What Our Midyear Market Checkup Reveals

Winners and losers of 2024 so far... It's a mega-cap world… But some small-cap stocks have surged… Inflation's influence… The bond bear market… Gold and bitcoin updates… 'A very strong bull market' in stocks… [Stansberry Research Logo] Delivering World-Class Financial Research Since 1999 [Stansberry Digest] Winners and losers of 2024 so far... It's a mega-cap world… But some small-cap stocks have surged… Inflation's influence… The bond bear market… Gold and bitcoin updates… 'A very strong bull market' in stocks… --------------------------------------------------------------- It's time for our annual midyear report... Die-hard readers may recall this exercise from the past few years. It's our midyear checkup, where I (Corey McLaughlin) zoom out from the market's day-to-day gyrations and take stock of the trends that have played out over the past six months. This is a valuable exercise, either at midyear like we're doing today or any time... (I personally have a deliberate practice once a quarter to review my portfolio closely, set goals, and jot down potential actions to take in the next three months and/or beyond.) At the very least, as we'll show, it is valuable to occasionally pause to examine how assets have performed recently – and consider what similar history suggests for performances ahead – rather than constantly speculate about the future. Momentum matters. So, away we go... So far in 2024, U.S. stock prices are generally higher, led by tech... The U.S. benchmark S&P 500 Index is up roughly 17% since New Year's Day, and the tech-heavy Nasdaq Composite Index is almost 25% higher since the beginning of the year... Both are trading at new all-time highs... Mega-caps are powering higher (again, just like last year). For instance, Nvidia (NVDA) shares are up about 160% in the first half of 2024, following a roughly 240% return in 2023. AI is still a buzzy acronym, and some are concerned about a dot-com-like bubble in the technology. As our colleague and DailyWealth Trader editor Chris Igou [wrote last week]( two of the S&P 500's 11 major sectors are blowing the rest away. They are information technology and communication services – up 28% and 24%, respectively, in the first six months of 2024... As Chris noted, too, the real estate sector is the only one down in 2024. It's hindered by still-high interest rates that have slowed activity in the real estate market. But about the winners, Chris explained... For information technology, you don't have to look much further than the top holdings in the S&P 500 Information Technology Index. You can see them in the table below... Nvidia (NVDA) and Broadcom (AVGO) are the major standouts, with 150% and 45% gains so far this year, respectively. These top holdings get a higher weighting in the index, meaning their returns impact the overall index more... And a similar situation is happening with communication services. Meta Platforms (META) and Alphabet (GOOGL) are the top two holdings of the main index. They make up 46% of the Communication Services Select Sector SPDR Fund (XLC). And these two stocks are crushing it as well... Meta is up 42.5%, while Alphabet is up 30.5%. Aside from those two holdings, no other position has more than a 5% weight. The truth is that a few innovative companies are driving a lot of these gains. That's unique when you compare it with nearly every other major U.S. sector. Those types of companies don't exist in utilities, financials, real estate, consumer staples, and so on. The fact is, Nvidia, Alphabet, Broadcom, and Meta have all embraced the AI boom. And it's paying off so far. The Dow Jones Industrial Average is lagging, up only 4%, but it is also near an all-time high set last month. And the small-cap Russell 2000 Index continues to trail, just 1% higher for the year and still about 15% from a new all-time high, though many of the biggest winners of the year so far come from the small-cap sector. A list of the 10 top-returning U.S. stocks of 2024 includes just one "AI stock." Most of the rest are small biotech firms that have demonstrated promising trial results for treatments of various diseases, plus a nuclear-energy company. Maybe AI is involved in these companies' research and development, but those businesses are first about health and energy, two things of importance to anyone. Meanwhile, inflation remains a story... You can see this a few ways. Higher stock prices is one. Remember, owning shares of high-quality stocks is inflation protection. Bond prices are also a signal, as they have an inverse relationship with yields, which are influenced by the federal-funds rate and inflation. For instance, the iShares 20-Plus Year Treasury Bond Fund (TLT) is down more than 5% this year. We are living through bonds' longest bear market, by far. You have to go back to the 19th century to find similar declines and the early 1980s for anything close more recently. Bond prices are higher than their 2022 and 2023 lows, but they remain 10% off previous highs from just about four years