The next trillion-dollar trade in Asia is about to unfold. Will you be there first? Forty percent of China’s pension investments are about to make their way into the stock markets. Guest Steve Sjuggerud, editor of True Wealth China Opportunities, recounts his recent observations and ideas from a whirlwind trip he just completed with a few dozen lucky Stansberry subscribers exploring Beijing, Shanghai, and Hong Kong.
Steve and his group of travelers found a massive gap between most outside perceptions of China and the reality on the ground. Steve shares shocking statistics and local details that will help you see exactly where the big investment opportunities should be considered in China today. There are two themes that are seemingly ignored by most investors that can easily produce triple digit gains. “It’s actually happened three times in the last dozen years.”
Two-time U.S. and World Surfing Champion Sean Poynter joins Steve from the road to talk about his near-death experience surfing in Mexico, how Steve influenced him to find success with Stand Up Paddleboarding (SUP), and why finding opportunity in the face of great adversity and fear is essential to survival in business, life, and on the water.
2 Time SUP Surf World Champion
Sean Poynter is one of the world's best stand up paddle surfers. Sean comes from a traditional surfing background where he was easily able to make the transition to SUP surfing and became one of the pioneers for progressing SUP surfing to the level that it's at today. Sean proves SUP can be taken beyond flat water and into the waves for electrifying surfing performances.
Editor, True Wealth,True Wealth Systems,True Wealth Opportunities: China,True Wealth Opportunities: Commodities,
Dr. Steve Sjuggerud is the editor of True Wealth, an investment advisory specializing in safe, alternative investments overlooked by Wall Street. It's based on the simple idea that you don't have to take big risks to make big returns.
Announcer: Broadcasting from Baltimore, Maryland and New York City, you're listening to the Stansberry Investor Hour. Tune in each Thursday on iTunes for the latest episode of the Stansberry Investor Hour. Sign up for the free show archive at InvestorHour.com. Here are the hosts of your show, Buck Sexton and Porter Stansberry.
Dan Ostrowski: Hey, everybody. Welcome back to another episode of the Stansberry Investor Hour. I'm Dan Ostrowski, producer of the show, and I'll be your host today sitting in for Buck Sexton and Porter Stansberry. Now Buck's tied up this week launching his brand-new D.C. based morning show on hill.tv. It's called "Rising with Krystal and Buck." Let's all go support Buck in his new venture by going to hill.tv and checking out the new show next time you're at your computer. Porter's also taking a break from the studio this week with a well-deserved fishing vacation with his sons to celebrate Father's Day. Speaking of, happy Father's Day to everyone out there as we celebrate all the men who've made a positive difference in our lives.
You're not going to want to miss what's coming up, folks. We have a very unique show planned with two outstanding guests. With me here today is editor and analyst of the True Wealth franchise at Stansberry Research, Dr. Steve Sjuggerud. Now, Steve and I just returned from a two-week trip across China with a group of about 50 Stansberry readers and staff. Our journey took us to Beijing, Shanghai, Hong Kong, and even sailing across the South China Sea. Stansberry Research sponsored two conferences in Asia over the last couple of weeks. We had an event in Shanghai and another in Hong Kong. At these meetings, Steve revealed his next big China investment opportunity, along with hosting guest speakers like trend-following expert Michael Covel, Asian real estate legend Peter Churchouse, editor of Crypto Capital Tama Churchouse, and elite equity researchers and business minds from China's top money managers, investment banks, and new tech companies.
Steve's here today to talk about what he calls the largest gap between perception and reality on earth taking place in China. We'll touch on exactly what we saw in China. That's clear evidence of the classic Sjuggerud trade of getting into an idea when it's being ignored by everyone else. We'll tell you exactly how to position yourself in the China trade first before the crowd arrives. And, of course, you can take full advantage of Steve's entire portfolio of China investment opportunities just by going to chinaopportunitiesoffer.com. That's chinaopportunitiesoffer.com. Also joining us today will be Steve's friend and two-time U.S. and world surfing champion Sean Poynter. You might not know this, but Steve Sjuggerud is passionate about surfing and was the first person to teach Sean how to use the standup paddle board. He also introduced Sean to his first main sponsor. Now we're going to get Sean on the phone with Steve just a little bit later on to hear about the one thing he learned from Steve that has made him so successful on the water. OK, let's get started. Hey, Steve. How you doing?
Steve Sjuggerud: Great, Dan. Thank you for having me on. I always love spending time with you and your positive attitude, positive outlook, and I also enjoy making music with you as well. I think we're going to have a good show.
Dan Ostrowski: Oh, I think so and of course we spent a lot of time in China these last two weeks. My mind is completely open once again going on this trip with you and all of our readers. Wonderful opportunity for us to be able to do that, and I know that the listeners here are eager to hear what was going on. Let's just get right into some questions, Steve. Last week in Hong Kong, you talked about investor perception of China being really very different than reality. Can you explain that?
Steve Sjuggerud: Absolutely, and just to back up a little bit on that, as an investor, I really want to see a moment when investor perception is different than reality. When there's a huge gap between perception and reality, there's often a massive opportunity to profit. And in my 25 years in the markets, I've never seen such a massive gap between perception and reality as I see in China today. To give you an example, and I know Dan, you were there and you experienced it, but I think the typical American perception of China is that it's the place where it's "made in China." It's where cheap electronics come from. It's where T-shirts and your underwear come from, and this – nothing could be further from the truth.
