THE PLACE WHERE 500% RETURNS GROW

FROM STANSBERRY RESEARCH

THE PLACE WHERE 500% RETURNS GROW

A Guide to Trading High-Performance Stocks

Published by Stansberry Research

Copyright 2015 by Stansberry Research. All rights reserved. No part of this book may be reproduced, scanned, or distributed in any printed or electronic form without permission.

THE PLACE WHERE 500% RETURNS GROW

A Guide to Trading High-Performance Stocks

During every bull market in stocks, dozens of companies climb by more than 500%.

Often, these "high performance" stocks become America's greatest corporate success stories. The famous coffee chain, Starbucks, for example gained 1,807% during the bull market of the 1990s. The emerging semiconductor maker Intel gained 6,556% during the same time.

Also consider the bull market of the 1980s. This decade saw the growing retail chain Wal-Mart gain 4,185%. Another growing retail chain, The Gap, gained 5,539%.

As you can see, "high-performance stocks" come in many forms.

Sometimes they are fast-growing retail chains.

Sometimes they are restaurant chains with a great new concept.

Sometimes they are high-tech firms with life-changing innovations.

The forms these winners take are different, but the cash profits reaped by shareholders are the same.

The profit earned from a stock that climbs more than 500% can buy a vacation... a new car... even a new house. It can add an extra $10,000... $100,000... even $1,000,000 to your net worth.

The allure of making huge profits draw millions of people to the stock market. And although many search for stocks with 500%-plus potential,

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few find them. The reason for this failure is simple. Instead of using a planned, systematic process, most people take the amateur's approach. They use gut instincts and follow "hot tips" from other amateur players.

This report shows you how to succeed where others fail.

It shows you how to find high-performance stocks that can make you 500% gains. It shows you how to find stocks that can vastly increase your net worth.

In the pages that follow, you'll find a common-sense method for profiting in the market's fastest growing high-performance stocks.

You'll learn how to find them... how to buy them... and the characteristics they share.

Most importantly, you'll learn a shocking fact about making money in stocks. Unknown to the general public, this fact has been used by professionals for decades to make millions of dollars. It is the professional's "edge." And if you're smart enough to follow the professional's lead, this idea could change the way you view stocks forever.

Where to Find Stocks With 500%+ Potential

Stocks with "home run" potential live in a special place.

But to find them, you need to know how to size-up a stock.

When professional stock traders group public companies according to their size, they use three general terms: Large caps, Mid-caps, and Small caps.

"Cap" is short for "market capitalization." This is the term used to describe the value of a public company... The share price times the number of shares. The group names are common sense. Large caps are large. Small caps are small. Mid-caps are in between.

For example, the well-known oil company ExxonMobil is a large cap. In 2014, its market cap was around $400 billion. Or, take retailer Wal-Mart. It's also a large cap. In 2014, its market cap was around $250 billion.

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Mid-caps are smaller than large caps. Mid-caps are usually said to have market caps in between $2 billion and $10 billion. The difference between a large cap and a mid-cap can be incredible. A mid-cap stock with worth $4 billion can be less than 1% of the size of giant ExxonMobil.

Small caps are stocks under $2 billion in market cap. And while the difference between a mid-cap and a large cap can be incredible, the difference between a small cap and a large cap can be stupendous.

Consider a small cap with a market value of $400 million. This is just 10% of a mid-cap with a value of $4 billon... which means it is just onetenth of one percent the size of a large cap like ExxonMobil.

Large caps like ExxonMobil can be great investments. They are mature, established companies that often pay steady dividends. They are great for retirement accounts and conservative investors. We own large-cap stocks ourselves.

But if you're looking for stocks with the potential to climb 100%... 500%... even 1,000%, you're best off looking in the small-cap arena. Small caps have much greater potential to register huge gains in a short time than any other kind of stock.

The small-cap market is where 500% potential returns grow.

And the reason is simple...

It's easier for a young, $400-million small cap to grow 10-fold than it is for a mature $400-billion giant to grow 10-fold.

