RJ Hamster
Between Hyperactivity and the Coffee
Delivering World-Class Financial Research Since 1999
Just bagged a 244% profit… Why I’m sad about it… You can’t manage risk by fundamentals… The most underappreciated variable in the market… Revisiting the coffee can… Too much trading or no selling at all… How to strike the balance…
The silver saga took a sad turn for me last Friday…
Just before you received my weekly Digest essay on Thursday evening, I (Dan Ferris) stopped out of the iShares Silver Trust (SLV) in The Ferris Report.
As I told Ferris Report subscribers the following day, a highly volatile market environment is no place to start second-guessing your stops. It’s exactly the place where you must maintain the most iron discipline.
So I recommended selling.
We recorded a 244% profit for The Ferris Report‘s model portfolio. Subscribers who followed my advice made nearly three and a half times their money.
It was a resounding success on all fronts. We bought well, held during an epic bull run, let our trailing stop tell us when it was time to exit, and bagged a triple-digit profit.
So… why would I be sad about a successful trade that more than tripled my subscribers’ money?
Besides the fact that it produced an excellent outcome, we’re not supposed to be emotional about investing. We’re supposed to keep emotions out of our investment process.
Yes, but… we humans will always have strong feelings about our savings… our futures… and the investment returns that we hope will provide for us after we’re no longer working. That’ll never change.
The best you can hope to do is keep emotion from wrecking your investment strategy and causing either sleepless nights or big portfolio losses.
In this case, I did that by using a trailing stop. I always knew what would take me out of the trade, and I never worried about it. The moment came and went. I recommended selling. And that’s that.
I’m sad about exiting silver for reasons I made clear last week…
As I told you in last Thursday’s essay, the three most important fundamentals are still in place for silver: the relationship between gold and silver, silver’s history as a monetary metal, and the ongoing supply deficit.
So I believe it’s likely the recent crash was simply a correction on the way to higher highs. I know that the biggest money is made by sticking with a great asset for a good long time.
The Ferris Report‘s SLV trade lasted a little more than three years. That’s a decent amount of time, but it’s not long enough to produce a 10-bagger, for example. Hence, sadness.
And yes, I think silver has 10-bagger potential from the December 2022 levels where I first recommended it.
That brings us to the question…
If I believe the trend is intact… why exit at all? Why not just keep the sadness at bay and stay in the trade? That’s an especially good question since I recommended silver based solely on fundamental reasons, not technical price action.
Here’s my answer… You can enter trades based solely on fundamentals. But you must control risk through other means, like position sizing and trailing stops.
Fundamentals don’t protect you from risk. As silver has amply demonstrated, the fundamentals can remain solidly intact even as the price is collapsing.
Arguing with the market won’t make it recognize the fundamentals. You must sell when your stops are hit, no matter how much conviction you have.
Hey, I’d love it if fundamentals and price action were never out of step.
Then we could just have fun learning about businesses and assets and portfolio construction. We’d never worry about the market crushing an asset’s price nearly 30% in a single day, like it did with silver.
Right now, our silver fundamentals are still intact… But the market took us out in dramatic fashion. With our sell alert, we may have prevented subscribers from watching all their profit disappear – or worse, from watching a large profit turn to a large loss.
By setting and respecting a stop loss, we set our portfolios free to grow…
Time is the most underappreciated variable in the market…
Wall Street obsesses over quarterly earnings reports. If a business could be made or broken by three months’ performance, it’s nothing but a rank speculation.
Professional investors obsess over their monthly performance, as though they have a prayer of achieving a good performance every single month. Few investors outpace their benchmark even every year.
Institutional investors of all kinds know their annual compensation is tied to the performance of the assets they manage relative to a benchmark like the S&P 500. They never want to be too far behind the index. So they’re always making adjustments to match it.
And, of course, too many individual investors tend to want to see their account balances constantly rising at unrealistically high rates of return. So they chase fads and succumb to FOMO – the fear of missing out on the next big market move.
