A Champion Company That Plays to Win

Now that we’ve freed up capital ahead of the financial panic, we can build a shopping list of the world’s best businesses. In this issue, we’ll unpack one of the greatest endorsement deals of all time – and show how it transformed one company from a struggling industry laggard into a classic “forever stock.”

Breaking News: Porter Stansberry Returns to MarketWise as Chairman and CEO

Porter & Co. subscribers retain exclusive access to Porter’s personal writing and market analysis.   As some astute subscribers noticed, after a protracted proxy fight, Porter recently regained control of MarketWise (Nasdaq: MKTW). At a board meeting last week, Porter was elected Chairman of the Board and CEO of the company, which is the publicly-traded parent of his other namesake financial research firm, Stansberry Research.  As most subscribers know, Porter retired from MarketWise in December 2020, shortly before the company’s IPO. But following the sale of the company, the conditions of Porter’s retirement were not honored by the company. And, worse, the company’s board and management began taking actions that were detrimental to the business, to the shareholders, and to Porter personally.  As a result, beginning in January 2023, Porter began an activist investor campaign to replace the board and most of the management team.  (If you’re interested in the details, you can read Porter’s SEC filings from his activist campaign on January 20, March 3, August 11, and August 28.) Everyone at Porter & Co. congratulates Porter on his big win in the boardroom. We always believed that, eventually, the shareholders would make the right decision to put Porter back in charge. What does this mean for Porter & Co. subscribers?  Porter’s plan is to merge Porter &  Co. into MarketWise, where it will be an independently managed unit, like the other major MarketWise brands. All of Porter’s writing and other financial presentations will continue to be published exclusively by Porter & Co. All Porter & Co. publications and subscription services are distinct from those of Stansberry Research. If you want to read Porter’s own analysis and thoughts… you’ll find them only at Porter & Co. And, if you know Porter, you know how eager he is to return to the good life of living and writing at his farm with us, his oldest friends and for you, his best clients.

Everyone Else Is Fighting for Second Best

A “Forever Stock” Powered by Superstars

The paper cutter sliced downward. A tiny scrap of cardstock fell to the floor.

That snip would cost Bill Mastro a quarter of a million dollars and land him in federal prison for nearly two years.

Crooked auctioneer Mastro, known as the “King of Memorabilia,” had gotten away with a few fraudulent sales at Mastro Auctions before – including a fake lock of Elvis’s hair and a Cincinnati Red Stockings baseball trophy that wasn’t really from 1869. Now he was working on his biggest con yet.

It was 1985, and Mastro had just scored an incredible find: the world’s most valuable baseball card. Via a Long Island dealer, he now had his hands on a genuine T206 Honus Wagner card – one of fewer than 60 printed in 1909, before the Hall of Fame shortstop withdrew the rights to his name and likeness. (Wagner didn’t like that the cards were packaged with cigarettes.)

Mastro picked up the T206 for a steal ($25,000) because it wasn’t in perfect condition. The edges were visibly crumpled. But – the shady auctioneer figured – a round or two with the paper cutter would fix that.

Snip, snip!

Now pristine – as though it had been freshly cut from a new sheet – the card easily met PSA (Professional Sports Authenticator) standards and was certified “Near Mint.” Armed with the PSA stamp of approval, Mastro fobbed the card off on a private collector for $110,000.

Then he got cocky.

The Federal Bureau of Investigation – already nosing around the sports-memorabilia industry on suspicions of fraud – tapped Mastro’s phone and heard him bragging about the doctored baseball card. It was downhill for Masto then: serial counts of wire and mail fraud, a $250,000 fine, and a prison sentence.

The bad publicity (and the edge trimming) didn’t seem to hurt the value of the doctored T206 card, though. During the 1990s, it cycled through a series of private buyers, roughly doubling in price each time it changed hands – eventually ending up in the hands of Ken Kendrick, co-owner of the Arizona Diamondbacks professional baseball team, who paid $2.8 million for the two-by-three-inch piece of heavy paper.

It was a testament to the magic of sports memorabilia – and the time-defying power of sports endorsements.

Although a few scattered baseball players had served as “models” in beer and tobacco advertisements in the late 1800s, Honus Wagner was the first big-name player to license his name and likeness to commercial products – starting around 1905, when he was a rising star batting .363 for the Pittsburgh Pirates. 