In Bangladesh, you can make a man's dress shirt today for 90 percent less than you can make it in China. If you – not you, Dan, but you the listener, if you think of China as the low-cost supplier of clothes and cheap goods to the world, then those days are gone. You are wrong, and one of the great ways to see this is when you and I were in Beijing and Shanghai. It's hard to believe when I even say this that the average apartment in Beijing will cost you $1.5 million U.S. dollars. And that same apartment in Shanghai will cost you even more. It'll cost you $2 million. And I'm not talking about some fancy waterfront posh apartment. I'm talking about less than 1,000 square feet with no view in particular. I think the perception is this is where the cheap goods and the cheap shirts are made, and the reality is Shanghai and Beijing, for example, are more advanced than any city in America.
Dan Ostrowski: That's true, Steve. Just to jump in here, one evening, I was out walking in Shanghai and it was in the Pudong area near our hotel and I wanted to walk down to the big spire tower. As I was walking down there, I'm walking by these construction areas and I'm seeing billboards on the side of the construction fences. And I was clearly looking at cities of the future. It hit me at that moment. We had been traveling, or rather touring, around Shanghai earlier that day, going up into the high-rises, seeing all the wonderful things, but for some reason seeing the artwork on all these construction fences of this future vision of what they're working on, it hit me even more that I am seeing the future.
Steve Sjuggerud: Dan, I'm glad that you could see it because when I was exactly in the same spot 22 years ago in Shanghai and I saw the Shanghai vision of the future, I saw a table that was maybe 25 feet long and 10 feet wide and it had a 3D rendering of what Pudong would look like 20 years from then. And I thought – so this was in 1996 and I almost laughed out loud. I thought these guys are crazy. This will never happen, and I've never been more wrong about an idea than I was about Shanghai 20 years ago. I believe that what we've seen is one of the greatest achievements of humankind. It is just an incredible feat of human engineering to make all of that happen in such a short period of time. And the problem is that Americans think of China as 20 years ago and what's happened in the last 20 years is just extraordinary. What I want to do is we have this incredible opportunity to actually profit from this.
The thing is, the Chinese don't realize it, meaning that there are no Chinese investors invested in their own stock market right now. The last thing that happened, the last big deal that happened in China, was a major bust in Chinese stocks. And so most investors in China are afraid of the stock market. Most institutional investors, they don't have China on their radar, and most Americans, foreign investors, they just write off China. They wouldn't even consider it. The reality is China is actually the world's second-largest economy right now and it's the world's second-largest stock market. And meanwhile nobody is invested in it and I just think this may be the biggest opportunity of my 25-year career in the markets.
Dan Ostrowski: I can see it, Steve. This is of course our second trip to China together and this year, it was even – just hit home even more to me, whereas this is truly a place where if you wanted to invest the U.S. stock market four decades ago or more, it seems like that opportunity exists in China today. Am I correct about that or am I on the right path?
Steve Sjuggerud: I think you're right. I think it feels like postwar, the boom of the '50s, where things are moving. The growth is high and the opportunity is great, but when you look at it, there are two things that are happening in the markets that are going to cause a trillion dollars at least to flow into Chinese stocks, whether or not it's a Goldilocks era like we saw in the U.S. in the '50s.
Dan Ostrowski: You're going to have to explain that, because a trillion dollars, that's a huge amount of money. What's that all about?
Steve Sjuggerud: Yeah, so I introduced this idea while I was in Hong Kong, actually– to the attendees of our conference and it was just an extraordinary discovery. Once again, it's another China story that nobody is talking about and here's the thing: China does not have enough money set aside to support future retirees. Very simple idea, but the seriousness of this, it's very simple to understand the seriousness of it. You know about the one-child policy. Everybody's aware of this. Think about what happens as people start to retire. You have two parents and one child, and another two parents and another one child. And when these four parents that I've just described retire, there are only two young people working to pay for the old people. This is sort of an inverted relationship. Traditionally in the world, you have a lot of young working people and then you have a smaller amount of retired people, and the young working people pay into social security or whatnot and it supports the older people. It makes sense.
With decades of a one-child policy, China is about to hit a pensions nightmare. And it happened quickly because the life expectancy in 1960 was 43 years. Today it's 76 years. That's an incredible feat to improve life expectancy that much, but it sets up this strange pension problem. China has come up with some very interesting ways to solve this problem. I think it's actually kind of cool. Some of these solutions, you haven't seen these types of solutions before. One of the solutions is actually to take 10 percent of IPOs of state-owned enterprises and put that into the pension fund system. A lot of government entities, oil companies, utility companies, coal companies, this and that, they are going public. They're going onto the stock market. They are being taken out of the government's hands and being sold to the public, and the proceeds of those sales are going to go to fill the retirement coffers. Another interesting way is China's national lottery – where people gamble on the lottery, that money becomes part of China's pension funds.
And China has a lot of solutions, but ultimately they have – they're starting from such a low base of retirement assets, it's really next to none. China's percentage of GDP, about 5% of GDP, that's the pension assets, really nothing. And so they've got a long way to go. In the U.S., we have over 100% of GDP in pension-fund assets. China has an extremely long way to go. Actually, in addition to having these unique solutions for retirement, they have to have a high return on the money that they raise for retirement. Where do you get a higher return than money on the bank?
Dan Ostrowski: I would have to think the stock market.
Steve Sjuggerud: The stock market, and so that's what China's taking this unprecedented step. They've authorized up to 40% of social security money to go into the stock market. And so do you a little back-of-the-napkin math, and if they only put 30% of their pension assets into the stock market, that would be over a trillion dollars going into stocks by the year 2025, a trillion dollars.
Dan Ostrowski: That's amazing. Is there anything in the U.S. market history that can compare to this? Is there anything to maybe illustrate readers this sort of thing happened in the U.S. or something that they can relate to? Is there anything like that, that comes to mind?
Steve Sjuggerud: This is really bigger than anything I've ever seen. Pension assets, the growth is insane. It's a 20-fold growth from 2005 to 2025. That's KPMG's projection. That's not my projection, but they've done good homework on this. No, Dan, the size, the scope of this is truly unbelievable and so again, this is going to happen. China needs to catch up on its pensions. It's going to happen and money is going to go into the stock market to get a higher return.