In other words, all types of investors, from the biggest to the smallest, tend to focus on short-term performance rather than sticking with a proven long-term strategy. It’s an all-too-human tendency. But it’s an obstacle to growing your wealth.
These investors trade frequently and can’t wait to buy and sell. The best way to build wealth is to identify a strong investment and give it time to work out.
Others let time work against them by overstaying their welcome in a losing trade.
Folks are cutting their winners and letting their losers run… Or, as some have put it, they’re “pruning the flowers and watering the weeds.”
We want to put our money into ideas we’re confident in for the long term. And we want to manage our risk with trailing stops (to cut short our losses) and careful position sizing (so that one loser doesn’t do too much damage to our overall portfolio).
There’s another way to control risk…
It requires even greater discipline than position sizing and trailing stops.
I mean being a good contrarian with a very long time horizon.
I talked earlier about not arguing with the market about fundamentals. But with this approach, you’re not arguing with the market… You’re just ignoring it.
My regular readers know that I’m a fan of “strong convictions, loosely held.” But when you have a strong enough conviction, and a long enough time horizon, you might just wait for the market to change its mind.
Let’s say you decided 20 years ago that silver was a highly desirable hard asset, and you were going to accumulate more silver any time it fell below $15 an ounce.
You’d have had many opportunities to do so in the past couple of decades. Most notably, silver was on sale before 2008, from late 2008 through 2010, and most of the time from 2013 through mid-2020. You’d have gotten another quick bite at the apple in late 2022 and again very briefly during the banking crisis in March 2023.
Then, when silver prices finally took off, you were sitting on a mountain of the stuff. It’s “coffee can” investing – buying an asset and just stashing it away.
In the chart below, the dashed line shows $15 an ounce. You can see the times silver was below $15 (for more than a brief spike) – and how much it has risen from that level…
If you’d stayed the course, you’d have wound up with as much silver as you could buy, at an average cost below $15 an ounce.
But that’s just the beginning. Buying isn’t that hard. Selling is hard. Holding is harder still.
It would have likely taken an inhuman level of discipline for most folks not to sell during silver’s nearly decadelong 76% decline from April 2011 through March 2020. If you were still holding after that, you’d soon be facing a 39% drop from August 2020 through September 2022.
After that kind of punishment, most folks would be asking themselves why they still owned it. You might even have some famous investors’ voices echoing in your mind, like Warren Buffett, who likes to say it’s silly to dig precious metals out of the ground and stack them up in vaults.
But if you were still holding silver today – even despite the recent drop in price – it would have worked.
Even at the bottom of the recent drawdown, you’d still be holding an asset worth 5 times what you paid for it…
You’d have done exactly what Buffett has consistently told investors to do: Be greedy when others are fearful.
This reminds me of a fellow I know whose late father left him a stake in Walmart (WMT), some of which was purchased at a split-adjusted price of $0.35 per share. The stock is around $130 today.
Imagine how you’d feel if that were you. You’d have a stock that was paying you more than two and a half times your cost in annual dividends (currently $0.94 per share per year). Why would you ever sell it?
The lesson is the same either way. If you have that kind of patience, you’re not reacting to every wiggle in the market. You would have let a huge winner run for decades.
At that point, selling isn’t about preserving gains or any other strategic portfolio consideration. It’s about things like taking your dream vacation, buying a second home, funding your grandkids’ college educations… or whatever else you’d like to do with it.
This is another thing nobody ever tells you about investing. For the “coffee can” approach, you should only invest savings – money you are absolutely certain you will never touch for decades. How much current consumption you wish to more or less permanently forgo is not for me to decide. I’m only pointing out that’s the decision you’re making if you want to buy stocks and plan never to sell them.
But wait. There’s one more little detail…
For every genius who bought and held an eventual winner, you’ll find five people who clung to something that never turned around.
