Dear Mr. Berko: Please tell me your opinion of Porter Stansberry, whose newsletter predicts the immediate collapse of the dollar and the stock market and recommends gold and silver. Should I buy this letter and follow his other advice, which is available only from this publication? Also, tell me your opinion of IBM. I am thinking of buying 55 shares.
— TR, Joliet, Ill.
Dear TR: Porter Stansberry has been predicting the collapse of the dollar and the collapse of the market since 1999. He also predicted that the price of oil would reach $360 a barrel by mid-2013.
Stansberry’s newsletter is a perfect fit if you are intellectually vacant, have a good fourth-grade education, are bereft of common sense, speak only pig Latin, have an IQ of 67 or were born on Pluto. This over-chubby fraudster sells a provocatively written publication about real estate, commodities, the stock market and economic theory so replete with deceit and misinformation that it borders on criminal negligence. The investment advice of this articulate shill is so masterfully egregious that the Securities and Exchange Commission fined him $1.5 million in 2007 for perpetrating a “scheme to defraud public investors by disseminating false information in several Internet newsletters.” The courts rejected his First Amendment defense, saying, “Stansberry’s conduct undoubtedly involved deliberate fraud, making statements that he knew to be false.” And that’s what Americans are exposed to when they listen to many financial advertisements on Sirius XM Radio. American investors are no greedier than other investors, though they are, by orders of magnitude, infinitely easier to hornswoggle.
Stansberry and thousands of investment incompetents who litter the airwaves, dirty your mail and post misleading advertisements in the media have caused irreparable damage to large numbers of investors. I’ve been in this business over 50 years; I’ve watched a lot of water go over the dam, and it’s never been more polluted. I would guess that 40 percent of licensed salespeople selling investment advice are devious, greedy, articulate incompetents. And 35 percent of those who are licensed to peddle investment products are just greedy and articulate. Of the remaining 25 percent, half are basically honest and as dumb as glue, and the other half are just basically honest. It’s tough for civilians to get a fair shake with their retirement portfolios. Brokerage firms hire representatives based foremost on their sales ability, provide four months of financial training and then set them loose.
Sadly, the overseeing SEC is a bureaucratic farce run by Mary Schapiro, who earned $21 million in her last year as chairwoman of a feckless Financial Industry Regulatory Authority in 2008 before assuming her SEC title. Last year, individual retirement account assets reached $6.5 trillion, and brokerages such as Royal Alliance, Ameriprise Financial, IAA Financial and Primerica, as well as smaller firms, have sliced and diced retirees with dreadful products and outrageous commissions. That’s par for the portfolio, which is why I laud a proposal by Jack Bogle (founder of The Vanguard Group) to create a federal body that would approve retirement products to ensure greater oversight of the brokerage industry.