Dan Ostrowski: It's curious that you say that, because – you say hey, playing catch-up and if there's one thing that we saw throughout our whole tour of China was this – for example, the train ride from Beijing to Shanghai. We just saw massive construction all over the place, practically whole new cities being built, construction cranes highlighting the entire horizon of the sky. That's another thing that, to me, seemed to really stand out was just that hey, here's a country that is playing catch-up. They're playing it very aggressively. It's very obvious. People are working everywhere there. Everywhere you go, there's somebody to help you every 10 feet. What you're saying about the stock market and playing catch up, it really does seem to me that China is going to be able to do this. The illustration that I viewed when we were on our trip was that this is clearly a country that's playing catch up. They're capable of it, and that was my takeaway.
Steve Sjuggerud: Yeah, absolutely, and the lesson for me being there 22 years ago and seeing the change and seeing it over and over again is China setting goals and China just knocking them down. This is a need and I'm fairly confident they are going to succeed and get out ahead of it, just like they've gotten out ahead of all of these other things that you've seen, that you experienced for yourself.
Dan, was there anything else that really struck you while we were over there? I know we've been talking about all these technical things, the Chinese pensions, but what was just, "Wow, this is extraordinary?"
Dan Ostrowski: I don't know if it's along the lines of extraordinary, but the fact that any of these cities we visited, they were extremely clean and orderly. There were no homeless people. There were no people that looked like they were in a destitute type of situation. And we can back to what I just mentioned a few moments ago, that everybody seems to be working. Everybody seems to be busy. This really was emphasized once again on this return trip just seeing how busy people were, how there's really no homeless, everything is clean, things are orderly. I never felt in any situation where I needed to be watching myself. I felt very, very safe. Just from a humanitarian standpoint, there seemed to be progress. If you compare that to Portland, Oregon maybe, where there's a massive homelessness problem, this is a human problem and China seems to be paying attention to that and they seem to have it licked. Maybe we didn't visit the right areas, but man, we took those buses all over the place. We saw a lot. That certainly stood out for me.
Steve Sjuggerud: I agree with you. Actually, I was really stunned at – every time I go, it just seems – so I think there's this thought of in a lot of life, you fake it until make it. And a lot of my trips to China, I was like, wow, they're doing a good job of faking it. They're doing a good job of faking it and the last two trips, it's like they've actually made it. It's not like, oh, wow, look at us, we're using WeChat, we're not using our wallets to pay for stuff. This is just standard operating procedure. No one wants a wallet.
Dan Ostrowski: A couple of times at the restaurants, they looked at me like, why are you handing me a credit card? Why are you handing me cash? This is so backwards.
Steve Sjuggerud: It's gone from "gee, isn't this neat" to "this is just the way life is." All of these little things now work and they work well. The one-hour delivery from JD.com, seeing those little JD delivery – what would you even call them, motorbikes?
Dan Ostrowski: I guess so. It's almost like a cross between a a tuk-tuk and a motorbike. I don't know.
Steve Sjuggerud: How do you deliver in an hour in Beijing? You can't even drive across Beijing in an hour and to see the JD motorbikes everywhere. They were like the tiniest little UPS delivery things you've ever seen and they're just all over the city. Anyway, it all works. It's not "fake it till you make it" anymore. It's made it. It's all working and people don't want to believe it, but you and I have been going there now and we've covered a lot of the country, a lot of the major cities at least. And we've seen a lot on our travels and I think that people just don't want to believe it.
In fact, this time I brought my wife who was a major skeptic, and apparently she came home and she was telling her parents about it. And their parents are skeptics and they were like, wow, that trip really converted you. And it's not a conversion. You just have your eyes opened. And another thing that you also often heard when I would come back over, traveling over there for so many years, was they're just showing you what they want you to see.
Dan Ostrowski: I get that. I explain this stuff to anybody and that's one of the first things they say, is that "eh, they're just showing you the stuff that the government wants you to see," but hey, man, we were all over the place. And we certainly weren't being taken to specific areas. We covered a lot of ground.
Steve Sjuggerud: Dan, one thing you had said was, "Steve, what's different? What do you see different this time compared to your other trips?" And as I thought about it, one thing is I hate to tell the people of Hong Kong this, but I think that Shanghai may have – and again, don't tell the people in Hong Kong.
Dan Ostrowski: I hear you because I think I know what you're about to say.
Steve Sjuggerud: I think that Shanghai may have even surpassed Hong Kong in its – it's just a more modern city than Hong Kong. And Hong Kong and Singapore, for much of my investment career, have been the pinnacle of the future. You're stepping into the future of finance when you step into these cities and just modernity and the way people treat each other. And it's just been a high standard and this is the –
Dan Ostrowski: Oh, yeah, I felt very welcome. How many times did we get pulled aside to have people take their pictures with us and our group? It happened in several locations. They seemed to be just very welcoming and I remember even this group of schoolkids. They come up to me and they're like, hey, can we get your picture? And it's like, sure, and afterwards they're like, welcome to Beijing. It felt good and it seems like people were relatively happy. I don't recall.
I think there was one woman. There was a fishing market we visited on the Lantau Island. This is when it was raining terribly and we went out of the bus there with our umbrellas. And that was the only person I – there was this one woman. She was this fish vendor and we approached her little vending shack there, and she didn't seem to be too happy to see us because people were just taking pictures and stuff and looking at her fish and – but it was clear we weren't going to buy any of them. Then she was the only woman who – I think in Chinese, I asked afterwards – In Chinese, she was telling us "hey, get out of here if you're not going to buy anything." That was the only little negative, but it was more of a cultural experience than anything.