If you try to put a big stake in one or two stocks and hold them indefinitely, you will probably blow yourself up. What seems like a great “forever” stock today could easily be a loser tomorrow.
And that brings us to the story of money manager Robert Kirby.
Kirby had been working with a client for about 10 years when her husband died. She called him because her husband was not Kirby’s client, but she wanted to put his securities into her account.
Kirby was amused to discover that the husband was piggybacking off of his advice, but with one key difference.
Whenever Kirby bought a stock for his client, her husband bought it, too. But the husband never sold any of them. He simply put about $5,000 into every stock and forgot about it.
When Kirby looked at the husband’s portfolio, this is what he saw, as recounted in the Journal of Portfolio Management in 1984:
Needless to say, he had an odd-looking portfolio. He owned a number of small holdings with values of less than $2,000. He had several large holdings with values in excess of $100,000. There was one jumbo holding worth over $800,000 that exceeded the total value of his wife’s portfolio and came from a small commitment in a company called Haloid; this later turned out to be a zillion shares of Xerox.
Several of the husband’s holdings were down 60% or more. But thanks to a few big winners, this “coffee can” portfolio crushed his wife’s actively managed account.
This experience suggests two things I’ve come to believe in the past several years…
First, nobody knows how to sell. There are effective strategies for selling consistently, but most folks won’t get the “lollapalooza” results the husband got because they’ll sell too soon.
Second, nobody knows what their best-performing stocks will be. Even if you make a lot of money quickly on a stock… another poor performer in your portfolio, if left untouched for decades, might go on to become a massive winner and leave that initial highflier in the dust. You never know.
Mind you, this is different than saying you’re only going to buy high-quality businesses. That’s just identifying the raw material out of which you intend to build a portfolio over many years.
What I’m saying is that, no matter how compelling a single stock might seem today, you can’t predict what your biggest winners will be. Only the market can determine that for you.
The client’s husband seems to have understood that he couldn’t predict which company would return the most. After all, he put the same amount of money into each stock.
But he did seem to understand that he’d have to hold all his stocks as long as possible so the really big winners could work their magic on the overall portfolio.
So here we are, trapped between the tempting habit of trading too frequently… and the totally unappealing but potentially massively lucrative practice of buying stocks year after year and never selling them.
It feels a bit hopeless – until you do the only logical thing left…
That’s to find a workable compromise.
Investing isn’t perfectible. It’s a game of “good enough,” and my Stansberry Research colleagues and I have for the most part found our compromise.
We’ve adapted the time-honored risk-protection mechanisms of the best traders in history, consistently advising readers to cut their losses ruthlessly and let their winners run.
I ruthlessly cut SLV. And now all I need to do is decide when to get my Ferris Report subscribers back in.
As always, we’ll protect ourselves with a diverse portfolio and a stop loss. And if it spends years running higher, we’ll be happy to ignore it.
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In today’s mailbag, feedback on yesterday’s Digest about the latest jobs data… and a reply to a piece of yesterday’s mail… Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.
“If they are not already, [the Bureau of Labor Statistics] needs to separate out from the regular economic and workforce data those data related to AI: Layoffs or job cuts and jobs filled by AI ‘workers.’ How much of labor force declines and unemployment are the result of implementing AI, which is not a reflection on President Trump’s economic policies?” – Subscriber Kevin S.
“In response to T.J.C.’s rant, everyone else in middle class America has the same problems you have. Most of us just don’t have them to the same magnitude that you have them. Everything is magnified by where you live, California!” – Subscriber K.S.