The mature giant's "hyper-growth" days are behind it. This does not mean it's a poor investment, it just means it's not an ideal vehicle for someone looking to make giant returns. Again, keep in mind that a $400 million small cap is just one-tenth of one percent of a $400 billion large cap. That's why a search for stocks with tremendous growth potential should always start in the small-cap market.

And there's a certain kind of small cap that beats all the rest when it comes to "high performance" potential. If you're looking to trade small-

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cap stocks for big profits, you'll want to focus your attention on this type of stock.

Before we reveal what it is, you must understand an important stock trading concept.

Here it is...

A Million Dollar Idea From Babe Ruth

To trade small-cap stocks and profit, it's vital to understand one key idea...

It's vital that you understand how Babe Ruth became of one of the greatest baseball players of all time.

I know that might sound funny.

After all, playing baseball is a lot different than trading stocks.

But trust me... knowing Ruth's secret could help you make hundreds of thousands, even millions, of dollars in the stock market.

Here's why...

Babe Ruth is considered one of the greatest baseball players of all time. Over his career, he collected 2,873 base hits. He was a seven-time World Series champion. He hit an astounding 714 home runs, a league record at the time.

However, Babe Ruth was also known as the "King of Strikeouts."

Ruth led his league in strikeouts five times. When he retired, he was the all-time leader in strikeouts.

In other words, Ruth failed a lot.

Because of his aggressive style, Ruth would often either hit a huge home run or strike out. His home runs could win games instantly. The opposing team could spend hours painstakingly building up a lead... only to see a Ruth home run destroy it in seconds.

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In other words, when Ruth achieved success at the plate, the success was often HUGE.

Ruth was fine with some failures because he knew his successes would more than make up for them. This aggressive style helped Ruth become one of the most productive, most valuable baseball players in history.

To achieve success as a stock speculator, you need the Babe Ruth mindset...

You must make your wins large and impactful... and your losses small and insignificant.

People like Babe Ruth have used the "home run" mindset to achieve extraordinary success for centuries. Entrepreneurs have used it to make billions. Professional gamblers have used it to clean out casinos. Top traders have used it to generate 100%-plus annual returns.

Top performers fail as often as anyone. But top performers ensure their failures are small and limited... while their successes are huge and impactful.

Why is the "home run" mindset so important to your trading success?

Because it allows you to maximize your wins while minimizing your losses.

You're not going to achieve success on 100% your trades, and that's fine.

You probably won't achieve success 75% of the time, that that's fine too.

Heck, if you adopt the "home run" mindset I'm about to describe, you can make huge stock market profits even if you're right just 50% of the time.

It all comes down to the Keep Losses Small (KLS) bet management system...

The Secret Behind the World's Biggest Trading Fortune

Over the past 60 years, George Soros has made more than $20 billion by trading the stock, bond, currency, and commodity markets.

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Twenty billion is a big number. If someone makes $2 million in the market, they are considered extremely successful. George has made more than 10,000 times that.

Whatever your thoughts on Soros' political views, there's no denying Soros is likely the greatest trader of all time.

Soros is a master of knowing how government actions will affect markets. He's exceptional at finding industries poised to enter big uptrends. But there's a simple money-management strategy that's more responsible for Soros' success than any of those things...

Soros once summed up the strategy like this:

"It's not whether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong."

Now... think back to Babe Ruth's strategy. Babe didn't focus on how often he succeeded. He focused on making his successes huge and impactful... and making sure his mistakes were limited.

Like Ruth, Soros knows that his winning percentage is relatively insignificant. It's much, much more important to make a lot of money when you're right... and lose just a little when you're wrong.

When you make sure to win a lot when you're right, and lose a little when you are wrong, you can be right just half the time... and still make huge profits in the stock market.

Some simple math shows us how it works...

The Power of Keeping Losses Small (KLS)

To get an idea of how powerful this strategy can be, consider a hypothetical stock trading scenario...

On March 1, you buy ten different stocks. You hold them for six months.

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