Editor's note: Agora founder Bill Bonner has never done anything like this before…
If you haven't heard, he recently committed to invest $5 million of his own family's trust in the stock recommendations of just one of his analysts: expert value investor Chris Mayer.
Chris has one of the best track records in the business. Over a 10-year span, he safely beat the markets by three-to-one and outperformed some of the world's best investors, including Warren Buffett.
And now, until tonight only, you can invest alongside Bill with a subscription to Chris' brand-new service Bonner Private Portfolio. But, as Bill points out in today's special essay, this service isn’t for everyone…
By Bill Bonner, editor, The Bill Bonner Letter
Today, we address a reader’s objection (shared by many, we suspect) about the new advisory from Chris Mayer we’ve been promoting, Bonner Private Portfolio:
$1,950 is a lot of money for a few books and a couple of stock picks. I appreciate that you want to expand your asset base to benefit your descendants, but you'll need to do it without my participation.
When one of our affiliate groups published Chris’ research, they priced it at $49. Other readers have noticed, too: There’s a big jump from $49 to $1,950.
Why? Are we just greedy?
“Elasticity of demand” is what economists call it. We noticed it, too. You price something at $49, you get a lot of buyers. You set the price at $1,950, you get a lot fewer.
If the elasticity is perfect… you get the same amount of money almost no matter what price you put on it.
So, from a cash flow point of view, it made little difference (at least, in theory… but also backed by substantial experience) which price we put on Chris’ new service.
“Greed” or “expanding our asset base” had nothing much to do with the choice of the price.
Of course, we always want to expand our asset base; our company is not a nonprofit.
But there’s more to the story…
We’ve been in this business for 36 years. We think… and hope… we’ve gotten better at what we do.
Not only have we made progress in understanding how the investment world works, but also we understand better how our readers and customers react to it.
Initially, we didn’t know whether Chris would succeed in making his readers money. It took 10 years to find out. During that time, readers could test him themselves – for less than the price of a newspaper subscription.
And since neither we nor Chris’ readers knew exactly what we had, probably neither of us got the full value of his research.
Subscribers came. And went. They bought. They sold. Nobody – maybe not even Chris – understood how valuable his recommendations were or what to do with them.
But now we see that Chris is an excellent long-term, value-oriented investor.
As we’ve been telling you, over a 10-year period, Chris' recommendations beat the overall market three-to-one… beat Warren Buffett's Berkshire Hathaway two-to-one… and turned every $10,000 into nearly $50,000.
But you can’t make much money trading in and out of his recommendations. You have to buy and hold. And you have to be willing to sit through periods of substantial drawdowns.
Sticking With It
Most investors – and we use the term loosely – do not expect that from a $49 service.
They want big ideas. They want speculations. They want to trade. They want more immediate gratification.
Putting the average investor together with Chris is not good for either.
Bonner Private Portfolio is for more serious, long-term family investors. It requires readers who understand how value investing works… and are willing to stick with it.
It’s not exciting. There’s not much to talk about. There are few occasions for bragging about your results (unless, that is, you have plenty of patience).
So, for Bonner Private Portfolio, we did not want a lot of readers; we only wanted the few who were suited to it.
That’s why we deliberately put the price high: to discourage casual subscribers or those who had not enough money to make it worthwhile.
We want serious subscribers who understand and appreciate the service. You can’t just “try it out for a few months.” You have to stick with it.
Is $1,950 the right price?
Too much? Too little?
We don’t know. But judging from the results, it might have been too low. We have more subscribers than we expected.
That may be because the serious investor compares this service – as he should – with a managed account. If he puts his money with a value-oriented manager, he will pay upward of 2% a year (if you’re lucky). With $500,000 invested, that works out as $10,000 a year.
The serious investor with serious money sees that Bonner Private Portfolio is a bargain at $1,950.
Almost every investment approach works sometime for someone. But none work all the time for everybody. Some are meant for serious, long-term wealth building. Others give traders and speculators the adrenaline rush they look for.
Some are good for sophisticated investors with a lot of money. Others are more appropriate for people with little money and little experience.
Putting the right people together with the right service is still hit or miss. But we’re getting better at it.
And pricing Chris’ new service at $1,950 is a step in the right direction. If the advice turns out to be good, no one will complain. If not… well, we will have learned something.
Editor's note: Right now, you can sign up for Bonner Private Portfolio—and get in on Chris' recommendations 48 hours before Bill does—for $1,000 off the normal price.
Chris releases his newest stock pick later today—an iconic company trading at a rare bargain. So act soon—this offer ends at midnight tonight. Click here to learn more.