RJ Hamster
How Government Rigs the Game
Delivering World-Class Financial Research Since 1999
Ceasefires and ceasefires… Don’t be too smug… Trump can’t repeal laws… U.S. supermajors aren’t building here… Bad for consumers, good for investors… The new Permian…
I (Dan Ferris) thought a ceasefire was an agreement to stop shooting…
But since the U.S. and Iran ceasefire was first announced two weeks ago, there seems to be a new headline every other day about Iran shooting at a ship in the Strait of Hormuz.
On Wednesday, the Wall Street Journalreported:
Iran attacked three ships in the Strait of Hormuz and escorted two of them to Iranian waters, as tensions flared in the waterway.
The events happened after President Trump said the U.S. would extend its cease-fire with Iran and continue its blockade until Tehran presents “a unified proposal.”
I assume a “unified proposal” includes a permanent end to hostilities. But the problem remains the same. No matter what a given agreement is called, we can never be sure that the shooting has permanently stopped.
It reminds me of a scene from the James Bond film Casino Royale. Before going to the casino’s gambling tables, Bond sees that his undercover partner, Vesper, has bought him a brand-new dinner jacket:
Bond: I [already] have a dinner jacket.
Vesper: There are dinner jackets and dinner jackets. This is the latter.
She explains that she needs him to make a dramatic impression, perhaps to intimidate the villain whose money he’ll be trying to win.
So maybe there are ceasefires… and then there are ceasefires. I’m not surprised. Governments always say one thing and do another.
I know markets better than I know ceasefires…
And the market stopped caring about the war and its global disruptions to oil days before oil prices peaked.
The S&P 500 Index hit a near eight-month low on March 30, then soared back to new highs – “from fear to greed in two weeks,” as Corey McLaughlin put it – even though oil prices continued rising until April 7.
In other words, the stock market began to recover a full five trading sessions before oil prices peaked at around $112 per barrel. After thinking about it for a few weeks, investors apparently decided Iran isn’t a match for the U.S. in an armed conflict.
That’s probably true, but our experiences in Vietnam, Iraq, and Afghanistan suggest we shouldn’t be too smug about it.
Also, let’s admit we never really know what the market is responding to, even if it seems obvious.
What if the market was just getting toppy and expensive and would have fallen on any bit of bad news?
Or what if instead of being near its most expensive valuation in history, the S&P 500 had been near one of its cheapest valuations in history before the war started? Would the market have hated news of war and higher oil prices as much?
We’ll never know. Like any good scientist, investors must learn to admit they don’t have all the answers.
But despite Brent crude oil, the international benchmark, trading at more than $100 per barrel once again, the S&P 500 hit a new all-time high today.
It seems a whole bunch of folks are suddenly no longer worried about $90 or $100 oil, if they ever were. So while I can see oil’s price clearly on any given day, I can’t read the market’s mind.
But that doesn’t change the fundamental picture for energy…
I’ve been warning (here and here) that there’s an energy crisis right here at home that will still exist even if the war ends tomorrow.
For example, one fundamental that has nothing to do with the war and won’t change anytime soon is the U.S.’s heavy regulatory barriers to building new energy infrastructure.
The environment hasn’t improved under President Donald Trump, despite the “America First” and “drill, baby, drill” rhetoric. There’s nothing wrong with either of those ideas, but they don’t change the regulations established by law.
Trump can write all the executive orders he wants, but he can’t singlehandedly repeal the Clean Air Act of 1970, its 1977 and 1990 amendments, nor the National Environmental Policy Act of 1969.
Those laws put some refineries out of business. And they make it hard – if not impossible – to build things like new refineries, while also effectively mandating the use of certain chemicals in the refining process.
If you’re thinking about the new refinery at the Port of Brownsville in Texas that Trump announced last month, it’s highly unlikely to ever be built.
