing like the averages you find in the prospectus. Most people who invest in mutual funds never make more than 5% a year on average because they buy the wrong funds at the wrong times and sell at exactly the wrong times. And anyone who was buying stock mutual funds over the last 15 years most likely lost money overall.

Buy and hold doesn't work for two reasons: It ignores valuation and sentiment and it ignores human nature.

Even if buy and hold did work, it would be a less-than-optimal strategy because, as should be readily apparent to everyone who watches the stock market, the market isn't as "efficient" as so many academics claim.

The intellectual rationale for buy and hold is the idea that securities prices instantly reflect all the information available. You can't get an advantage on the market. The best investors can hope to do, therefore, is to get the market's average return. And the only sure way to do this is to buy an index fund, year after year, and hold it forever.

This idea – that information is reflected accurately and instantly in the market – is preposterous. In the first place, lots of people trading stocks don't know what they're doing. They can't accurately handicap stock prices because they don't know the first thing about valuation.

But even more than this, most of what's important to stock prices is unknowable. Nobody knows what the future holds for things like interest rates and economic growth. People's emotions about these unknowable variables – what we call "sentiment" – make a far bigger impact on stock prices than the latest earnings report. And people's emotions are anything but rational or efficient.

You can dramatically increase your returns in common stocks if you're simply more disciplined about when you make major investments. You only want to commit a substantial amount of capital when both valuation and sentiment are in extremely bullish ranges. In short, you want to buy when stocks are cheap and most people are afraid to buy them.

Unfortunately, these opportunities don't arise often in U.S. blue-chip stocks. But you can almost always find these conditions somewhere or in some part of the U.S. market.

Regards,

Porter Stansberry

And let me tell you one more thing about this situation. In January 2007, when TRF was widely overvalued and when most individual investors were clamoring to buy shares – despite the premium valuation – we checked to see if we could sell the fund short. We knew it was going to collapse and wanted to profit directly as it fell. But we couldn't. Why not? Because other professionals had already borrowed all of the available shares to short.
In other words, while 401(k) investors were buying and holding a time bomb, Wall Street's pros were lined up, waiting to take their money.

That's why we call "buy and hold" "buy and fold." That's what happens. People think they're investors when they buy. But sooner or later, the pain gets so bad and the loss is so big they panic and sell. Wall Street wins.

Would you have been able to continue buying the Templeton Russia Fund through the collapse of 2008? Not many people could. Instead, they chase hot sectors and investment fads and buy in at the worst possible time. Then after prices collapse, sooner or later, the pain and fear become unbearable, and they liquidate their investments – usually at the exact bottom.

Believe me, the pros know that's what individual investors are going to do. That's how they make their living.

Meanwhile, the big mutual-fund companies spend millions on "buy and hold" advertising each year. They give more millions to academic researchers – all of whom "prove" you can't time the market.

According to these folks, we shouldn't have been able to do the kind of trading we did with the Templeton Russia & East Europe Fund. They would tell you we didn't have any real edge against the other investors in the fund. They would tell you we just got "lucky" – despite the fact that we do these kinds of trades year after year.

And when researchers study actual mutual-fund returns, the results are nothing like the averages you find in the prospectus. Most people who invest in mutual funds never make more than 5% a year on average because they buy the wrong funds at the wrong times and sell at exactly the wrong times. And anyone who was buying stock mutual funds over the last 15 years most likely lost money overall.

Buy and hold doesn't work for two reasons: It ignores valuation and sentiment and it ignores human nature.

Even if buy and hold did work, it would be a less-than-optimal strategy because, as should be readily apparent to everyone who watches the stock market, the market isn't as "efficient" as so many academics claim.

The intellectual rationale for buy and hold is the idea that securities prices instantly reflect all the information available. You can't get an advantage on the market. The best investors can hope to do, therefore, is to get the market's average return. And the only sure way to do this is to buy an index fund, year after year, and hold it forever.