Steve Sjuggerud: But still a lot of investors are very negative on China, and to me, that's fine. That creates our opportunity right now. Chinese stocks are trading at less than 12 on a forward PE ration. This is a huge discount to major stock markets around the world. Meanwhile, between the pension-fund assets and the MSCI story that I've been telling, easily a trillion dollars is going to flow into China in the next five to seven years. And when I say flow into China, I'm specifically talking about Chinese A-shares, local shares that trade in China. I do think this is one of the biggest opportunities of my career. It might be a five-year opportunity and I can't tell you. What I can tell you is I strongly believe that sometime in the next five years, Chinese stocks will soar by over 100% within 18 months. I just don't know when that sort of gun goes off, when they start to soar, but this is going to happen.
It's actually happened three separate times in the last dozen years. It's not crazy at all to imagine Chinese stocks going up by that much in that short amount of time. But when you have the huge tailwind of both this MSCI decision that I've talked about in the past and the money that has to flow in from Chinese pension funds, there is a trillion dollars out there that has to flow into these stocks whether or not they're a good buy. And they happen to be a good buy right now. I strongly urge folks to take advantage of it.
Dan Ostrowski: Let's stick on that for one minute because I know Brendan Ahern from KraneShares, he was there with us. He gave some presentations updating everybody on the MSCI inclusion of the China A-shares and you've written of course volumes about this and how this is going to be a watershed moment for the Chinese stock market, why it's still a great big opportunity for investors. But I think some folks, they probably might not understand the inclusion process and why this might take some time to roll out. In other words, they might think MCSI is going to include the A-shares. Why doesn't this start happening right away? Can you explain to me just a little about the MSCI inclusion process and how it rolls out? Just to kind of clarify that for people.
Steve Sjuggerud: Yeah, sure, absolutely. Just briefly, up until June, up until this month really, China's local shares, the shares that trade inside the country, have not been included in the major global stock market indexes. And this is unique. Right now the global stock market index, the largest countries in it are the U.S., which has a 59% weighting in the global index, Japan, U.K., France, Germany. Those are the main ones, but Japan has a 9% weighting and the U.S. has a 59% weighting. Meanwhile, China is somewhere in between the U.S. and Japan in size. Specifically, the U.S. economy is about $19 trillion. China is about $12 trillion. Japan is about $5 trillion.
That was a lot of numbers, but the long story short is that China deserves a huge weight in the global stock market indexes. And why does this matter? Well, $13 trillion of investor money. I know we've been talking about a lot of trillions, but $13 trillion is a lot of money and $13 trillion is benchmarked to MSCI world indexes.
Dan Ostrowski: Now that's not $13 trillion going into the market all at once, right?
Steve Sjuggerud: That's all the money in that is benchmarked to MSCI's global indexes. That's not how much is going into China. On the whole planet, $13 trillion worth of investor money is benchmarked to MSCI's world index. And so what happens is – look, I know how fund managers work. The simplest thing is fund managers don't want to lose their jobs. It's a pretty cushy job and as long as you don't underperform your benchmark index dramatically, you get to keep your cushy job. How do you make sure you don't dramatically underperform your benchmark index? You basically hold exactly your benchmark index. Then you don't underperform dramatically and you don't lose your job.
For the most part, most fund managers hold pretty close to whatever the index makeup is. Right now, the world index has 59% U.S. It's a rounding error right now of China A-shares and has 9%, Japan 6%, U.K., et cetera, et cetera. This China percentage is going to go way up and if you had 10% of the index, 10% of MSCI indexes in China, that's over a trillion dollars right there. That would take time for that to happen, but I just wanted you to – I was trying to give the view from 30,000 feet or whatnot so you could – the overview so you could look down on it.
But in short, you can't just all of the sudden shove down the throat of a market a trillion dollars. You can't expect the market to swallow a trillion new dollars. As soon as MSCI says OK, you need to put in a trillion dollars into China, that would cause the stocks to soar over night. It would cause all kinds of disruptions in the market. Instead of saying put all the money, put a 100% of the inclusion in right now, they're breaking it up into small amounts. And instead of 100% of the money that should go in, they – they're just starting out with 2.5%, just a tiny percentage of the money that should go in. And so people are wondering why didn't Chinese stocks soar when they started out or really it's kind of like dipping their toe in the water to make sure it's not too cold, to make sure nothing's going to bite. And that's what they did in June, but once they've dipped their toe in the water, they'll dip another toe in, in September.
But at some point in the next five years, they're going to take the full dive. And basically the way it's worked traditionally is MSCI, just make sure that all of the trades work out OK, that there are no disruptions to the stock market as they put their toe in, put their toe in. And then once everything's working, once they know the system works, then they dramatically raise the amounts of the inclusion. And so I don't know when, but at some point this fire will light and people will get onto this idea, and – but I just don't know the day. But basically if you like the idea of skating to where the puck is going, this is the trade for you. Like I said, it could be a five-year trade, but it could start tomorrow. That 18-month triple-digit gain could start tomorrow.
Dan Ostrowski: It makes sense. There's going to be this slow trickle of money that's coming into this trade and I think –
Steve Sjuggerud: Until the lighter fluid ignites, and you just don't know the date. You don't want to miss it because it happens quickly.
Dan Ostrowski: Yeah, I see. And I know that Brendan Ahern from KraneShares, he put up a slide that showed this inclusion schedule. We'll make sure for all the listeners out there, if you're signed up for our free email, you go to investorhour.com, put your email address in there. We'll get you on our list so you get all the great stuff we're sending out. For those that are on the list right now, I'll include this slide in this week's issue– so the folks can actually see this inclusion schedule. It looks like every June 1 and September 1, there's going to be some sort of event. You can almost plan your dating calendar to this thing. That's great, man. Thanks for that explanation. I think that brings people up to a little bit more speed on what's going on with the MSCI inclusion and how it's going to roll out.