I detail the reasons why in the latest issue of The Ferris Report, published today. Just one suspicious fact is that none of the major U.S. refinery operators will touch it. Marathon Petroleum (MPC), Valero Energy (VLO), ExxonMobil (XOM), Chevron (CVX), Phillips 66 (PSX), and Motiva Enterprises (Saudi Aramco’s U.S. refinery unit) have all the engineering and operating expertise and experience to build a new refinery of any scale. They all have enough capital to write one check that would cover the entire project. But they don’t bother because they know it’d be a waste of time and money.
Less refining capacity means higher fuel prices for consumers. Californians, for example, pay the highest gas prices in the country: a statewide average of $5.88 a gallon, compared with the national average of $4.06 per gallon.
It’s no coincidence that California hates fossil fuels more than anywhere else on the planet and has recently lost two major oil refineries totaling more than 17% of the state’s refining capacity. Less supply equals higher prices. That’s Economics 101.
As I said above, U.S. regulations also effectively mandate the use of certain chemicals in the refining process. Without these chemicals – and the companies that make them – refineries couldn’t make fuel that anybody would legally be allowed to burn. The choice between using these chemicals and violating the law is no choice at all.
It’s like this in other industries, too…
Banks are a great example. Heavier compliance burdens kick in as they grow their assets. As a 2021 congressional report noted:
[B]anks’ corporate governance and auditing requirements become more strict at $500 million in assets and then become stricter at $1 billion; banks below $3 billion can qualify for less frequent examination and take on more debt to merge; banks below $5 billion file simpler quarterly reports; banks below $10 billion are not subject to proprietary trading restrictions (the Volcker Rule), limitations on debit card interchange fees, or primary consumer compliance supervision by the Consumer Financial Protection Bureau.
There are a few tiers of regulatory burdens when bank assets hit $50 billion, $100 billion, $250 billion, and $700 billion.
The way Congress frames it is surprisingly – and probably inadvertently – honest: It’s cheaper to be a smaller bank below any of the given thresholds. Meanwhile, regulations give megabanks a permanent competitive advantage over smaller banks by creating a barrier to entry.
I could give other examples, but you get the point. We’re told that the regulations are there to protect us. Meanwhile, the rules limit competition and serve the powerful incumbents in the industry.
The regulatory moat is just one of the reasons why I’ve recommended a few refinery and chemical stocks recently…
In the most recent issues of Extreme Value and The Ferris Report, I recommend market-dominating businesses with some of the biggest competitive advantages I’ve ever seen.
To understand the type of advantage I mean, imagine having a Walmart store attached to your home. Do you think you’d buy more from Walmart than from other stores? And what if there were a law that required you to buy what Walmart was selling?
Refineries have that sort of physical attachment, delivering roughly 80% of all the products they sell to customers and distribution terminals through pipelines.
But chemical companies are even more embedded and less competitive. They deliver their products to refineries either by operating on the refiner’s site or by railway or pipeline. They’re physically connected through huge, expensive infrastructure that’s nearly always impossible to build due to regulatory issues. There are no substitutes for the chemicals they sell and it’s effectively illegal to make fuel without them.
In short, these companies are cash-gushing dominators that pay dividends and don’t have to worry much about competition.
That’s what happens when the government makes it effectively impossible to build refineries, pipelines, storage terminals, and other critical infrastructure, and when it requires that fuel meet stringent environmental standards.
The infrastructure that’s already there becomes a lot more valuable and faces a lot less competition.
Investors should pay attention and buy the better companies in these industries when they’re attractively priced.
And that’s just one part of the energy patch.
The case for some of the better oil producers is also intact…
Before the war, major oil producers were shutting down operations because prices were too low to justify continuing to drill. In my March 6 Digest, where I called energy “the trade of the decade,” I said:
Oil veteran and Continental Resources founder Harold Hamm announced in January that he was shutting down his company’s large operations in the Bakken region in North Dakota and Montana – a region he discovered and has been operating in for more than 30 years.
His reasoning was simple: His breakeven price was $58, and oil in the low $60s and high $50s made it impossible to earn a decent profit margin. It just wasn’t worth drilling. Lots of other oil executives had similar thoughts.