This idea – that information is reflected accurately and instantly in the market – is preposterous. In the first place, lots of people trading stocks don't know what they're doing. They can't accurately handicap stock prices because they don't know the first thing about valuation.

But even more than this, most of what's important to stock prices is unknowable. Nobody knows what the future holds for things like interest rates and economic growth. People's emotions about these unknowable variables – what we call "sentiment" – make a far bigger impact on stock prices than the latest earnings report. And people's emotions are anything but rational or efficient.

You can dramatically increase your returns in common stocks if you're simply more disciplined about when you make major investments. You only want to commit a substantial amount of capital when both valuation and sentiment are in extremely bullish ranges. In short, you want to buy when stocks are cheap and most people are afraid to buy them.

Unfortunately, these opportunities don't arise often in U.S. blue-chip stocks. But you can almost always find these conditions somewhere or in some part of the U.S. market.

Regards,

Porter Stansberry

In other words, while 401(k) investors were buying and holding a time bomb, Wall Street's pros were lined up, waiting to take their money.
That's why we call "buy and hold" "buy and fold." That's what happens. People think they're investors when they buy. But sooner or later, the pain gets so bad and the loss is so big they panic and sell. Wall Street wins.

Would you have been able to continue buying the Templeton Russia Fund through the collapse of 2008? Not many people could. Instead, they chase hot sectors and investment fads and buy in at the worst possible time. Then after prices collapse, sooner or later, the pain and fear become unbearable, and they liquidate their investments – usually at the exact bottom.

Believe me, the pros know that's what individual investors are going to do. That's how they make their living.

Meanwhile, the big mutual-fund companies spend millions on "buy and hold" advertising each year. They give more millions to academic researchers – all of whom "prove" you can't time the market.

According to these folks, we shouldn't have been able to do the kind of trading we did with the Templeton Russia & East Europe Fund. They would tell you we didn't have any real edge against the other investors in the fund. They would tell you we just got "lucky" – despite the fact that we do these kinds of trades year after year.

And when researchers study actual mutual-fund returns, the results are nothing like the averages you find in the prospectus. Most people who invest in mutual funds never make more than 5% a year on average because they buy the wrong funds at the wrong times and sell at exactly the wrong times. And anyone who was buying stock mutual funds over the last 15 years most likely lost money overall.

Buy and hold doesn't work for two reasons: It ignores valuation and sentiment and it ignores human nature.

Even if buy and hold did work, it would be a less-than-optimal strategy because, as should be readily apparent to everyone who watches the stock market, the market isn't as "efficient" as so many academics claim.

The intellectual rationale for buy and hold is the idea that securities prices instantly reflect all the information available. You can't get an advantage on the market. The best investors can hope to do, therefore, is to get the market's average return. And the only sure way to do this is to buy an index fund, year after year, and hold it forever.

This idea – that information is reflected accurately and instantly in the market – is preposterous. In the first place, lots of people trading stocks don't know what they're doing. They can't accurately handicap stock prices because they don't know the first thing about valuation.

But even more than this, most of what's important to stock prices is unknowable. Nobody knows what the future holds for things like interest rates and economic growth. People's emotions about these unknowable variables – what we call "sentiment" – make a far bigger impact on stock prices than the latest earnings report. And people's emotions are anything but rational or efficient.

You can dramatically increase your returns in common stocks if you're simply more disciplined about when you make major investments. You only want to commit a substantial amount of capital when both valuation and sentiment are in extremely bullish ranges. In short, you want to buy when stocks are cheap and most people are afraid to buy them.

Unfortunately, these opportunities don't arise often in U.S. blue-chip stocks. But you can almost always find these conditions somewhere or in some part of the U.S. market.

Regards,

Porter Stansberry

That's why we call "buy and hold" "buy and fold." That's what happens. People think they're investors when they buy. But sooner or later, the pain gets so bad and the loss is so big they panic and sell. Wall Street wins.
Would you have been able to continue buying the Templeton Russia Fund through the collapse of 2008? Not many people could. Instead, they chase hot sectors and investment fads and buy in at the worst possible time. Then after prices collapse, sooner or later, the pain and fear become unbearable, and they liquidate their investments – usually at the exact bottom.

