If you watch a lot of Finance related channels on YouTube it's almost certain that you've been targeted with ads for various penny stock get-rich Quick schemes. They almost all have the same format. Some Talking Heads will tell you that the economy and stock market are about to collapse and that 90% of people will have their life savings wiped out. but they have found a secret method to take advantage of the coming chaos and make a life-changing amount of money.

So you'll pay a few thousand for their research report, which will tell you to buy some penny stocks or cryptocurrencies. The returns are almost always disastrous. While Most people can see that these painy stock research reports are little more than Snake Oil. There are a few people who get sucked into paying for them, and because the prices are so high The Operators of these newsletters can make hundreds of millions of dollars.

This part of the financial industry has historically operated in the shadows with very little accountability, but in the past couple years the mask has finally been lifted. One of the biggest players in the industry over the past two decades has been a man named Frank Porter Stanbury, the founder of Stanberry Holding Bus, which eventually Chang its name to Market Wise Mr Stansbury portrays himself as a financial genius and his pricey stock picks level the playing field for individual investors. In 2021, he took his company public by merging it with a spa at a valuation of $3 billion. While he stepped down from the company shortly before the merger, the disastrous share price performance cements his legacy.

Through Market Wise's public filings and other publicly available information, we can finally unmask the predatory and deceptive nature of the penny stock newsletter industry. In the late 1990s, a young man by the name of Frank Porter Stanbury realized that he was interested in investing and wanted a career out of picking stocks. There were two options: He could start an investment fund and manage other people's money. The problem is the money management industry is highly regulated and there was onerous disclosure requirements meant to protect investors.

The other option was a start a financial newsletter. You can publish a paid newsletter that recommends to readers what stocks they should buy. Because you're not actually managing client money, the regulatory burden is far less. Pretty much anyone can start writing a newsletter if they can find paying customers.

In or around the 1990s Mr Sansbury Started working for a newsletter company called Agra Inc Agra Published dozens of different paid newsletters. Focus on investing, health, and other areas. Because the barriers to entry are so low, the paid newsletter industry is very competitive. If you want people to buy your newsletter, you need them to believe your information is valuable enough to justify the price.

Aggro decided to specifically Target older Americans With conservative political leanings, they would pay influential Republican politicians such as former Arkansas Governor Mike Huckabee and Former House Speaker new Gingrich for access to email list to their supporters. They used these lists to send out mass email campaigns advertising their newsletters. According to an investigation by Mother Jones, these newsletters were often of low quality, if not outright scams. For $74 you could access a report which would show you a cure for cancer hidden in the Book of Matthew.

While these paid newsletters might seem ridiculous, there were some people who believed the Absurd claims and Agra grew to hundreds of millions of dollars in annual revenue. While working for Agra Mr Stansbury started writing Financial newsletters which were very successful. Stanbury quickly gained the recognition of Agra CEO Bill Boner, and they founded Stanbury Research, a company focused exclusively on financial newsletters. Stansbury Research was eventually spun out as an independent company, but for the first few years it was part of Agra.

It appears that Mr Stansbury implemented a lot of the same marketing methods that Agra developed over the years. The main strategy was to send out advertisements, making huge promises to potential customers to entice them to pay high fees to access the newsletter. In 2002, Stansbery wrote a newsletter called the Pirate Investor. On or around May 14th, 2002, Stansbery sent out mass emails to 800,000 people on Agra's mailing list titled double Your Money On May 22nd.

On this super inside tip, May 22nd was less than 2 weeks away, so the sense of urgency was high. In the email, Stanbury elaborated that he had received Insider information from a senior executive at a small cap company. The company was involved in the nuclear energy field and stood to profit to the tune of $2.5 billion due to an arms reduction treaty between the US and Russia. When the deals announced, Stansbury said the stock would double.

He was so confident in this trade that he recommended putting your entire portfolio into this one stock. Of course, there was a catch to learn what the stock is. you would have to pay $1,000 for the research report, but given the fact that the stock was going to double, this was a small price to pay. Indeed, over 1,000 people paid for the report, nitting Agra over $1 million.