Oil company operators are smart enough to know that the war in Iran could end any day, and oil prices could wind up falling even lower than they were before it started.
If they’ve shut down production like Hamm, the war’s higher oil prices don’t necessarily give them a good reason to turn it back on. Oil wells can’t be turned on and off like light switches. And it’s harder to turn them on than it is to shut them off.
Lower-cost producers that can keep drilling profitably have a clear advantage when the competition is shutting wells down.
So rather than restart in the Bakken, Hamm is starting fresh in another hemisphere…
Hamm compares the Vaca Muerta shale in the Neuquén Basin of Northwest Argentina with the Permian Basin, the largest oil-producing region in the U.S. Global consulting firm McKinsey says Vaca Muerta is a thicker shale formation than the U.S.’s Eagle Ford and Bakken shales, and contains oil that is comparable to the high quality of the Permian’s output.
Hamm likes to remind everybody that oil companies are price takers, not price makers. So they must drill at a cost far enough below the prevailing oil price to make a profit. That he can do that in Argentina and not the Bakken right now speaks for itself.
I haven’t delved too deeply into the regulatory environment there, but Argentina’s President Javier Milei has led a libertarian “revolution” there. He hates government. Less than six weeks after he took office in December 2023, he cut state fuel subsidies and reduced the number of government ministries by half. He has also eliminated burdensome capital controls and dramatically reduced inflation.
Argentina has great geology, tons of oil in the ground, and a government that is more free-market-oriented than America’s.
Who wouldn’t want to operate there?
You can see how the regulatory environment is a key ingredient in the global competition for capital. I doubt Hamm would have given Vaca Muerta a second thought under any of Argentina’s socialist regimes.
Most folks are probably obsessed with sources of demand when they think about oil. Demand is part of the equation, but as I’ve said before, supply is where investors should spend most of their time when contemplating commodity plays.
As long as there are governments in the world who believe they need to discourage the production of hydrocarbons, we’ll likely find plenty of opportunities among the companies that know how to navigate the rules and exploit their competitive advantages.
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In today’s mailbag, a question about our Top 10 Open Recommendations list, which we discussed in yesterday’s mail… Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.
“Hi, I cannot find the article which shares the top 10 open recommendations. Could you share the link with me?” – Stansberry Alliance member Takayuki F.
Corey McLaughlin comment: You can find the list at the bottom of our e-mail version. You’ll also find a list for our Stansberry Research Hall of Fame (of highest-returning closed positions), as well as lists for the top five open and closed positions in Crypto Capital from editor Eric Wade.
Good investing,
Dan Ferris
Medford, Oregon
April 24, 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
Microsoft11/11/101,376.0%Retirement MillionaireMSFT
Microsoft02/10/121,342.2%Stansberry’s Investment AdvisoryCIEN
Ciena10/20/22825.7%Stansberry Innovations ReportADP
Automatic Data Processing10/09/08775.3%Extreme ValueBRK.B
Berkshire Hathaway04/01/09763.7%Retirement MillionaireGOOGL
Alphabet12/15/16735.2%Retirement MillionaireALS-T
Altius Minerals03/26/09676.5%Extreme ValueWRB
W.R. Berkley03/15/12636.3%Stansberry’s Investment AdvisorySII
Sprott01/11/18601.0%Extreme ValueLITE
Lumentum04/15/21546.9%Stansberry Innovations Report
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 MillionaireDoc2Stansberry Innovations ReportEngel2Stansberry’s Investment AdvisoryPorter
Top 5 Crypto Capital Open Recommendations
Top 5 highest-returning open positions in the Crypto Capital model portfolioInvestmentBuy DateReturnPublicationBTC/USD
Bitcoin11/27/181,982.3%Crypto CapitalWSTETH/USD
Wrapped Staked Ethereum12/07/181,893.5%Crypto CapitalONE/USD
Harmony12/16/191,008.5%Crypto CapitalPOL/USD
Polygon02/26/21641.8%Crypto CapitalQRL/USD
Quantum Resistant Ledger01/19/21527.1%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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