Believe me, the pros know that's what individual investors are going to do. That's how they make their living.

Meanwhile, the big mutual-fund companies spend millions on "buy and hold" advertising each year. They give more millions to academic researchers – all of whom "prove" you can't time the market.

According to these folks, we shouldn't have been able to do the kind of trading we did with the Templeton Russia & East Europe Fund. They would tell you we didn't have any real edge against the other investors in the fund. They would tell you we just got "lucky" – despite the fact that we do these kinds of trades year after year.

And when researchers study actual mutual-fund returns, the results are nothing like the averages you find in the prospectus. Most people who invest in mutual funds never make more than 5% a year on average because they buy the wrong funds at the wrong times and sell at exactly the wrong times. And anyone who was buying stock mutual funds over the last 15 years most likely lost money overall.

Buy and hold doesn't work for two reasons: It ignores valuation and sentiment and it ignores human nature.

Even if buy and hold did work, it would be a less-than-optimal strategy because, as should be readily apparent to everyone who watches the stock market, the market isn't as "efficient" as so many academics claim.

The intellectual rationale for buy and hold is the idea that securities prices instantly reflect all the information available. You can't get an advantage on the market. The best investors can hope to do, therefore, is to get the market's average return. And the only sure way to do this is to buy an index fund, year after year, and hold it forever.

This idea – that information is reflected accurately and instantly in the market – is preposterous. In the first place, lots of people trading stocks don't know what they're doing. They can't accurately handicap stock prices because they don't know the first thing about valuation.

But even more than this, most of what's important to stock prices is unknowable. Nobody knows what the future holds for things like interest rates and economic growth. People's emotions about these unknowable variables – what we call "sentiment" – make a far bigger impact on stock prices than the latest earnings report. And people's emotions are anything but rational or efficient.

You can dramatically increase your returns in common stocks if you're simply more disciplined about when you make major investments. You only want to commit a substantial amount of capital when both valuation and sentiment are in extremely bullish ranges. In short, you want to buy when stocks are cheap and most people are afraid to buy them.

Unfortunately, these opportunities don't arise often in U.S. blue-chip stocks. But you can almost always find these conditions somewhere or in some part of the U.S. market.

Regards,

Porter Stansberry

Would you have been able to continue buying the Templeton Russia Fund through the collapse of 2008? Not many people could. Instead, they chase hot sectors and investment fads and buy in at the worst possible time. Then after prices collapse, sooner or later, the pain and fear become unbearable, and they liquidate their investments – usually at the exact bottom.
Believe me, the pros know that's what individual investors are going to do. That's how they make their living.

Meanwhile, the big mutual-fund companies spend millions on "buy and hold" advertising each year. They give more millions to academic researchers – all of whom "prove" you can't time the market.

According to these folks, we shouldn't have been able to do the kind of trading we did with the Templeton Russia & East Europe Fund. They would tell you we didn't have any real edge against the other investors in the fund. They would tell you we just got "lucky" – despite the fact that we do these kinds of trades year after year.

And when researchers study actual mutual-fund returns, the results are nothing like the averages you find in the prospectus. Most people who invest in mutual funds never make more than 5% a year on average because they buy the wrong funds at the wrong times and sell at exactly the wrong times. And anyone who was buying stock mutual funds over the last 15 years most likely lost money overall.

Buy and hold doesn't work for two reasons: It ignores valuation and sentiment and it ignores human nature.

Even if buy and hold did work, it would be a less-than-optimal strategy because, as should be readily apparent to everyone who watches the stock market, the market isn't as "efficient" as so many academics claim.

