Inside today’s Daily Journal…

It isn’t different this time.

Over the next five years, you’re going to hear – again and again – that nothing like artificial intelligence (AI”), robotics, and automation have ever happened before. But of course it has. The world has been transformed in unimaginable ways many, many times.

The printing press was probably the single most transformative invention of all time. The railroads reordered time and space across entire continents. Electrification eliminated almost all physical labor and, like God himself, brought the light into the darkness. The combination of semiconductor computing, solid state memory, and photonics (aka, the internet) rivals the printing press (and perhaps supplants it) as the most important invention of all time.

Never forget: wealth accrues to optimists. Luddites decried all these changes. Lots of publishers got rich selling scared people newspapers, pamphlets, and books about how these innovations meant the end of the world (ask me how I know…)

So, yes, it has happened before. And no, it doesn’t mean the end of the world.

In fact, we have a very good road map of what’s about to happen.

I expect the coming automation revolution (the combination of AI and robotics) will rival the build-out of the U.S. railroad networks as the largest and most valuable capital investment of all time.

Investors haven’t yet figured out how much capital will be required to automate the world. But it’s far, far more than most people can imagine. Amara’s Law describes how humans inevitably react to bona-fide technological revolutions:

Let’s consider the railroads.

Between 1860 and 1910, roughly $20 billion was invested in building out America’s railroad networks… that was 400% of the entire national GDP in 1860. In other words, the capital investment into the railroad network was four times bigger than the country’s entire GDP when the major capital spending began.

If you were to scale that to today, we should expect to see $120 trillion invested into achieving full economic automation over the next 50 years.

The markets went sideways last week when, during quarterly earnings announcements, Big Tech companies (Google, Microsoft, Amazon, Tesla, Meta) committed almost $700 billion for 2026 on data centers, chips, and robotics integration. This is up more than 50% from just last year. But… consider the numbers above.

It will not be long before more than $2 trillion a year is being invested. And our entire economy will be transformed.

The “keystone” to this revolution won’t only be Nvidia chips. These changes will require an unprecedented amount of new, always-on power supply.

Today it’s very difficult to imagine how enough energy will be produced, but it will come from new sources that aren’t feasible today.

How do I know? The railroads.

America’s first major railroad, the Baltimore & Ohio, opened in 1830. It hauled coal from Western Maryland and Virginia to Baltimore. By the mid-1800s, railroads lowered shipping costs by 90%, making coal a national fuel source. Coal production exploded. U.S. coal production grew 32x, from 8.4 million tons in 1850 to 270 million by 1900.

This new energy fueled more than just railroads. It fueled America’s massive industrialization, steel mills, and factories – creating billions in new wealth.

In 1860, America’s biggest industry was… flour. Growing wheat and grinding it into meal was the biggest single industry in the United States. But the railroad (and barbed wire, as I wrote about last week) led to a massive boom in cattle ranching. By 1890, beef (slaughtering, meat-packing) became America’s biggest single industry ($525 million annual revenue) and remained so until the first World War. The cattle boom would not have happened – along with so many other things – without the enormous amounts of capital that were spent building the railroads.

Ironically, considering how much wealth they helped create, the railroads were, for the most part, lousy investments. They rarely earned enough to cover their debts, and their repeated failures (1857, 1873, 1883) sparked market panics. Investors, upon seeing the iron horse emerge, would have been far better off buying what those horses ate (energy) and what those horses were clad in and rode on (steel).

Most people know that Andrew Carnegie became the wealthiest man in the world (and probably the wealthiest man of all time, relatively) by selling his company U.S. Steel to J.P. Morgan in 1901 for $500 million. But how did Carnegie get the capital necessary to start building steel mills in the first place? He invested $40,000 in an oil field in 1864. It would pay him over $1 million in dividends over the next decade, fueling his investments in steel. With those dividends, Carnegie built his first blast furnace in 1870 and a second furnace in 1872. With those profits he founded the Edgar Thomson Steel Works in 1875. Who bought his steel? The Pennsylvania Railroad.

