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Is Nomi Prins’s Distortion Report really good?

What are the stocks recommended by Nomi Prins in the Distortion Report, and how have they performed so far?

Would it help you achieve better investment results?

Lastly, are there any better alternatives?

Who Is Behind Distortion Report?

Nomi Prins is the editor of Behind Distortion.

Here is Nomi Prins’ academic background:

• B.S. in Math from SUNY Purchase
• M.S. in Statistics from New York University
• Ph.D. in International Strategic Studies with a specialization in International Political Economy from The Federal University of Rio Grande do Sul

She used to work in investment banks such as Goldman Sachs, Bear Stearns, Lehman Brothers, and Chase Manhattan Bank.

Then she left the banking industry and started writing books and doing public speaking.

Some of her books include “Permanent Distortion: How Financial Markets Abandoned the Real Economy Forever”, “Collusion: How Central Bankers Rigged the World”, “All the Presidents’ Bankers”, “Black Tuesday” and “Other People’s Money: The Corporate Mugging of America”.

Distort Report Investment Strategy

So, what is Nomi Prins’ investment strategy that she uses to recommend stocks to Distortion Report members?

From what I have read so far, I have gathered the following.

Nomi Prins thinks that “we are standing at the precipice of an epic restructuring of the markets, the economy, and finance in general and money”. (by the way, this is too abstract for me and I don’t really understand how this translates into a specific investment strategy.)

Also, she believes there is a permanent distortion between the markets and the real economy because of the Fed.

Here were her top five trends and sectors in 2022 and 2023:

• New Energy
• Infrastructure
• Transformative Technology
• The Metaverse and AI (artificial intelligence) (this was only included for 2022)
• New Money

Most of her stock recommendations have a trailing stop (ranging from 25% to 40%) to preserve capital.

“Trailing stops” were only introduced in April 2023 for her model portfolio because of all the huge losses in her stock recommendations for the year 2022.

Generally, only traders use “trailing stops” to protect their profits.

Investors don’t really use them because experienced investors would buy good stocks with a margin of safety to protect themselves.

In her May 2023 report, Nomi Prins mentioned that her strategy is “taking stock of the markets and taking profits when the time is right”.

In other words, depending on the market conditions rather than the fundamentals of the underlying company, she would exit positions accordingly.

All in all, I still don’t have a good idea about what Nomi Prins’ investment strategy is.

Distortion Report Stock Picks & Performance

So, what are Nomi Prins’ stock recommendations in the Distortion Report?

How have these stock picks performed so far?

Below are the stock picks in the current portfolio of distortion report:

Here is the performance of Nomi Prins’ past stock picks (positions closed).

As you can see, Nomi Prins’s stock picks in 2023 significantly underperformed the S&P 500.

Distortion Report Stock Pick	Return as of 20th Aug 2023
Jan 2023	-19% (Closed position)
Feb 2023 #1	-14.8% (Closed position)
Feb 2023 #2	0.6%
Mar 2023	-6.4%
April 2023	4.5%
May 2023 #1	24.8% (Closed position)
May 2023 #2	2.9%
May 2023 #3	23.3%
May 2023 #4	4.1%
June 2023 #1	6.7%
June 2023 #2	1.1%
June 2023 #3	7.4%
July 2023 #1	7.6%
July 2023 #2	5.9%

In other words, you would do so much better just buying a low-cost S&P 500 index ETF in 2023.

Most of her stock picks in 2022 were in big losses and these trades were already closed by realizing losses.

As you can see, there are a total of 20 closed positions in the Distortion Report portfolio as of 20th Aug 2023.

Out of these 20 closed trades, 14 trades are losing trades with a maximum loss of 87.2%, 5 winning trades with a maximum gain of 24.8% and 1 trade is breakeven.

As you can see, Nomi Prins’ win rate is not impressive.

On top of that, the average loss is so much bigger than the average gain.

Also, these positions were held for a few months to slightly more than a year.

Again, it feels more like short-term trading than investing.

By examining the model portfolio, I don’t like the idea of putting a “trailing stop”.

“Trailing stops ” are used mostly by traders.

For investors, “Trailing stops” are seldom used because you sell based on fundamentals and valuations, not some random price levels.

In the 1970s, Warren Buffet bought Washington Post shares at a very good price.