The intellectual rationale for buy and hold is the idea that securities prices instantly reflect all the information available. You can't get an advantage on the market. The best investors can hope to do, therefore, is to get the market's average return. And the only sure way to do this is to buy an index fund, year after year, and hold it forever.

This idea – that information is reflected accurately and instantly in the market – is preposterous. In the first place, lots of people trading stocks don't know what they're doing. They can't accurately handicap stock prices because they don't know the first thing about valuation.

But even more than this, most of what's important to stock prices is unknowable. Nobody knows what the future holds for things like interest rates and economic growth. People's emotions about these unknowable variables – what we call "sentiment" – make a far bigger impact on stock prices than the latest earnings report. And people's emotions are anything but rational or efficient.

You can dramatically increase your returns in common stocks if you're simply more disciplined about when you make major investments. You only want to commit a substantial amount of capital when both valuation and sentiment are in extremely bullish ranges. In short, you want to buy when stocks are cheap and most people are afraid to buy them.

Unfortunately, these opportunities don't arise often in U.S. blue-chip stocks. But you can almost always find these conditions somewhere or in some part of the U.S. market.

Regards,

Porter Stansberry

Believe me, the pros know that's what individual investors are going to do. That's how they make their living.
Meanwhile, the big mutual-fund companies spend millions on "buy and hold" advertising each year. They give more millions to academic researchers – all of whom "prove" you can't time the market.

According to these folks, we shouldn't have been able to do the kind of trading we did with the Templeton Russia & East Europe Fund. They would tell you we didn't have any real edge against the other investors in the fund. They would tell you we just got "lucky" – despite the fact that we do these kinds of trades year after year.

And when researchers study actual mutual-fund returns, the results are nothing like the averages you find in the prospectus. Most people who invest in mutual funds never make more than 5% a year on average because they buy the wrong funds at the wrong times and sell at exactly the wrong times. And anyone who was buying stock mutual funds over the last 15 years most likely lost money overall.

Buy and hold doesn't work for two reasons: It ignores valuation and sentiment and it ignores human nature.

Even if buy and hold did work, it would be a less-than-optimal strategy because, as should be readily apparent to everyone who watches the stock market, the market isn't as "efficient" as so many academics claim.

The intellectual rationale for buy and hold is the idea that securities prices instantly reflect all the information available. You can't get an advantage on the market. The best investors can hope to do, therefore, is to get the market's average return. And the only sure way to do this is to buy an index fund, year after year, and hold it forever.

This idea – that information is reflected accurately and instantly in the market – is preposterous. In the first place, lots of people trading stocks don't know what they're doing. They can't accurately handicap stock prices because they don't know the first thing about valuation.

But even more than this, most of what's important to stock prices is unknowable. Nobody knows what the future holds for things like interest rates and economic growth. People's emotions about these unknowable variables – what we call "sentiment" – make a far bigger impact on stock prices than the latest earnings report. And people's emotions are anything but rational or efficient.

You can dramatically increase your returns in common stocks if you're simply more disciplined about when you make major investments. You only want to commit a substantial amount of capital when both valuation and sentiment are in extremely bullish ranges. In short, you want to buy when stocks are cheap and most people are afraid to buy them.

Unfortunately, these opportunities don't arise often in U.S. blue-chip stocks. But you can almost always find these conditions somewhere or in some part of the U.S. market.

Regards,

Porter Stansberry

Meanwhile, the big mutual-fund companies spend millions on "buy and hold" advertising each year. They give more millions to academic researchers – all of whom "prove" you can't time the market.
According to these folks, we shouldn't have been able to do the kind of trading we did with the Templeton Russia & East Europe Fund. They would tell you we didn't have any real edge against the other investors in the fund. They would tell you we just got "lucky" – despite the fact that we do these kinds of trades year after year.

And when researchers study actual mutual-fund returns, the results are nothing like the averages you find in the prospectus. Most people who invest in mutual funds never make more than 5% a year on average because they buy the wrong funds at the wrong times and sell at exactly the wrong times. And anyone who was buying stock mutual funds over the last 15 years most likely lost money overall.