And… this is the most important part of the story.

The critical step to controlling the steel industry was controlling the supply of energy. Carnegie partnered with Henry Frick, whose vast Pennsylvania coal mines included over 1,000 coke ovens. By 1889 they’d consolidated into Carnegie Steel Company and built the greatest fortune the world had ever seen.

What’s the equivalent today? I’m certain that just as coal fueled the industrial revolution, uranium will fuel the age of automation.

Cameco (CCJ) is the world’s second-largest producer of uranium, making about 20% of the world’s annual supply from mines in Canada. It has a very low cost of production ($20 per pound) and seems likely to dominate the industry for at least the next decade… and possibly for much longer.

Centrus Energy (NYSE: LEU) is a critical American nuclear-fuel producer. Long-time readers might remember my history with this business. (Hint: It used to be called United States Enrichment Corp.) It’s long been one of the world’s major suppliers of LEU (low enriched uranium). U.S. light-water reactors run on LEU, which has up to 5% the fissile isotope U-235. Centrus is also developing HALEU (for high-assay low-enriched uranium) fuel production. This is nuclear fuel with between 5% and 20% of the fissile isotope U-235. HALEU is the fuel source for the latest generation of reactors (called Gen IV) – such as small modular nuclear reactors (“SMR”) – because it facilitates small reactor cores (higher power density).

Long-time holding BWX Technologies (BWXT) is the world’s leading SMR company. Starting in the 1950s with the USS Nautilus, it built all of the U.S. Navy’s reactors. Today it maintains reactors on Ohio-, Virginia-, Seawolf-, and Los Angeles-class submarines, along with Nimitz- and Ford-class aircraft carriers – roughly 100 reactors. It is also developing a top secret new “mini reactor” known as Project Pele for the U.S. Department of Defense.

Shares of Cameco are up 700%+ in the last five years. Centrus Energy is up 1,000%+ in the last five years. And BWX Technologies is up 250% over that period. Yes, we picked the most conservative way to play this trend and, over time, that will prove wise.

Many investors seeing these moves will call it a bubble. It isn’t. It’s the beginning of a revolution that’s so big it dwarfs our entire current economy.

That doesn’t mean we’re buying these stocks today. But it does mean we want to own a lot more uranium.

Tell me what you think about today’s Daily Journal – or anything else: [email protected]

Good investing,

Porter Stansberry
Stevenson, Maryland

1. Big Tech leans into leverage. Alphabet (GOOG) is raising $15 billion to fund its AI endeavours via a high-grade bond sale, signaling a preference for debt over its massive cash reserves. This move is a strategic bet: Alphabet assumes its AI-driven returns will outpace the locked-in interest rates. However, should AI demand soften, Alphabet could be left holding depreciating assets and long-term debt that was otherwise avoidable. The scale is unprecedented: combined, Alphabet, Amazon, Meta, and Microsoft are projected to spend $650 billion in 2026 – a staggering 60% surge over 2025.

2. China tells its banks to limit exposure to U.S. Treasury bonds. According to Bloomberg News, Chinese officials have advised its banks to limit new purchases of U.S. government debt – Chinese banks hold about $300 billion of dollar-denominated bonds. The move was officially positioned as addressing “concentration risk and market volatility” rather than U.S. creditworthiness. However, the shift would align China’s banks with the government, which has dramatically slowed its purchases of U.S. government debt in lieu of gold in recent years.

3. The Warsh-Bessent pivot. Federal Reserve Chair nominee Kevin Warsh is advocating for a modern Fed-Treasury Accord to synchronize the Fed’s $6.6 trillion balance-sheet runoff with the Treasury’s debt-issuance strategy – headed up by Secretary Scott Bessent. In practice, this coordination could shift the financing mix away from long-term bonds and toward short-term Treasury bills, effectively reducing long-term supply and easing pressure on yields. While such tight cooperation blurs the line between monetary and fiscal policy – potentially undermining Fed independence – America’s fiscal reality leaves little room for maneuver. With the national debt mounting, unmanaged interest costs now pose an existential threat to the federal budget.