ago, as writer and investor Charlie Bilello recently showed... Gold is higher, bitcoin is more volatile and higher... Earlier this year, inflation hedges like gold moved higher when the U.S. central bank signaled it was still planning to lower rates at some point. That would juice the economy despite a rebound in "official" inflation data in the first three months of 2024... Gold hit a new all-time high above $2,400 in April and again in May, and it's up 14% year to date. Bitcoin moved higher around the same periods, though the greenlighting of spot bitcoin ETFs also played a major role in a 90% move higher from mid-January to a new all-time high above $70,000 in March. Bitcoin's price action has diverged from gold recently. Bitcoin now trades around $56,000, down double digits from its most recent high, but it's still 27% higher for the year. What history suggests... Let's start with stocks. This type of start to a year for stocks has typically led to more gains in the second half. Since 1954, when the U.S. benchmark index has gained more than 10% in the first six months of the year, its return has averaged 7.7% over the next six months. And it has been higher roughly 83% of the time. As Ryan Detrick of Carson Investment Research recently shared... What's more, as you may have noticed in the above table, stocks have been higher a year later 100% of the time. At the same time, though, the 12 months after the midpoint of 1987 got close to a decline. That stretch included the Black Monday crash, of course. That's a reminder: Past performance does not guarantee future results. We're not saying there are no risks in this market – there always are. But momentum is in the bulls' favor today. But it's only a few stocks, right?... This was the same question we addressed this time last year. At this point last year, many folks claimed the market was "narrow" – with gains only coming from the so-called Magnificent Seven. But market breadth – a good gauge of market health – was about average... At the time, 60% of S&P 500 stocks traded above their 200-day moving averages (a technical long-term trend). Today, 64% of S&P 500 stocks are trading above their 200-day moving average. Now, if you measure market breadth another way – by the number of stocks outperforming the S&P 500 – things look weaker, with just 40% beating the U.S. benchmark. But that alone does not mean a massive market pullback is coming. In fact, history suggests odds are against it... Bank of America analysts recently showed that in years of mega-cap leadership ("Nifty Fifty," they called them) since 1986, the market was up the following year 75% of the time... Today, the S&P 500 is trading above its longer-term, 200-day moving average and higher than its short-term 50-day moving average. It has been above its 200-day average since November 2023. And the big names' leadership is a bullish sign. Usually. The S&P 500 has dropped by double digits at times during the past three decades, like during the burst of the dot-com bubble and most recently in 2022. But three-quarters of the time, stocks have been higher 12 months later. Beyond stocks... As for Treasury bonds, the worst of the worst may be behind. With super-low interest rates in place in the decade after the great financial crisis, and then the 40-year-high inflation sparked by the response to the pandemic, bond prices had nowhere to go but down after 2020 and 2021. Now they have pushed somewhat higher from lows in 2022 and last year. They could go higher still if or when interest rates move lower (which the Fed seems intent on doing)... But people have been waiting on that and trying to call a bottom in bonds for a few years now. Next, we hesitate to project an outlook for gold's near-term action. But over the long run, it's a proven store of value that has a place in any portfolio. As for bitcoin, I find it hard to declare it a gold-like inflation hedge as it still has speculative characteristics (see the recent 20% drop in the past three months) as it trades. But if the start of this year and previous cycles are any indication, the world's most popular crypto could see higher highs the rest of the year and into 2025... Bitcoin hasn't hit a new all-time high until a year or so after its "halvings," the latest of which just occurred in April. As our Crypto Capital editor Eric Wade shared in a free presentation last month... Everyone who's freaking out about bitcoin dropping from its all-time high of over $75,000 down to the low $60,000s just hasn't done their homework... As you can see, each of the previous three halvings served as a launching point for bitcoin's next bull run. It's plain as day here for you to see. But those big run-ups didn't just kick off immediately. Look closely and you'll see that's not the case. Each time it's taken at least a year for bitcoin to hit its new all-time high. A brief review... At this point [in 2021]( we pointed out that "hated" energy stocks were leading the benchmark S&P 500 Index higher... as commodity prices were soaring... and high(er) inflation