Buy and hold doesn't work for two reasons: It ignores valuation and sentiment and it ignores human nature.

Even if buy and hold did work, it would be a less-than-optimal strategy because, as should be readily apparent to everyone who watches the stock market, the market isn't as "efficient" as so many academics claim.

The intellectual rationale for buy and hold is the idea that securities prices instantly reflect all the information available. You can't get an advantage on the market. The best investors can hope to do, therefore, is to get the market's average return. And the only sure way to do this is to buy an index fund, year after year, and hold it forever.

This idea – that information is reflected accurately and instantly in the market – is preposterous. In the first place, lots of people trading stocks don't know what they're doing. They can't accurately handicap stock prices because they don't know the first thing about valuation.

But even more than this, most of what's important to stock prices is unknowable. Nobody knows what the future holds for things like interest rates and economic growth. People's emotions about these unknowable variables – what we call "sentiment" – make a far bigger impact on stock prices than the latest earnings report. And people's emotions are anything but rational or efficient.

You can dramatically increase your returns in common stocks if you're simply more disciplined about when you make major investments. You only want to commit a substantial amount of capital when both valuation and sentiment are in extremely bullish ranges. In short, you want to buy when stocks are cheap and most people are afraid to buy them.

Unfortunately, these opportunities don't arise often in U.S. blue-chip stocks. But you can almost always find these conditions somewhere or in some part of the U.S. market.

Regards,

Porter Stansberry

According to these folks, we shouldn't have been able to do the kind of trading we did with the Templeton Russia & East Europe Fund. They would tell you we didn't have any real edge against the other investors in the fund. They would tell you we just got "lucky" – despite the fact that we do these kinds of trades year after year.
And when researchers study actual mutual-fund returns, the results are nothing like the averages you find in the prospectus. Most people who invest in mutual funds never make more than 5% a year on average because they buy the wrong funds at the wrong times and sell at exactly the wrong times. And anyone who was buying stock mutual funds over the last 15 years most likely lost money overall.

Buy and hold doesn't work for two reasons: It ignores valuation and sentiment and it ignores human nature.

Even if buy and hold did work, it would be a less-than-optimal strategy because, as should be readily apparent to everyone who watches the stock market, the market isn't as "efficient" as so many academics claim.

The intellectual rationale for buy and hold is the idea that securities prices instantly reflect all the information available. You can't get an advantage on the market. The best investors can hope to do, therefore, is to get the market's average return. And the only sure way to do this is to buy an index fund, year after year, and hold it forever.

This idea – that information is reflected accurately and instantly in the market – is preposterous. In the first place, lots of people trading stocks don't know what they're doing. They can't accurately handicap stock prices because they don't know the first thing about valuation.

But even more than this, most of what's important to stock prices is unknowable. Nobody knows what the future holds for things like interest rates and economic growth. People's emotions about these unknowable variables – what we call "sentiment" – make a far bigger impact on stock prices than the latest earnings report. And people's emotions are anything but rational or efficient.

You can dramatically increase your returns in common stocks if you're simply more disciplined about when you make major investments. You only want to commit a substantial amount of capital when both valuation and sentiment are in extremely bullish ranges. In short, you want to buy when stocks are cheap and most people are afraid to buy them.

Unfortunately, these opportunities don't arise often in U.S. blue-chip stocks. But you can almost always find these conditions somewhere or in some part of the U.S. market.

Regards,

Porter Stansberry

And when researchers study actual mutual-fund returns, the results are nothing like the averages you find in the prospectus. Most people who invest in mutual funds never make more than 5% a year on average because they buy the wrong funds at the wrong times and sell at exactly the wrong times. And anyone who was buying stock mutual funds over the last 15 years most likely lost money overall.
Buy and hold doesn't work for two reasons: It ignores valuation and sentiment and it ignores human nature.