The stock in question was USC a company that supplies nuclear fuel to civilian nuclear power plants. According to Sansbury's report, USC reached an agreement with the Russian government they would buy dismantled nuclear warheads at a reduced price following following the implementation of an arms reduction treaty. The deal needed approval from both the US and Russian governments. US President George W Bush and Russian President Vladimir Putin were scheduled to attend a summit meeting on May 22nd.

According to the USC Insider, Uscc would announce the approval of the deal right before the summit meeting on May 22nd. USC failed to announce any deal. The stock price fell by 15% as Stanbury's victims realized they' been conned and dumped their shares. The Insider And question was a man named Steven Wingfield USC's Director of Investor Relations.

Stanbury did not receive an Insider tip from Wingfield under regulation FD Investor relations representatives of public companies are required to tell the same information to all investors and that's exactly what Wingfield did he told Stansbury What he told all investors that USC expected the contract would be approved in the near future, he said nothing about May 22nd. Basically, Stanbury was lying. There was no Insider tip. Shortly thereafter, the SEC opened an investigation into potential violations of Securities laws.

Even after Agra became aware of the investigation, they continued to make outrageous and fraudulent claims in their marketing materials. Their advertisements included: quote: turn $10,000 into $144,200 by April 18th, 2003 Unot ande almost unbelievable profits 4 and a half times your money in 48 hours. unquote. These reports pitched various penny stocks, almost all of which ended up being complete failures.

Eventually, Mr Stansbury and his company Pirate Investor LLC which at the time was a subsidiary of Agra were forced to pay $1.5 million in restitution to his victims as well as civil penalties. This Legal setback didn't deter Mr Stanbury. He continued his financial newsletter business and eventually spun it out from Agra to become an independent company called Sansbury and Associates Investment Research. He continued using deceptive and sometimes outright fraudulent marketing tactics.

In 2011, Stanbury had to pay a $55,000 settlement to the Social Security Administration for promoting a misleading publication, claiming that they found a way for people to get Social Security payments no matter your age. That same year, he published a bizarre hourong infomercial called the End Of America. The video consists of a slideshow with words and charts with Mr Sansbury narrating in the background. He starts off by establishing credibility by claiming to have predicted the 2008 Financial crisis all the way back in 2006.

He says that he warned investors to avoid Fanny May Freddy Mack Bear Sterns Leeman Brothers General Motors and dozens of other companies that have since collapsed. Not only that, but he recommended that his readers short these companies and buy put options to benefit from the collapse. In fact, no other research firm in the world can match Sansbury's record of correctly predicting the 2008 financial crisis. Frank Porter Sansbury is a great genius who is able to predict the market crash years in advance and profit from it Now now.

in 2011, Mr Sansbury sees an even bigger crisis on the horizon. He will tell you what this crisis is and how to profit from it of course, for a price. Mr Stanbury created a huge paid marketing campaign for his End of America Infomercial, causing it to receive millions of views. This caught the attention of Peter Schiff the founder of a broker dealer called Europacific Capital We've talked about him on this channel before.

He is verifiably one of the few people who predicted the 2008 Financial crisis as early as 200 6. We can verify this because he gave an interview on CNBC in 2006 saying that a recession would start in either 2007 or 2008 due to excessive debt accumulation across the economy. although he's predicted 15 out of the past two recessions, so take that as you will. Regardless, Shiff does deserve credit for his accurate prediction.

When he saw Stansberry's claims of also having predicted the recession, he did some investigations to see if it was true Mr Sansbury Never gave any public interviews predicting the recession, so Shiff contacted Sansbury research asking for any proof that Mr Sansbury predicted the recession. A staffer at Sansbury Research gave Shiff access to all of Sberry's paid newsletters from 2006 through 2008. In 2006 and 2007, not a single one of Sansbury's newsletters gave any warning about a financial crisis or market crash. He did not recommend shorting a single Financial stock, not Bear Cerns not Leman Brothers nothing.