But, after he bought it, its share price continued to drop.

Warren Buffett didn’t put a trailing stop or a stop-loss on his position because he understood the underlying business fundamentals didn’t change.

If he did put a trailing stop or a stop-loss, he might have been taken out of his positions prematurely at a loss or at a very small profit instead of a more than 9,000% return over 40 years.

Personally, I think many people who use stop-loss or trailing stop are not investing and don’t really know what they are doing or are not confident about their analysis of the company.

For example, there was this copper stock that Nomi Prins recommended in Jan 2022.

About a year later in March 2023, she sold it at a loss.

What is shocking to me is that she then bought the same stock back one month later at a higher price than the price she sold.

That’s one of the many problems of using a trailing stop for your investments.

Distortion Report Pricing

So, how much does Distortion Report cost?

What do you get as a subscriber of Distortion Report?

Here is what you get after subscribing to Distortion Report:

• Monthly Newsletter (on the fourth Wednesday of each month) with stock recommendations
• Model Portfolio
• Buy & Sell Alerts
• Free Special Report: The Escape Plan, #1 Gold Stock for 2023 and Beyond, and The Unprintable Portfolio
• All Past Issues

Usually, it costs about $199/year.

Alternatives to Distortion Report

Motley Fool Stock Advisor is focused on giving you stock recommendations that are high-quality companies with long-term growth potential.

The reason why I subscribe to Stock Advisor is to get stock ideas as Motley Fool has a proven record of finding stocks with massive upside potential.

Personally, I don’t buy every single stock recommendation.

What I do is that if I find any interesting stock pick, I will do my own research again.

Below is the performance comparison between Motley Fool Stock Advisor and S&P 500 between 2002 and 8th June 2023.

As of 8th June 2023, average Motley Fool Stock Advisor recommendations have returned over 459% since inception while S&P 500 has returned 124%.

In short, the Motley Fool Stock Advisor has outperformed the market 3 to 1.

That’s a HUGE difference in returns.

But, what about its individual stock picks?

This metric is important because you might not be buying every single stock recommendation made by Stock Advisor.

Below is a table that shows you the performance of individual stock picks over the years.

As of 28th April 2023, Motley Fool Stock Advisor has had 178 stock recommendations with 100%+ returns.

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[*Returns as of 31st Dec 2021. Past performance is no guarantee of future results. Individual investment results may vary. All investing involves risk of loss.]

Will the Motley Fool Stock Advisor always be right about their stock recommendations?

No, because no one can be right about their stock picks 100% of the time.

Let me sidetrack a bit here.

If any stock picking service tells you that they have a close to 100% success rate on their stock picks and can guarantee you high investment returns, you should definitely stay away.

Even Warren Buffet has loss-making stocks in his portfolio, but he still achieves above-average returns because a few big gainers in the portfolio can make up for the under-performers.

What I like about the Motley Fool Stock Advisor is that they are very open and transparent about their bad investments.

As a member, I can see the performance of ALL its past and current stock recommendations (even for closed positions).

For some other stock-picking services that I’ve tried, they don’t publish the performance of all their past and current stock recommendations, so it’s not easy for you to find out their true track record.

For example, the year 2022 has not been good for high-growth stocks because of rising interest rates and high inflation.

So, you can see a lot of Motley Fool Stock Advisor’s stock recommendations are not doing very well.

The truth is that other stock-picking services are not doing well either because of the stock market crash.

Do I still think it’s worth subscribing to the Motley Fool Stock Advisor?

My answer is yes.

The stock market goes up and down all the time.

Every few years, there is a bear market.

According to Peter Lynch who is a legendary fund manager, far more money has been lost by investors trying to anticipate correction than lost in corrections themselves.

In fact, I think the bear market is the BEST time to start investing in the stock market.

Why?

During a bear market, it’s more likely to find great businesses selling at very cheap prices because people are just selling out of fear when the business is still fundamentally sound.

A market crash is a time when huge wealth transfers from irrational and emotional investors to patient and rational investors.

So, if you are thinking of getting into stock investing, I highly recommend the Motley Fool Stock Advisor because I think there are a lot of well-researched stock recommendations.

In terms of pricing, Motley Fool Stock Advisor is also much more affordable.

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