Even if buy and hold did work, it would be a less-than-optimal strategy because, as should be readily apparent to everyone who watches the stock market, the market isn't as "efficient" as so many academics claim.

The intellectual rationale for buy and hold is the idea that securities prices instantly reflect all the information available. You can't get an advantage on the market. The best investors can hope to do, therefore, is to get the market's average return. And the only sure way to do this is to buy an index fund, year after year, and hold it forever.

This idea – that information is reflected accurately and instantly in the market – is preposterous. In the first place, lots of people trading stocks don't know what they're doing. They can't accurately handicap stock prices because they don't know the first thing about valuation.

But even more than this, most of what's important to stock prices is unknowable. Nobody knows what the future holds for things like interest rates and economic growth. People's emotions about these unknowable variables – what we call "sentiment" – make a far bigger impact on stock prices than the latest earnings report. And people's emotions are anything but rational or efficient.

You can dramatically increase your returns in common stocks if you're simply more disciplined about when you make major investments. You only want to commit a substantial amount of capital when both valuation and sentiment are in extremely bullish ranges. In short, you want to buy when stocks are cheap and most people are afraid to buy them.

Unfortunately, these opportunities don't arise often in U.S. blue-chip stocks. But you can almost always find these conditions somewhere or in some part of the U.S. market.

Regards,

Porter Stansberry

Buy and hold doesn't work for two reasons: It ignores valuation and sentiment and it ignores human nature.
Even if buy and hold did work, it would be a less-than-optimal strategy because, as should be readily apparent to everyone who watches the stock market, the market isn't as "efficient" as so many academics claim.

The intellectual rationale for buy and hold is the idea that securities prices instantly reflect all the information available. You can't get an advantage on the market. The best investors can hope to do, therefore, is to get the market's average return. And the only sure way to do this is to buy an index fund, year after year, and hold it forever.

This idea – that information is reflected accurately and instantly in the market – is preposterous. In the first place, lots of people trading stocks don't know what they're doing. They can't accurately handicap stock prices because they don't know the first thing about valuation.

But even more than this, most of what's important to stock prices is unknowable. Nobody knows what the future holds for things like interest rates and economic growth. People's emotions about these unknowable variables – what we call "sentiment" – make a far bigger impact on stock prices than the latest earnings report. And people's emotions are anything but rational or efficient.

You can dramatically increase your returns in common stocks if you're simply more disciplined about when you make major investments. You only want to commit a substantial amount of capital when both valuation and sentiment are in extremely bullish ranges. In short, you want to buy when stocks are cheap and most people are afraid to buy them.

Unfortunately, these opportunities don't arise often in U.S. blue-chip stocks. But you can almost always find these conditions somewhere or in some part of the U.S. market.

Regards,

Porter Stansberry

Even if buy and hold did work, it would be a less-than-optimal strategy because, as should be readily apparent to everyone who watches the stock market, the market isn't as "efficient" as so many academics claim.
The intellectual rationale for buy and hold is the idea that securities prices instantly reflect all the information available. You can't get an advantage on the market. The best investors can hope to do, therefore, is to get the market's average return. And the only sure way to do this is to buy an index fund, year after year, and hold it forever.

This idea – that information is reflected accurately and instantly in the market – is preposterous. In the first place, lots of people trading stocks don't know what they're doing. They can't accurately handicap stock prices because they don't know the first thing about valuation.

But even more than this, most of what's important to stock prices is unknowable. Nobody knows what the future holds for things like interest rates and economic growth. People's emotions about these unknowable variables – what we call "sentiment" – make a far bigger impact on stock prices than the latest earnings report. And people's emotions are anything but rational or efficient.

You can dramatically increase your returns in common stocks if you're simply more disciplined about when you make major investments. You only want to commit a substantial amount of capital when both valuation and sentiment are in extremely bullish ranges. In short, you want to buy when stocks are cheap and most people are afraid to buy them.

Unfortunately, these opportunities don't arise often in U.S. blue-chip stocks. But you can almost always find these conditions somewhere or in some part of the U.S. market.