Steve Sjuggerud: Just to wrap all this up on the China idea, there's one really simple way to take advantage of it and I wish there were more ways, but this way is just so ideal. It's really all you need and you mentioned Brendan of KraneShares. It's the KraneShares MCSI China A Fund, symbol KBA, and it's really the ideal way to play it. I hesitate to even recommend anything else and that's my favorite trade for the next five years.
Dan Ostrowski: That's great news. And also folks, if you're interested in getting more of Steve's research on China opportunities, he has a whole service dedicated to these opportunities. It's called True Wealth China Opportunities and you can simply go to chinaopportunitiesoffer.com and it's a simple order form. There's no crazy long video or crazy long promotion. If you're interested in this sort of thing, I'm sure there's some kind of trial period on it. It'll all be explained on the order form, chinaopportunitiesoffer.com.
Okay, next up we actually have a guest on the line here, Steve, and I know this gentleman is a friend of yours. He's had some pretty incredible accomplishments. His name is Sean Poynter. Since the age of 14, Sean Poynter has been sponsored to travel the world surfing with some of the most beautiful locations on earth. In fact just the other day, Sean was once again crowned champion at the U.S. surfing championship in Oceanside, California. Sean is now a two-time U.S. surfing champion as well as a two-time world champion. He started standup paddle boarding in the summer of 2009 after being introduced to the sport by none other than our own Steve Sjuggerud. In no time at all, Sean was one of the top ten professionals in the standup paddle boarding arena, and he's here today to talk about his incredible journey and the one thing Steve taught him that has led to so much success on the water. Please welcome to the Stansberry Investor Hour 2018 U.S. surfing champion Sean Poynter.
Steve Sjuggerud: Hey, Sean. How you doing?
Sean Poynter: I'm doing great. I'm just here in California, excited to call in here. Thanks for having me.
Dan Ostrowski: I'm so excited for you. You won the U.S. championships and so now that was back to back world – back to back U.S. championships and now you've won two world championships as well. How are you feeling after the latest national championship victory?
Sean Poynter: Feels like I'm maybe getting better at this thing. I don't know. Feeling elated.
Dan Ostrowski: Awesome. It's funny you say you think you're getting better at this thing and it's one thing that I've seen you do in your career actually is I think last year, you said you peaked in the finals. I think you had your highest results, your highest numbers in the final and I think this year, you may have done the same thing. Really one thing that I've seen you do and it's really struck me all these years is somehow you manage to rise to the occasion and I don't know how. I've seen you do it even in situations where it looked like all the chips are down. There's no way you could pull it out and somehow you still manage to pull out the victory. It's a mystery to me. It's a skill that I want to learn and so maybe you could share a little bit about how you're able. Everyone at a high level, when you reach a high level in anything, it's – there has to be some sort of X factor. Everybody has a similar ability at the top, whether it's golf or business or whatever it is. What do you think it is that's allowed you to achieve this level of success? What's different about what you're doing than your competitors?
Sean Poynter: As they say, success is where preparation and opportunity meet, and I think that's just so true for my success in this. And I think this even in last year's event and my world championships, I've come into them so prepared over my competitors, at least so in my own head. I pretty much have wholeheartedly given myself to understanding what needs to be done to give myself an advantage. And surfing is difficult because it's not a golf course. It's not a basketball court. There's so many variables. The ocean is not constant and so you have to have some understanding there almost beyond what's happening out in the water, this belief in yourself. And that belief again really stems from that preparation that you do leading into these things. And I would really attribute my success to that preparation factor.
Steve Sjuggerud: Sean, maybe we got ahead of ourselves there a bit. I think that we ought to introduce how we know each other and I've just got to tell a little story. Sean actually grew up a block from my house in Florida and I remember there was a hurricane swell. The waves were big and I saw this little guy paddle out. He couldn't have been more than 11, 12 years old tops and not a big 11 or 12 year-old. And it was a hurricane swell and it was at Scott Road, Sean, and I thought man, this little kid, am I going to have to save this kid? These are serious waves out here and then I saw him catch a wave and talk about that confidence. He surfed it better than I could at being a grown man and he was 11 or 12 years old. And since then, Sean and I have had a lot of life adventures together going to Fiji and traveling the California coast. And it's been a real thrill, but Sean, do you want to tell a little bit about how you actually got into it – you'd already been surfing, but how you got into paddle boarding, which is where you've won these world championships.
Sean Poynter: I think Dan mentioned it. On the intro to my standup paddling career was you, Steve, was Mr. Sjuggerud. And it was in Florida and Steve offered to take me out one time, and I took him up and ended up getting completely humbled by the experience, humbled by Steve who was just ripping around me. And pretty much saying to myself I am not going to be defeated by this thing. Let me try and get this going. But even before that, it was – what really got me into it was Steve's passion that he had for standup paddling, and it was new to me. I was this surfer. Surfing and standup paddling is – they're different worlds and one is different – viewed differently than the other. And I had a different perspective of standup paddling and Steve really opened my eyes to what this other kind of world was. And his passion really just got me excited by it. And so from there, I started developing my own passion for it that Steve had and it's been a real journey since, but Steve and I have had some amazing rides together. Not only in the literal, but also the metaphorical and from catching waves together in Fiji to crossing a 13-mile channel from Molokai to Oahu. And getting waves just right there in Florida and it's been a hell of a ride. It's been really fun.