Wagner backed out of the baseball-card deal quickly, writing that “I don’t want to have my picture in any cigarettes.” However, he had no problem associating his image with the “manlier” cigar, as well as with gunpowder, soft drinks, and chewing gum.

Most enduringly, in 1905, he inked a deal with Bud Hillerich, manufacturer of the Louisville Slugger baseball bat, allowing Hillerich to use the famous Honus Wagner signature as a decal on his bats. (Bud paid him $75 for the privilege, around $2,600 in 2023 dollars.)

For Bud, it was money well spent. Sales soared, putting Hillerich’s small family business on the map and eventually securing the Slugger as the official bat of Major League Baseball. (Well over a century after Honus signed the bat, 14% of MLB players still wield a Louisville Slugger at the plate.)

Honus Wagner didn’t hawk gum and gunpowder in vain. His enterprising attitude opened the door for a series of ever more lucrative sports-endorsement deals. As the 20th century rolled on, A-list players realized they could often make more money from signing a ball than from tossing it.

And thereby hangs a tale…

In this issue, we’ll unpack one of the greatest endorsement deals of all time – and show how it transformed one company from a struggling industry laggard into one of the greatest success stories in American business. 

But before we get into today’s recommendation… an urgent note of caution. 

Waiting for the Right Price 

Financial markets have reached a critical inflection point. From 2009 to 2020, central banks flooded the world economy with a record amount of cheap money in order to maintain ultra low interest rates. 

As we explained in our previous issue, by manipulating the most important factor in the economy – the price of capital – central banks have encouraged a decade of unprecedented capital misallocation. The free-money frenzy of the last decade is akin to a steady pour of dynamite filling the world’s largest powder keg. 

As long as there was no spark, there was no imminent danger. When Bank of America bought hundreds of billions in long-duration Treasuries at sub-2% yields in 2020 and 2021, it seemed the ultimate “safe.” After all, what’s safer than government bonds? 

But now, central banks have lit the match – in the form of the most aggressive rate-hiking campaign of the last 40 years. With long-term U.S. Treasury yields breaking out above 5% to new 15-year highs, a big bill is coming due for a decade of free money. 

So far, the fallout has been contained to a few regional banks. The bull-market cheerleaders have assured the investing public that the banking crisis is “contained.” 

We heard the same thing in 2008. When subprime lenders and major financial institutions started going belly up, then-Fed Chair Ben Bernanke claimed the subprime crisis was “contained.” Financial markets enjoyed short-lived rallies on each bailout and emergency liquidity injection. But the embers continued smoldering… until a firestorm erupted into the greatest financial crisis since the Great Depression. 

Now, the stage is set for a repeat performance. Except this time, the problems run far deeper. The capital distortions are more entrenched. We can’t know exactly when the mistakes made during a decade of zero percent interest rate policy (ZIRP) will reveal themselves in spectacular fashion. We only know it’s a matter of when… not if.

Today, one thing is clear: the cheap-money era is over. With a high cost of capital now imposed onto the U.S. and global economies, a painful reckoning awaits.

But with every crisis comes opportunity.

As I (Porter Stansberry) have written about for the last two decades, the safest and surest path to inevitable wealth is stunningly simple. Buy the world’s most dominant, capital efficient businesses and don’t overpay for them. 

The problem lies in that last point. Most of the time, the shares of world-leading companies trade at premium prices. But every once in a while, a financial panic – or a corporate misstep, and short-sighted investors who sell at the first sign of trouble – provides the rare opportunity to get top-shelf stocks at bargain-basement prices. 

That’s the opportunity we’re preparing for… starting today. Our mission in the coming months is to help investors build a shopping list of the world’s best businesses – companies that dominate their industries, featuring business models with high capital efficiency, that can return a growing stream of earnings to shareholders – in anticipation of their shares hitting the discount rack. We’ll be creating a game plan to transform the coming crisis into a once-in-a-generation wealth-building opportunity. 

The company we’re introducing today is a classic “forever stock.” Over the last three decades, it’s created one of the most valuable and enduring consumer brands of all time. The company has also built a world-class marketing engine that none of its competitors can come close to replicating. This enduring competitive advantage makes us confident the company will continue stoking demand for its products – and generating world-class returns, for decades to come.

The Business of Selling Aspiration