Regards,

Porter Stansberry

The intellectual rationale for buy and hold is the idea that securities prices instantly reflect all the information available. You can't get an advantage on the market. The best investors can hope to do, therefore, is to get the market's average return. And the only sure way to do this is to buy an index fund, year after year, and hold it forever.
This idea – that information is reflected accurately and instantly in the market – is preposterous. In the first place, lots of people trading stocks don't know what they're doing. They can't accurately handicap stock prices because they don't know the first thing about valuation.

But even more than this, most of what's important to stock prices is unknowable. Nobody knows what the future holds for things like interest rates and economic growth. People's emotions about these unknowable variables – what we call "sentiment" – make a far bigger impact on stock prices than the latest earnings report. And people's emotions are anything but rational or efficient.

You can dramatically increase your returns in common stocks if you're simply more disciplined about when you make major investments. You only want to commit a substantial amount of capital when both valuation and sentiment are in extremely bullish ranges. In short, you want to buy when stocks are cheap and most people are afraid to buy them.

Unfortunately, these opportunities don't arise often in U.S. blue-chip stocks. But you can almost always find these conditions somewhere or in some part of the U.S. market.

Regards,

Porter Stansberry

This idea – that information is reflected accurately and instantly in the market – is preposterous. In the first place, lots of people trading stocks don't know what they're doing. They can't accurately handicap stock prices because they don't know the first thing about valuation.
But even more than this, most of what's important to stock prices is unknowable. Nobody knows what the future holds for things like interest rates and economic growth. People's emotions about these unknowable variables – what we call "sentiment" – make a far bigger impact on stock prices than the latest earnings report. And people's emotions are anything but rational or efficient.

You can dramatically increase your returns in common stocks if you're simply more disciplined about when you make major investments. You only want to commit a substantial amount of capital when both valuation and sentiment are in extremely bullish ranges. In short, you want to buy when stocks are cheap and most people are afraid to buy them.

Unfortunately, these opportunities don't arise often in U.S. blue-chip stocks. But you can almost always find these conditions somewhere or in some part of the U.S. market.

Regards,

Porter Stansberry

But even more than this, most of what's important to stock prices is unknowable. Nobody knows what the future holds for things like interest rates and economic growth. People's emotions about these unknowable variables – what we call "sentiment" – make a far bigger impact on stock prices than the latest earnings report. And people's emotions are anything but rational or efficient.
You can dramatically increase your returns in common stocks if you're simply more disciplined about when you make major investments. You only want to commit a substantial amount of capital when both valuation and sentiment are in extremely bullish ranges. In short, you want to buy when stocks are cheap and most people are afraid to buy them.

Unfortunately, these opportunities don't arise often in U.S. blue-chip stocks. But you can almost always find these conditions somewhere or in some part of the U.S. market.

Regards,

Porter Stansberry

You can dramatically increase your returns in common stocks if you're simply more disciplined about when you make major investments. You only want to commit a substantial amount of capital when both valuation and sentiment are in extremely bullish ranges. In short, you want to buy when stocks are cheap and most people are afraid to buy them.
Unfortunately, these opportunities don't arise often in U.S. blue-chip stocks. But you can almost always find these conditions somewhere or in some part of the U.S. market.

Regards,

Porter Stansberry

Unfortunately, these opportunities don't arise often in U.S. blue-chip stocks. But you can almost always find these conditions somewhere or in some part of the U.S. market.
Regards,

Porter Stansberry

Regards,
Porter Stansberry

Porter Stansberry

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The Templeton Russia Fund (TRF) is about to get crushed again. Stuffed with Russian oil and bank stocks, this ETF is one of the few direct Russia plays in the market… This spring, the premium on TRF hit a whopping 35%. You had to pay $1.35 for every $1 of real value. This huge overvaluation was corrected when emerging markets got obliterated in May. The Russia Fund fared the worst, falling 47% from its peak.