Steve Sjuggerud: I've really learned a lot from Sean actually and one of the big things I learned from him was that when it came to standup paddling, he actually chose standup padding because at the time, the economy was in the big recession, the great recession. And he was actually dropped from his major surfing sponsor, if I have the story right, and so Sean was at a crossroads in his life. And standup paddling was the proverbial "if there's a fork in the road, take it." And most of his peers did not see this as a potential way to continue a life in the ocean, but Sean's goal was to spend a life in the ocean and be at the top of his game. And when his main surfing sponsor dropped him in the great recession, Sean just said okay, I've gotta pivot. I've got to figure out another way to succeed to make this life in the ocean that I want to live and see the world. And now it's been 10 years and Sean was 19 at the time, and now he's been a multiple world champion and traveled the world and won contests in Tahiti and in Mexico and all kinds of exotic places around the world. And because he was willing to go down a road that his peers were not willing to go down, it led him to an extraordinary decade. Sean, can you talk just briefly about how you made that decision and how you feel about it looking back on it and looking at some of your peers as well? Do you have any comments on that?
Sean Poynter: Sometimes a door is a locked door that you just can't bust through and you gotta take one that's maybe ajar and rip it open and just walk through the thing. And that was really the case for me. With one door just completely shutting on me and locking, and me needing to pivot and find a new way to get through to where I wanted to. And that being the dream of traveling the world and competing at the highest level and challenging myself to a degree that I wanted to be challenged. And that all formulated in the way of this new opportunity of standup paddle boarding, where this idea of me being this professional surfer pivoting to this new sport of standup paddling to my peers, professional surfers, was kind of ludicrous. They were going what are you doing? This was a completely foreign idea to them because it was not surfing to them. You had a paddle in your hand and it was just so unknown to them. And I just decided you know what, this is going to get me to where I want to go and forget what anyone says or thinks about it. I have a chance here to actually fulfill what I've set out to do. And it's through this type of just understanding of what I want and also being a little bit accepting that maybe everything isn't going to go as – exactly as you planned and to move with the tides. And that was really a massive learning experience for me, but also what led me to now ten years later living – continuing to live this dream out of mine.
Steve Sjuggerud: That's extraordinary and I think we're kindred spirits in a way. As an investor, I try to be a contrarian. I try to look for opportunities where other people don't see them and it's really led to my success. And I love that you were willing to look for an alternative path to accomplish your goals and still become the best in the world at something in the ocean. Let me ask you one more question here and then I want to ask you what you're planning on doing for the rest of the year. The one question is I think everybody has certain fears of the ocean, whether it's sharks or getting sucked out to sea or – so I'm putting you on the spot here, but – because I don't know what you're going to say. I don't have any idea, but what is the most scared you have been in the ocean? What caused it and if you can just think, was there a moment where you thought you were going to drown or was there just a situation that was really, really particularly heavy? I know you're always optimistic in the water, so I'm just curious as to what your worst moment in the ocean looked like.
Sean Poynter: I would have to rewind to 2010. I'm in Puerto Escondido, Mexico and it's what they call Mexican pipeline. It's one of the most aggressive waves in the world and I had a competition there, and it was my first time competing actually with standup paddling on the craft of a board like the board I had with such an aggressive wave.
Steve Sjuggerud: When you say aggressive, how tall was the wave face and I'm not talking the macho Hawaiian. I'm talking the man on the street. How tall does the wave face get at Puerto Escondido? What did you see?
Sean Poynter: About 20 to 25 foot face waves. Two plus stories high and these waves are breaking completely from top to bottom in a way that's what you would see barrels or a tube or the eye of a wave. That being top to bottom is completely large and you can fit a truck in the eye of that wave. And what that means is that it's a really powerful wave. And so that type of wave at that size is really aggressive and I –
Steve Sjuggerud: When you say aggressive, what that means is if you get hit by that, people have died in situations like that before.
Sean Poynter: Actually on that note, our toe lift guy who would take us up the beach on the jet ski – or no, on the – on an ATV, was actually paralyzed from the waist down from that wave just months before. It was a reality of just the magnitude that power and the danger that wave produces. And I was out in a heat and I had a wipeout, and I had a sequence of waves coming on my head. Pretty much the biggest the waves get in the session I had was all landing on my head after I had fallen on the –
Steve Sjuggerud: Just to paint the picture, you probably had walls of whitewater coming at you, 20 to 25 feet high, coming right at you, and you've already lost all of your breath and here comes another wall storming right at you.
Sean Poynter: Completely, completely, and with it, you have whitewater that is starting to foam up to be six inches high above the surface of the water. It's actually difficult to get your head above that whitewater to get a breath in. And it these waves coming, bearing down on you that you just start to worry a little bit. You start thinking that death. But what I was able to do in this situation was actually be able to hold out long enough to get rescued by a jet ski. But I was able to hold out long enough by a trick of pretty much not looking at what was coming. It was almost like blinding myself of the imminent wave that was going to be bearing down on me. Because what happens in these situations, at least it does for myself, is that you start to hyperventilate. If you're looking at this problem coming at you from afar too soon, it's like the idea festers in your head of all the things that could go wrong. And you then start feeding into that and you're like, it will go wrong and this is going to happen. And so after a couple waves, I decided to just look down at the water in front of me and not at these massive storming waves that were coming, boiling down on me. And I was able to then just look up at it at the very last minute to understand where I was and go down, almost not giving myself enough time to think about the potential disaster of it.
Steve Sjuggerud: When you say go down, you don't mean go down. You mean get tumbled like a quarter in a washing machine, right?
Sean Poynter: Yeah, maybe I'm being a little bit light on the actual words of what it does to you, but it's like getting thrown around doing multiple flips, say five or so flips underneath the water, and going deep, deep, deep down. And then having to swim back up to the top to have – to repeat this again. It's a washing machine that will just run you and deplete all your energy and oxygen.
Steve Sjuggerud: And so you get on the jet ski. Somehow the jet ski saves you. Do you sit on the beach? How do you recover?