Caterpillar (CAT) continues its record-breaking run, hitting an all-time high of $738 today – bringing the stock’s total gain to 97% since it was first featured in Porter’s Permanent Portfolio.

I’m Ready For Saas To Sink

Paid-up subscriber Raymond H Writes:

Resetting A Valuation

Paid-up subscriber Alex V Writes:

Porter Comment: Alex —

Porter’s Permanent Portfolio takes a buy-and-hold approach to investing in equities.

It buys a diverse portfolio of equities, for a full year, as part of a non-correlated, multi-asset strategy. It buys and holds because trading in and out stocks based on short-term movements is far more likely to reduce returns than be accretive. It’s also a great approach for people who want their money to work for them without having to watch it every day.

If you read my Daily Journal from last Wednesday, you’ve seen the arguments for lower software-equity multiples. Today, the very best tech investors in the world aren’t certain about software earnings in a decade. The global “tech stack” is being rebuilt around AI and it’s not clear what role, if any, software companies will play.

If I had a crystal ball, then I wouldn’t have bought the software companies in the Permanent Portfolio (Microsoft is down 21%, Wolters is down 40%, and Oracle is down 53%). And, if I had a crystal ball, then I could tell you that these declines are way overblown and it’s time to buy these stocks.

Oracle is up 11% today. So it could be the bottom…

But I don’t have a crystal ball.

And that’s the irony about your email.

The Permanent Portfolio is based upon the reality of uncertainty. We don’t have a crystal ball. So you can try to guess. Or you can invest in a portfolio approach that’s sure to win because it’s diversified across many great businesses and because it contains offsetting / non-correlated businesses and assets.

Last year everyone complained about the property and casualty (P&C) companies. It didn’t occur to them that gold (which soared) is designed to hedge against the poor performance of bonds, aka P&C companies. This year infrastructure is up big (Illinois Tool, Caterpillar, Union Pacific, Taiwan Semiconductor Manufacturing) and so is pharma (Johson & Johnson, Eli Lilly, Roche). These positions tend to go up when software goes down.

Investors don’t seem to realize that the portfolio is built like a see-saw. Some things are going to go down. But other things will go up, a lot more.

Software is 3% of the entire Permanent Portfolio. If all of those stocks go to zero, it will not materially impact our portfolio. Overall, we’re way up so far on our equity positions.

We don’t have to guess to win.

And that’s the point.

The biggest problem with Porter’s Permanent Portfolio this year is Bitcoin. We have a 12.5% weight to Bitcoin (!), and it’s down about 40%.

If you want to guess about something, buy more Bitcoin.

Going forward, I suspect I’ll break our hard-money segment into equal thirds (gold streamer, gold bullion, Bitcoin) instead of half gold / half Bitcoin. I am very bullish on the long-term value of Bitcoin, but the volatility probably makes a 12.5% weight too much.

Even with Bitcoin having a major drawdown, Porter’s Permanent Portfolio is still up 28.6% since its establishment in September 2024, outperforming the S&P 500 (+23.2%) – and that’s with holding 25% in cash and with volatility less than half the markets!

If you’re leveraged into the Permanent Portfolio, you’re up more than 50% so far.

Why bother guessing?

Please note: The investments in our “Porter & Co. Top Positions” should not be considered current recommendations. These positions are the best performers across our publications – and the securities listed may (or may not) be above the current buy-up-to price. To learn more, visit the current portfolio page of the relevant service, here. To gain access or to learn more about our current portfolios, call our Customer Care team at 888-610-8895 or internationally at +1 443-815-4447.