In 2007, he didn't recommend a single short position. In fact, in October of 2007, he recommended buying shares of an insurance company called Marle Group which then proceeded to lose half its value during the market crash of 2008 and 2009, he didn't put on a single short position until April of 2008. While he had 22 long recommendations, this was months into the financial crisis and Bear Cerns had already gone bankrupt by this point. He never told his readers to buy any put options in June of 2008.

He did in fact recommend shorting Fanny May and Freddy Mack, which was a good call. But this was well into the financial crisis and their stocks had already declined by more than 50% at that point. So this does not support the claim that he saw the crisis coming before anyone else. At this point, he was recommending 23 long positions and just three short positions.

Not only did Sansbury fail to predict the financial crisis when it did happen, he thought it would end far sooner than it actually did. In August of 2008, he recommended buying shares of the municipal bond insurance company Mbia. The stock proceeded to lose another 2third of its value over the next year and a half. There is zero evidence that Mr Sansbury predicted the financial crisis in 2006 or 2007, and of course, the infinitely more dangerous crisis he predicted in 2011 never materialized.

Near the end of his infomercial, he gave a few recommendations, as well as a sales pitch to buy his research products. One of his recommendations was to buy silver. He said that silver could rise to $187 per ounce in 2011. The silver price was more than $3 $ per ounce today is about 23.

It never came close to his $187 price. Target While the silver prediction turned out disastrously, there's nothing illegal or inherently immoral about giving investment advice, which turns out badly. It is likely that Mr Stanbury truly believed that silver was a good investment. But his next recommendation is where things really get.

Shady He said that he had found a secret strategy to safely extract gains of exactly 100% from the market over and over again and you don't even need to buy any stock. Some of Sansbury's clients have employed this safe and secret strategy to make an average of $10,000 per month. To find out what this super secret strategy is, you have to buy his research report I Didn't buy his research report, but it's quite obvious what he's talking about. What he's recommending is to sell cash secured puts you sell a put and collect the premium up front if the stock Falls Below the strike price, you are required to buy the stock for the strike price, thus recognizing a loss.

First of all, there's nothing secret about about selling puts any degenerate on Wall Street Bets knows how to do this without paying Stanbury for a research report, and it's claimed that this strategy is safe is extremely misleading. The only way you can make a 100% return is if you sell a put that significantly in the money and the stock price would have to increase substantially for your put not to be called. Thus, it is economically very similar to just buying the stock, but his entire sales pitch was that this is a much safer method than buying stocks, which he recommends avoiding because of the great financial crisis that he's prediced ing. He gives a large number of supposed testimonials of customers who have made life-changing amounts of money by following his advice.

These testimonials are almost impossible to independently verify. In the testimonials, Stanbury gives the names of the individuals and where they are from. This is meant to give the impression that they're real people, although don't waste your time trying to find any of them. An investigation by the nonprofit consumer advocacy group Truth and Advertising conducted an investigation and found a number of anomalies.

For example, in two separate testimonials, two separate supposed customers claim to have earned exactly $ 72,3 189 by following Stanbury's stock picks. In another case, two separate supposed customers claim to have earned exactly $15,408 Anomalies In the testimonials, one could wonder if the supposed customers ever existed. One year later, in or around 2012, Stanbury conducted a separate marketing campaign on various right-wing news sites. He promoted a bizarre conspiracy theory that then President Barack Obama would seek to run for a third term in 2016.

This would create a major shock for the US economy, and Stanburry will tell you how to profit from this for a price. Throughout the 2010s, Stanbury Holdings Acquired and built a number of paid newsletter brands in addition to their Flagship Stanbury Research service. In or around 2021, they changed the companies name to Market Wise ahead of their Spa merger. So why does Stanbury have so many? Brands Why not aggregate all of their financial research under one brand? To understand Market Wise's strategy, We have to understand how they make money.

They have cheaper plans which cost a few hundred per year. According to their Spa presentation, they had 68,000 so-called paid subscribers. These are people who only buy the lower priced offerings. These newsletters will recommend boring large cap stocks.