Sean Poynter: Recover for just a few moments because what was next was we had to get back out for a few more waves, but I think beyond that – I finished second that competition. And I had a really humbling experience, but I wasn't defeated by it. I really was warned from the last year's event and I went again in 2011, and I went there and I won. And I think that was – for me, that was my victory. That was my victoriousness over my previous year of near death.
Steve Sjuggerud: That's pretty awesome to come back to the place that you – the closest to death and go and beat all the other guys and win, facing your fears. That's good. I can talk with you all day, Sean. Let me just ask just what's your plan for the rest of the year. You just won the U.S. championship. What's next?
Sean Poynter: Next I'm going to be focusing really on our standup paddle boarding retreats. We do standup paddle boarding retreats where we educate people – first timers and even advanced standup paddle surfers to get better, to learn or to improve their ability. And so we'll be taking this understanding that I have along with some other really great coaches to bring groups of people down to Mexico to share our knowledge and help people feel.
Steve Sjuggerud: Man, that sounds awesome. Can we do that in the wintertime, where the water is nice and warm down there and it's cold in the rest of – can we do a Stansberry retreat? Can we do a Stansberry surf trip?
Sean Poynter: Oh, 100 percent, yeah.
Steve Sjuggerud: Here's what it is: come learn to surf with the world champ and me in the warm waters of Mexico. Let's do it.
Sean Poynter: Sounds great. Sounds good to me.
Steve Sjuggerud: And then you just won the U.S. championship. What about the world championship? When is that and what do you – you've won this twice. How do you like your chances this year and when is it?
Sean Poynter: It's going to be in November and it'll be, as of now, end of November, beginning of December, and it'll be in Brazil just outside of Rio de Janeiro in Búzios. And I like it. It's a wave over there. Brazil has very similar conditions to our surf that we have in Florida, Steve. And it is – it's a warm place. Water is similar to that Florida that I grew up in surfing and it's another opportunity to pretty much get ready for and put my best foot forward, and try and repeat. I'm really looking forward to it and I have a good amount of preparation to do for that, but I'm really excited about the challenge.
Steve Sjuggerud: Awesome, man. Good luck. I'm sure our whole Stansberry crew is behind you and Sean, thanks for joining us. I know it's outside the norm of the Stansberry Investor Hour, but I always love catching up with you and I just wanted to highlight your national championship again, and get you out there to our customers.
Sean Poynter: Thank you, Steve. Thank you for having on me, guys, and all the best to you all.
Steve Sjuggerud: Yeah, maybe we'll see you at a Stansberry retreat in Mexico.
Sean Poynter: That sounds great.
Dan Ostrowski: All right, man. That's pretty cool stuff, Steve. Just hearing about Sean's experiences and how he's conquering his fear, and that goes such a long way, that confidence really to – doing anything we do in life. And even what he's talking about when it was 2009 and his surfing sponsorships were drying up. What do you do next? And he says hey, one door is closing, the other one is just slightly ajar, and it sounds like he just ran through that door in a real massive way.
Steve Sjuggerud: He's such an incredible guy and he has such strong belief in himself and belief in everyone around him. And what that does is it raises the level of everyone around you. A few years ago, he said to me, "Steve, you want to do the Molokai race with me?" And I thought there's no way he's actually asking me to do the Molokai race because this is the super bowl of paddle boarding. It's crossing from Molokai to Oahu on a paddle board, 32 miles in the most disorganized seas you can possible imagine. And I said, "Sean, you know if you do it with me on your team, there's no way you're going to be competitive." And really I was actually looking for an out, but –
Dan Ostrowski: Sounds a bit like torture to me, but –
Steve Sjuggerud: He said, "No, let's do it." And so we did and it was an extraordinary – it was also the most humbling experience of my career because I truly did try to prepare heavily. I went to a couple different Hawaiian islands to prepare and such, and took it pretty seriously, but it was really ultimately over my skill level. But we did it as a team. It's really crazy, Dan. I don't know if you can even imagine this, but each competitor has to have their own chase boat. Our team was a – was considered a competitor and what a team means is one guy paddles and then when he's done paddling, he jumps off the paddle board into the ocean, but the seas are so disorganized, you wave your seven foot paddle hoping that the chase boat can you see your paddle waving above you. And then when the chase boat comes around, the back end of the boat is going up and down 15, 20 feet in the air. And you've gotta somehow jump on instead of it crashing on top of your head. And so I was bloody just from getting in and out of the chase boat and – it's just – it is an unbelievable experience. It's beyond the peak of my abilities and – but I was honored that Sean invited me. And down here in Florida, Sean's been my personal trainer and he believes more out of me than I believe out of myself, which is awesome and it pushes me to just be better. And those are just kind of the people that you want to spend your life around. I wanted to introduce the Stansberry world to my friend Sean Poynter.
Dan Ostrowski: It sounds great and I think everyone out there, you can look up Sean Poynter and it's spelled – it's not Poynter as you would think. It's P–O–Y–N–T–E–R. You can look him up. I'm sure he's got some videos out there and in fact I think as we were preparing for this, I saw a whole series of lessons that he was giving. If you're interested at all in the standup paddle boarding universe, Sean Poynter is your guy. Obviously a close personal friend of Steve Sjuggerud and so awesome that Steve, you got to actually give this guy his start in 2009. You're the man who introduced the world champion to this sport. How does that feel?