Good investing,
Dan Ferris
Medford, Oregon
February 12, 2026
Stansberry Research Top 10 Open Recommendations
Top 10 highest-returning open stock positions across all Stansberry Research portfolios. Returns represent the total return from the initial recommendation.InvestmentBuy DateReturnPublicationMSFT
Microsoft11/11/101,352.9%Retirement MillionaireMSFT
Microsoft02/10/121,302.3%Stansberry’s Investment AdvisoryADP
Automatic Data Processing10/09/08832.1%Extreme ValueBRK.B
Berkshire Hathaway04/01/09789.8%Retirement MillionaireGOOGL
Alphabet12/15/16666.2%Retirement MillionaireWRB
W.R. Berkley03/15/12663.7%Stansberry’s Investment AdvisoryHSY
Hershey12/07/07590.7%Stansberry’s Investment AdvisoryALS-T
Altius Minerals03/26/09579.8%Extreme ValueCIEN
Ciena10/20/22558.4%Stansberry Innovations ReportSII
Sprott01/11/18558.1%Extreme Value
Please note: Securities appearing in the Top 10 are not necessarily recommended buys at current prices. The list reflects the best-performing positions currently in the model portfolio of any Stansberry Research publication. The buy date reflects when the editor recommended the investment in the listed publication, and the return shows its performance since that date. To learn if a security is still a recommended buy today, you must be a subscriber to that publication and refer to the most recent portfolio.
Top 10 Totals3Extreme ValueFerris3Retirement MillionaireDoc3Stansberry’s Investment AdvisoryPorter1Stansberry Innovations ReportEngel
Top 5 Crypto Capital Open Recommendations
Top 5 highest-returning open positions in the Crypto Capital model portfolioInvestmentBuy DateReturnPublicationBTC/USD
Bitcoin11/27/181,681.0%Crypto CapitalWSTETH/USD
Wrapped Staked Ethereum12/07/181,632.8%Crypto CapitalONE/USD
Harmony12/16/191,010.5%Crypto CapitalQRL/USD
Quantum Resistant Ledger01/19/21746.0%Crypto CapitalPOL/USD
Polygon02/26/21640.3%Crypto Capital
Please note: Securities appearing in the Top 5 are not necessarily recommended buys at current prices. The list reflects the best-performing positions currently in the Crypto Capital model portfolio. The buy date reflects when the recommendation was made, and the return shows its performance since that date. To learn if it’s still a recommended buy today, you must be a subscriber and refer to the most recent portfolio.
Stansberry Research Hall of Fame
Top 10 all-time, highest-returning closed positions across all Stansberry portfoliosInvestmentDurationGainPublicationNvidia (NVDA)^*5.96 years1,466%Venture Tech.Microsoft (MSFT)^12.74 years1,185%Retirement MillionaireInovio Pharma. (INO)^1.01 years1,139%Venture Tech.Rocket Lab (RKLB)^2.35 years1,034%Venture Tech.Seabridge Gold (SA)^4.20 years995%Sjug Conf.Berkshire Hathaway (BRK-B)^16.13 years800%Retirement MillionaireIntellia Therapeutics (NTLA)1.95 years775%Amer. MoonshotsRite Aid 8.5% bond4.97 years773%True IncomePNC Warrants (PNC-WS)6.16 years706%True Wealth SystemsMaxar Technologies (MAXR)^1.90 years691%Venture Tech.
^ These gains occurred with a partial position in the respective stocks.
* Editor Dave Lashmet closed the first leg of this Nvidia position in November 2016 for a gain of about 108%. Then, he closed the second leg in July 2020 for a 777% return. And finally, in May 2022, he booked a 1,466% return on the final leg. Subscribers who followed his advice on Nvidia could’ve recorded a total weighted average gain of more than 600%.
Stansberry Research Crypto Hall of Fame
Top 5 highest-returning closed positions in the Crypto Capital model portfolioInvestmentDurationGainAnalystBand Protocol (BAND)0.31 years1,169%Crypto CapitalTerra (LUNA)0.41 years1,166%Crypto CapitalPolymesh (POLYX)3.84 years1,157%Crypto CapitalFrontier (FRONT)0.09 years979%Crypto CapitalBinance Coin (BNB)1.78 years963%Crypto Capital
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