Editor’s Note: On Tuesdays we turn the spotlight outside of Porter & Co. to bring you exclusive access to the research, the thinking, and the investment ideas of the analysts who Porter follows.
Today’s Spotlight is on Stansberry Asset Management Chief Investment Officer Austin Root.
Stansberry Asset Management (SAM) is an SEC-registered investment advisory firm with more than $1.1 billion in assets under management.
SAM is separate and distinct from Porter & Co, and helps families and individuals across the country invest their wealth and achieve their long-term financial goals.
Austin has an investment pedigree grounded in real-world experience and a track record of delivering results.
He ran a successful hedge fund with a strategic backing from Julian Robertson and Tiger Management… He was a portfolio manager for billionaire investor Steve Cohen… He was an investment banker for Blackstone… He has an MBA from Stanford… And before becoming CIO at SAM, he was the Director of Research for the former company I founded, Stansberry Research.
I (Porter) have often said that if you have $1 million or more in investable assets, having a professional asset manager is a huge advantage. And that’s especially true, if that asset manager has the skills and experience of the investment team at SAM.
Here’s Austin.
*Disclaimer: Porter & Co. may receive compensation, referral fees, or other benefits if you purchase products or services mentioned in this email.
Now I want to be clear. Only God (and maybe Stan Druckenmiller) can predict the future. Nevertheless, this time of year, investors across the globe want to know what’s in store for the coming year. The question that seems to come up the most is whether or not we are in a bubble from the meteoric rise of AI and seemingly, any stock related to AI.
Bubble Or Not – Stay Invested
There is no doubt that we are in a confusing time for investors.
Bubble or not, with valuations and expectations for future growth both high, we must see meaningful growth in the economy and earnings this year for asset prices to move higher from here. Full stop. This is not a market that will accept growth disappointments gracefully.
With that said, we at Stansberry Asset Management (SAM) believe you should stay invested in the market in 2026.
Here are the two main reasons why:
First, we expect this growth required to power markets higher will in fact materialize. Consider the macro backdrop that is supportive of such growth:
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Monetary policy is accommodative. The Fed has dropped short-term rates 175 basis points already and it and the market expect even lower rates next year. We agree.
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Fiscal policy is accommodative. The Treasury plans to continue to overspend its revenues, and 2026 should see major economic tailwinds from increased investment and tax incentives coming from the One Big Beautiful Bill Act.
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Oil prices and bond yields are low, which benefit corporate earnings, particularly smaller and medium-sized businesses.
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The bull market is spreading, and increasing breadth is absolutely a positive sign for the staying power of an upward market move. Since November 1st of last year through January 15th, the Magnificent 7 are down an average of 1.6%, while the S&P Equal Weight index is up 6.8% and small caps are up 11.4%.
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Capital expenditures and investment are increasing, led in no small part by AI spending, which IT research firm Gartner expects will grow from $1.5 trillion in 2025 to more than $2 trillion in 2026. These outlays should be a boon for myriad supporting industries.
Source: Gartner, September 2025. Includes: AI services, software, hardware, and capital expenditures
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The economy, employment, and the consumer have proven resilient in 2025, all holding up better than consensus expectations throughout the year. What’s more, much of the GDP growth in 2025 has come from productivity gains (or higher GDP output per employed worker), growth that is far stickier than other sources such as government investment, net imports, or labor force growth.
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Finally, growth is not only strong, it’s likely accelerating. Analysts have raised S&P 500 profit estimates for next year, calling for 14% growth versus roughly 11% expected for 2025.
The second reason to stay invested is the simple fact that it’s exceedingly painful to be out of the market for any meaningful amount of time in the current environment. As you know, the federal government is deeply in debt, it continues to operate at a loss, and has no political will to correct these problems. As such, dollars will continue to be debased, inflation will continue to rise, and those who sit idly on the sidelines in cash will see their purchasing power and real net worth erode.
Said differently, in today’s money-printing environment, your best defense is a good offense. To defend your purchasing power and net worth, you must play offense and invest in productive assets (like world-class businesses) and superior stores of value (like gold).
To be certain, plenty of things could derail this market and change our outlook. A.I. spending could fall short of its promises for returns on investment, for productivity gains in the economy, or by eliminating far more jobs than it creates. Low- and middle-income consumers could finally get tapped out. And of course, the risk of black swan macro events and geopolitical upheaval can never be eliminated.
But on balance, the current environment is supportive of staying invested in highly productive assets that can protect your purchasing power and compound your wealth over the long run. Particularly when those assets are well-run, high-quality businesses with durable franchises that are likely to be bigger and more profitable a decade from now.
How To Turn Defense Into Offense
It is possible to grow your wealth materially while also shielding it from much of the downside risk that comes when markets inevitably correct. I’ll explain exactly how we’ve been doing this for our clients at SAM over the past decade.
Recall that just during the last 10 years, we’ve seen three of the sharpest and quickest downturns that equity markets have ever experienced: during COVID in 2020, the bear market of 2022, and the tariff tantrum in 2025.
In all of these, SAM investment strategies saw much less volatility and significantly lower drawdowns than the market and their relevant benchmarks. More specifically, if we look back to just last year, at the lowest point for equities when the S&P 500 had dropped 19% from its high and was down 15% for the year, every one of the SAM investment strategies was either up for the year at the time, outperforming its benchmark, or both.