Each of these paid customers have a lifetime value of less than $600 This represents an aggregate lifetime value of less than $400 million. Then they have high value subscribers who pay thousands of dollars for premium research. These newsletters provide recommendations for more speculative assets like penny stocks, options, and cryptocurrencies. Each high value customer has a lifetime value of about $2,500 They had 233,000 high value customers, which represents an aggregate lifetime value of about $600 million.

And then they have ultra high value customers who pay many thousands and sometimes tens of thousands of dollars. For bundles of multiple newsletters, they had 110,000 ultra high value customers which represents an aggregate lifetime value while in excess of $550 million. This is a minimum number. Thus, the majority, if not the vast majority of their revenue comes from the high and ultra high value customers.

The way it works is: a customer will begin subscribing to a low PRC newsletter. They'll get recommended some large cap stocks. These stocks may or may not perform well over a long period of time, but they're not going to make you rich overnight once you sign up for the cheap subscription, they'll bombard you with advertisements for their premium newsletters which promise the potential for life-changing returns. With penny stocks or cryptocurrencies, these newsletters cost thousands of dollars.

The problem is, most of these newsletters are not very good at picking penny stocks, and the returns from their recomend recommendations are almost always disastrous. All of the market-wise brands have horrible reviews on third party review sites like Trust Pilot, with the majority of the reviews being one star. If you pay thousands of dollars for some penny sock recommendations and they turn out disastrously, chances are you're never going to buy any research from that company ever again. It's common in casinos that after losing a bet, instead of giving up the Gambler will double down betting again in an attempt to make back their losses.

There may be a similar psychological phenomenon at play with penny stock new newsletters. As a hypothetical example, you might have lost hugely on recommendations from Brownstone research. You now no longer trust them so you won't pay them again. But then you get an ad from Palm Beach Research: promising life-changing returns, so you try them hoping to make back the losses from Brownstone.

You may not know that both Brownstone and Palm Beach are owned by the same parent company market-wise formerly known as Stanbury. Holdings. In Trust Pilot reviews, many customers complain that their email address is being sold to other companies, as as their inboxes inundated with Getrich Quick schemes under a wide range of brand names. In reality, Market Wise does not sell their customers email addresses, but they do cross promote across their various Brands It is not obvious to many customers that they're all owned by the same company Stansbury copies and pastes its previous marketing gimmicks to the new newsletter brands that they create or acquire.

For example, in 2020, they launched a new brand called Brownstone Research, which was ostensibly run by a man named Jeff Brown He started an infomercial eily similar to Sansbury's end of America Infomercial from 2011 Jeff Brown Claims to have predicted the fall of the Soviet Union the Doom bubbles collapse president Donald Trump's surprise Victory and the meteoric rise of Bitcoin I could find no evidence for any of these predictions. He then warns of an impending Financial catastrophe that will devastate ordinary investors and retirees, but he found a way to make extraordinary profits from this looming disaster. All you have to do is pay a few thousand do to access his research report. The man interviewing him appears to be a news anchor, but in reality he is an actor hired specifically to make this infomercial in July of 2021.

Market Wise took advantage of the Spa Mania to go public by merging with a spa at a $3 billion valuation. Mr Sansbury Stepped down as CEO shortly before the merger, but he touted the merger as a Vindication of his life's work. In May of 20122, he gave an interview where he talked about how he built Market wise over the past two decades. He credited unparalleled investing acument as well as a few high-profile hires as the keys to the company's success.

And so for a guy with like for example, with Empire Financial I wanted Whitney Tilson Whitney Tilson had started writing about stocks in the 1990s. He had a very successful hedge fund. He's been on 60 Minutes three times like he is credibility and when he got out of his hudge fund business, the two places he was likely to go work were either Stanberry or mly fool and so I'd been recruiting him since since 2003, 2004 and I'd sent him lots of you know good information on stocks. I'd helped him, it helped him with his hedge fund so he knew me and he was willing to come over and we started in 2017.

