The Twelve Days of Christmas... Gold $3,000... "Let's get the f@#& out of here"... No dollars, please... Secret bathroom meetings at Bear... When AAA isn't... Apple vs. Nokia 2007...

It's the best gift we could give you: a break from our self-absorbed mendacity. Starting on Monday, December 24, and running daily through January 5, in lieu of The Digest, we will publish the Twelve Days of Christmas. What fresh Hell is this? You'll have to wait until Christmas Eve to find out...

(If you enjoy our standard verbosity, don't fret. The Digest will return January 7, after the Twelve Days of Christmas have run their course.)

What's the best way to scare analysts away from your stock? End a conference call with "Let's get the f**k out of here." That's exactly what Al Lord, CEO of student lender Sallie Mae, did yesterday." Already nervous analysts sent the stock plummeting 21%.

The Taj Mahal sees almost 2.5 million visitors a year – as long as they don't try to buy tickets with U.S. dollars. The tourist attraction announced in November that it would stop accepting the dollar and take only rupees.

DealBreaker reports Bear Stearns executives have been holding secret meetings in the 14th-floor bathroom to plan the ousting of CEO James Cayne. Bear announced an $854 million quarterly loss today, the first quarterly loss in the company's history. And its top executives have already bypassed bonuses for the year.

S&P cut the ratings outlook for MBIA and Ambac Financial Group, the world's largest bond insurers, to negative yesterday. S&P also cut its rating on ACA Financial Guaranty Corp. to CCC, which may lead to default (its shares have fallen from $15 in June to $0.64 today). The ratings of bond insurers present an interesting question: If a company's business is dependent on a AAA rating and one downgrade will destroy it, does the company really deserve that rating?

There was no joy yesterday in Mudville. We saw no new highs in any of our recommended portfolios. Merry Christmas...

In the mailbag... We discover what you really do with our letters, dear subscribers. You leave them as trash in your car's trunk. It was better to only imagine. Send us your "holiday greetings" and let us know how you did in the market this year. Do we deserve something shiny from Tiffany's... or a lump of black coal? feedback@stansberryresearch.com.

"I was cleaning out my car trunk and found an S&A Digest from January 10, 2007, with this gem: 'Prediction: The new iPhone will flop, and the stock will end the year lower than it's trading for today. Trying to compete against mobile phone makers puts Apple in a very high-cost, low-margin game where it's completely outclassed.' Apple closed near $97 back then, today it closed about $183. Granted, there's still time for Apple to crash 50% by years end, but somehow I don't think that's going to happen. You've written about Steve Jobs and how his strategies have failed in the past, and you may be right in the long run, but anyone who shorted Apple this year has lost his shirt. I suppose we won't be seeing that prediction again with a 'We said it, did you short it?' lead-in anytime soon, eh? Ha-Ha." – Paid-up subscriber Todd Kronlein

Porter comment: I don't know how much the iPhone helped or hurt Apple this year, but I was clearly wrong about the stock, which has seen all of its product lines grow. On the other hand, I didn't recommend shorting it. I recommended buying Nokia instead. Nokia has almost doubled in price this year, too. So, did you make more money in Apple than in my cell phone pick? Yes, slightly. Was it worth the risk you took buying a very expensive stock that has become an absurdly expensive stock? Not to me.

"'Bated' breath? Have you been eating bats? Did you mean 'baited'? On second thought, that means you've been eating bait. You might want to treat yourself to a proof-reader for Christmas." – Paid-up subscriber Larry Herbst

Flippen comment: As one of the folks who copyedits The Digest, I think maybe you should treat yourself to a big slice of shut up for Xmas...

From the New College edition of the American Heritage Dictionary:

bate... tr.v. (bated, bating, bates). 1. to lessen the force of, moderate: bate one's breath.

"The boobs complaining about your advertising apparently have no idea what makes the world go 'round. Their own livelihood probably depends on advertising selling something that impacts their bottom line, and they are too donkey-minded to make the connection. If it hadn't been for your advertising, I would never have become an Alliance member. The Alliance investment is the most profitible I've ever made! Yes, all those letters carry a lot of advertising, and I no longer read it all, but keep up your good promotion works so that more souls can be brought into the Stansberry financial light." – Paid-up subscriber D.K. Davis

"Your correspondents often point out 'signs of tops,' as in a recent discussion of the price of Copper. In all my perusal of stock market observations, discussions, analyses etc. in the media and in market letters, which is considerable, I have not seen a single mention of the classic Head-&-Shoulders top that the DJI and the S&P have constructed over the past 6 1/2 months. This is the elephant in the room. The recent rally into December appears to have completed a typically weak right shoulder. It so happens that the close of the S&P at the 2 lows in August and November was precisely at 1,407. These 2 points define the 'neck-line' at the bottom of the pattern. 1,407 is a level we do not want to see broken." – Paid-up subscriber DBA

Regards,

Porter Stansberry
Baltimore, Maryland
December 20, 2007

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