Steve Sjuggerud: It's pretty neat, but it's funny. I'd actually started a magazine called Standup Journal Magazine, which is like Architectural Digest quality. And the main advertiser was a company called Starboard and Starboard's the top brand in – one of the top brands in standup paddle boarding. And they'd contacted me and said, "Steve, is there anybody," – this was 2009 and we were getting 35,000 pictures for each issue and from just outside contributors. And so Starboard said, "Steve, is there anybody out there, any young guys, not guys your age, Steve, but any young guys that are really doing extraordinary things on the paddle board?" I said, "Well, there's two kids in Hawaii. There's a kid in Australia, but there's actually a kid a block away from me that could be as good as anybody in the world." Starboard probably thought oh, jeez, here's another guy just pushing his local buddy trying to get him sponsored. And it turns out it was actually true. Sean was a total unknown from Florida. He goes to Hawaii. He goes to Tahiti. He goes to 20 foot Mexico and he beats the best guys in the world. I don't know. I do feel like a proud papa in a sense there, but Sean did it himself. I just opened a door for him really and anyway, I – he's just one of the type of people that you want to be around. Like I said, it raises everybody's level and I'm sure you know people like this in your life.
Dan Ostrowski: Oh, absolutely and you could hear it in his voice. It comes through. I'm sure everyone listening out there, you can hear it in this guy's voice, the confidence. And that just goes to show you that believe in yourself. Believe in what you have. Believe in everything that you already have been given inside of you. It's just waiting to come out. Believe in those things and that's going to bring you more happiness. It's going to fill your life with more good people and really it's going to allow you to give to other people. And it sounds like Sean has given you a lot back from the stuff – and let's face it. You reached out. You gave this kid an opportunity, an introduction to the sport. You helped him get his first sponsor and I think that's coming right back at you. He invites you to this trip to Hawaii. He has confidence in you. Really a humbling experience for you, I think.
Steve Sjuggerud: Absolutely.
Dan Ostrowski: And that gave you more lessons. Sean said something interesting about his harrowing experience there in Mexico, where he's getting tumbled in these waves.
Steve Sjuggerud: And by the way, the retreat where he teaches you to surf is not at that spot.
Dan Ostrowski: That's probably good to know. We're looking for flat water to train on, Steve. That's what we want, flat water. You're describing this thing down in Hawaii, these – you gotta raise your paddle to get the boat to see you. That's definitely not the flat pond, but Sean, he said something about that experience where – how did he survive. He was not looking for the disaster to come. He was focusing in on just – on the moment, on the present. Not having that worry of the future. I'm just trying to bring this back into some sort of useful context for our listeners. And the one thing that I was getting out of that was that folks, we will. We'll spend a lot of time. We worry about the future. Sometimes we worry about the past that we cannot change whatsoever. And we hear a lot about hey, being in the moment, being in the present. And it's something that's difficult to do for a lot of folks and our minds race. It's hard to find that space in your life to just really be present.
That's something I took away from that is just another reminder that when you're able to really just open your eyes, see the present for what it is, see the opportunities that are given to you in that moment and not ignore them, that's where progress in your own life can come from. But you have to be aware of it and so I just encourage everybody out there to – don't be – not ignorant, but just don't dismiss those moments in your life. Trust your gut. Trust your gut in those moments that – to take you where you need to be. Because I know that's worked out for me and sometimes it's hard to do, but it's almost even like improvising in music. Right, Steve?
Steve Sjuggerud: One of the things that Sean does beautifully and he doesn't realize he does it, but is also being willing to not follow the crowd. He made a switch over to standup paddling when all of his peers said that's for old guys. And he revolutionized the way this thing could be ridden and all of his peers, just the way it went, none of his peers really went onto have successful careers in the – in what they thought was the safe route of being a professional surfer. None of them, by following the tried and true path, actually got anywhere, but meanwhile he was willing to see another opportunity that was – it was completely different looking, but he understood that it could have potentially even greater upside. And he had the guts to stand up against his peer group and say this is what I'm going to do and it's going to allow me to accomplish all of my life goals just in a slightly different way than I'd originally intended. And I respect the heck out of that and just doing things your own way and having that conviction is also something to keep in mind.
Dan Ostrowski: Yeah, I think as humans we're wired to really do that, but then there's something in our society that pushes that down. I don't know what it is, but look at some of these people that we know. A man like Peter Churchouse that was on this trip with us in Asia and here's clearly a guy who does it his own way.
Steve Sjuggerud: Absolutely, yeah.
Dan Ostrowski: He does it his own way. He's not taking the clues from other folks necessarily and so just – Sean is just another example of that. Steve, I think you're a great example of that. Porter Stansberry of course, he's a great example of that as well.
Steve Sjuggerud: Dan, I want to thank you and thank our listeners for allowing me to go off the reservation there with a pro surfer on our Investor Hour podcast.
Dan Ostrowski: Steve, I think it all ties together. We're all trying to accomplish these things in life and like you said, finding that different path, I think that's maybe the lesson today. Stick to your path and believe in yourself and realize that really all the stuff that you need to succeed, you already have it inside you and you just gotta bring it out and break through that fear sometimes.
Steve Sjuggerud: On the investor side, just to bring it completely full circle, you will be that maverick. You are that independent thinker if you are going to be invested in China when all of your peers are afraid to. I encourage you to follow my lead and follow Sean's lead, and think for yourself and do things a little bit differently. And I think it will pay off very, very well for you in the next five years tops.
Dan Ostrowski: That's fantastic advice, Steve, and that was a real nice way to bring it full circle. Folks, I think we're going to wrap it up for this week. Thanks for tuning in. On behalf of Buck Sexton and Porter Stansberry, we want to thank you of course for sharing your time with us. We're going to skip the mailbag for today, but if you do want to write into us, you can reach us always at [email protected] That's [email protected] Steve, thanks for taking the time to get this together with us and as we say here on the Stansberry Investor Hour, love us or hate us, just don't ignore us. Send us that feedback.
Steve Sjuggerud: Thanks for listening, everybody.
Dan Ostrowski: Take care, folks. See you next week.
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