And that business now Empire is probably worth a100 million now. Whitney Tilson Ran a hedge fund called Case Capital Management which managed $180 million at its peak according to Mr Sansbury Whitney Tilson was a great financial genius and it was a big win when he finally convinced him to join Market-wise as an editor. What Mr Stansbury failed to mention was that Whitney Tilson shut down his hedge fund in 2017 after suffering sustained poor results and massive redemptions. The fund's assets had declined by more than 2/3 to $50 million.

In a letter to investors, he said he could not, in good conscience continue to manage their money as he was not confident he could turn things around in a reasonable time frame. While Mr Tilson wasn't good enough to run a hedge fund, he apparently was good enough to run a new Market Wise subsidiary called Empire Financial Research. Like all of Market Wise's brand, Brands it has atrocious reviews on Trust, Pilot and the Better Business Bureau. In the same interview, he makes another pathetic attempt to burnish His Image by claiming hedge fund managers read his newsletters I Think that piece right.

There is is something that people don't realize in the publishing space, which is that if you have the the quality of product that you're talking about, um, it's not just the mom and pop retail investor who's buying them. Oh no, not at all. Yeah, every every hedphone in the world reads my work. The claim that there's not a hedge fund in the world who doesn't read Stansberry's newsletters is absurd on his face.

Not only that, but it's provably untrue. There's a hedge fund called Focus Capital Management They publish so-called post-mortems on their website where they talk about successful and unsuccessful trades they've made in the past. They bought shares of Market Wise shortly after the merger in July of 2021. They sold it in November of 2022 for a 75% loss, making it their worst investment ever at the time.

Focus Capital describ the quality of Market Wise's investment advice as poor to fair and they are very aggressive in their advertising. They would advise everyone to stay far away from it. It is similar to Mle Fool, but with worse investing advice and sleazier advertising. So that's at least one hedge fund that doesn't read Mr Sb's newsletters Focus Capital Knew that the product was of poor quality, but they invested in the company anyway because they thought the aggressive marketing tactics would continue to drive Revenue growth.

Throughout the 2010s, Market Wise's Revenue grew strongly as they Acquired and launched new brands with their aggressive cross promotion strategy. They were able to extract huge amounts of money from their subscribers, but this strategy has its limits. Eventually, customers catch on and realize they're getting ripped off in 2022. Revenue Growth turned negative and the business has been steadily deteriorating ever since.

Since the Spa closed, the share price has declined by more than 80% putting the company only slightly above penny stock territory. Mr Sansbury Was furious with the design disastrous share price performance of the company. In January of 2023, he sent an angry letter to Marker Weis's board of directors. He said: Mark Arnold the Spa sponsor promised me that I would receive roughly $100 million in cash at the IPO of the company in exchange for between 12 and 15% of the shares and what I can only describe as the most ruinous business transaction in history, if not plainly fraudulent.

Market Wise chose to move forward with our IPO even though virtually all the Money Ascendant promised us was Redeemed by their investors. ascendant was the name of the spa who in their right Minds would have agreed to this deal. He's complaining that the vast majority of the Spa shareholders voted to redeem their shares, leaving Market Wise with far less money than he expected. This is how Spacks work.

Investors are free to redeem their shares before the transaction closes. Even if there are significant redemptions, the sponsor still receives millions of dollars worth of shares for free. It does seem like a pretty bad deal. What kind of idiot would possibly agree to this? None other than Frank Porter Stanbury.

He personally signed off on the SPC transaction that he's now criticizing. Mr Stanbury likes to portray himself as a great genius who understands financial markets better than anyone else. Yet it appears that he didn't even know how Spaxs worked, even as he merged his own company with one. Perhaps? Mr Stansbury Thought that taking his company public would cement his legacy as a legendary investor.

Instead, he will be remembered for what he is. a con man and a clown. All right guys, wraps it up for this video. What do you think about? Mr Stanberry Let us know in the comments section below.

As always, thank you so much for watching and we'll see you in the next one! Wall Street Millennial Signing out.