Two caveats. First, past performance does not guarantee future results. And second, investing in this manner can limit returns when markets snap back quickly, as they did for us in 2025 from April on. Still, the point is, it’s possible. And we believe this type of positioning is prudent for most investors in 2026.
So how do we look to achieve this dual mandate of growth and protection? I’ll briefly point to four things…
1. Security selection matters. As we look ahead, we expect a greater dispersion of returns among companies even within the same industry. This bifurcation is already happening across many vectors: companies perceived as AI-beneficiaries are outperforming those deemed as AI-threatened, companies that cater to high income consumers are outperforming low-income-focused businesses, and so on. But we anticipate the dispersion between the haves and the have-nots to only increase in the year ahead.
One particular focus we have that we believe will provide added returns and ballast to your portfolios in 2026 is an even greater emphasis on the highest-quality businesses. A lot of investors talk about owning quality businesses but don’t always define it. In our case, we’re focused on industry leaders with healthy margins, fortress balance sheets, strong returns on investment, and superior pricing power. We are confident that this mix of attributes not only benefits well-run businesses in good times, but is particularly valuable when markets and industries suffer through tougher times. We also find that very often these types of businesses tend to gain market share through the lows and come out even stronger on the other side.
2. Investing is seasonal, so be nimble and tactical. Staying mostly invested does not mean holding the same mix of assets all the time no matter what. In fact, there are plenty of times when whole swaths of assets should largely be avoided.
One of our most successful strategies at SAM (Tactical Select) is strategy blending a rigorous fundamental approach and multiple quantitative systems meant to help determine what’s best to own and when, including world-class companies with positive momentum that are investing in the biggest secular trends.
3. Lower your correlation. Longtime clients have heard me say this before: diversification is not the same as correlation. You may think you have a diversified portfolio because you have dozens of positions. But if those positions are highly correlated because they share the same risk factors, they will tend to move up and down together (e.g., oil & gas producers or speculative biotech plays).
The real way to provide ballast to your portfolio – and enable you to be more fully invested in high-quality, productive assets – is to own a blend of assets that do not share the same set of risk factors.
At SAM, we own many different assets with lower correlation – sometimes even negative correlation – to the overall market. Here is a brief description of a few…
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Merger arbitrage investments. We tend to own the target of an M&A transaction when it trades at a material discount to the takeout price. Our return-to-risk equation here is “idiosyncratic,” meaning that success is based on whether the deal ultimately closes and not on if the overall market moves up or down.
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Financial exchanges. We love owning financial exchange businesses in part because they are regulated, protected monopolies capable of generating strong growth and returns over long periods of time. We also love them because they tend to be less correlated with other stocks. You see, when volatility rises in markets and other businesses pull back or see their stocks sell off, financial exchanges tend to see increases in their transaction volumes and profits.
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Gold investments. As a crisis hedge and superior store of value to fiat currencies, we’re seeing gold’s low-correlation benefits in real time. While gold has had an amazing run over the past year, we caution that the huge surge in gold and silver is unlikely to continue in perpetuity. You may want to use this as a lower correlation supplement, not as the core of your investment portfolio.
4. Broaden your base. I’ve always marveled at this statistic: in the U.S., 87% of firms with revenue greater than $100 million are private. Put differently, public markets and public companies are only a small part of the overall economy.
Share of public and private U.S. companies with revenue greater than $100 million
Source: S&P Capital IQ, 2024
This fact leads to one of the main reasons that we believe private markets and alternative investing can be so beneficial for many investors: it broadens your base of investments to a much wider universe. And in so doing, private markets can provide enhancements to each of the attributes above: greater security selection, tactical benefits, and lower overall correlation.
In addition, we believe that in today’s environment, broadening your base of investments to include alternatives provides another key benefit: better risk-adjusted returns. Specifically, we’re seeing opportunities in private credit and private income-producing real estate to generate significantly higher total returns than their publicly traded corollaries. And that can be hugely beneficial to our efforts to grow and protect your wealth at the same time.
With that said, here are some “no free lunch” caveats. At present, investing in private markets the right way means that you’ll need to be an accredited investor (with at least $1 million or more in investable assets) and deal with delayed tax filing and K-1s. You’ll also need to be okay with part of your portfolio being illiquid for up to five years or more. As such, we caution that alternatives are not for everyone.
Admittedly, many of these strategies that can broaden your base will be challenging for individuals that manage their own portfolios. This is just one of the reasons why you (subscribers to investment services like Porter & Co.) might want to consider a professional money manager like SAM.
A Decade Later
This year Stansberry Asset Management will celebrate its 10th anniversary. Our mission over the past 10 years has always been to invest our clients’ wealth wisely, making informed and proactive decisions to help grow assets when market conditions are favorable, and just as important, to protect wealth when they’re not.
And that’s what we’ve done. We’ve delivered strong performance through up markets and down, all while greatly expanding our investment strategies. These include a dedicated gold strategy, a portfolio of only “Forever” stocks, a quantitative investing strategy, and even alternative investments.
If you would like to learn how SAM can help you structure your investments, how we utilize independent research from many sources including Porter & Co., and how we can help you achieve financial success over the next decade, please click here.
Prosperous investing,
Austin Root
P.S. For more details on what exactly we’re seeing in the markets today, I invite you to watch our investment team discuss The Six Keys to Growing and Protecting Your Wealth in 2026. Access this on-demand webinar here!