fears were a concern, at least among us. The reality that followed was bad... The first six months of 2022 marked the worst start to a year for U.S. stocks since 1970. They fell more than 20% as the Federal Reserve reversed policy course and started making dollars more expensive, hoping to slow the pace of inflation (that it helped create). And last year, at the start of July, the S&P 500 was up by about 16% since the start of 2023... As we wrote on July 5 of that year... Why? Well, we can get into all kinds of debate about that. But generally speaking, the widely expected recession that many market pundits have been talking about for more than a year hasn't arrived yet. The jobs market is still strong, with the unemployment rate still near lows. Enough folks are still spending money on needs and (some) wants. And while high inflation remains "sticky," it's showing signs of deceleration (though not across the board). That's, in a nutshell, one argument you could make. In any case, the price action says that the major U.S. stock indexes are up, and many tech stocks that were among the biggest losers of 2022 are the biggest winners in 2023. We also said history suggested more gains ahead in the rest of 2023... Since 1950, the S&P 500 has been 10% higher through the first six months 23 times. The average gain for the U.S. benchmark index over the next six months is 12%, and it has been higher in 77% of those 23 instances. And we pointed out reasons for optimism despite claims the market was too "narrow"... While market sentiment has turned more bullish, it is not at an extremely bullish level yet. That tells me there is possibly more room for stock prices in general to move higher... At the same time, the simple indicators for short- and long-term technical trends for the major indexes have been bullish for several months. The technical traders in our group like Ten Stock Trader editor Greg Diamond and DailyWealth Trader editor Chris Igou have been making and eyeing more bullish trades in their daily services. Take note. The dominant market narratives, more or less, have continued for the past year... Returns have been higher, as history suggested... Stocks sold off some in the second half of 2023 as recession fears picked up, but then snapped back higher in the final weeks of the year to finish positive after the Fed signaled rate cuts to come in 2024. Those cuts still haven't happened, but the bullish momentum remains, and history suggests it will continue. Going back to Chris' first-half review he sent to his DailyWealth Trader subscribers last week, he noted that even a few sectors that were down in the past three months (like health care, financials, and real estate) are still trading above their longer-term technical averages... In short, we're in a bull market. The S&P 500 is hitting new all-time highs. And innovative sectors like information technology and communication services are leading the way. That's not to say we don't have concerns about the AI boom eventually fading, wars, debts, deficit spending, politics, and still-high inflation. But first-half action is bullish when it comes to the market right now. As our colleague Greg Diamond said in his latest Diamond's Edge video (see more below), we're in "a very strong bull market." These Two Lagging Sectors Are Signaling Caution In this week's Diamond's Edge, Ten Stock Trader editor Greg Diamond looks at a pair of sectors that have been trailing the S&P 500 – small caps and transportation stocks – and discusses what their performance potentially signals for the market ahead... As a Digest reader, you get the first look at Greg's new Diamond's Edge video each Monday. For more free videos, [check out our YouTube page](... And if you're interested in more research and analysis from Greg, [click here for information]( on how to get started with a subscription to his Ten Stock Trader advisory. --------------------------------------------------------------- Recommended Links: [MUST-SEE BY MIDNIGHT TONIGHT...]( Wall Street titan Marc Chaikin predicted 2023's bank crisis five months in advance. He also predicted last year's bull run when everybody was expecting a recession. Now he's sounding the alarm on what's coming NEXT for the stock market, based on a signal with 100% perfect accuracy across more than 80 years of historical data. [Click here to learn more before it goes offline](. --------------------------------------------------------------- [Our No. 1 Stock for the Rare 'Millionaire Window' Opening NOW]( According to Wall Street legend Whitney Tilson, an extremely rare window in the markets is about to open. It's an often-misunderstood market setup we've only seen 13 times since 1920. 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[Get our No. 1 stock (with 500%-plus upside potential) for this rare market event now](. --------------------------------------------------------------- New 52-week highs (as of 7/5/24): Apple (AAPL), ASML (ASML), Alpha Architect 1-3 Month Box Fund (BOXX), Costco Wholesale (COST), iShares MSCI Emerging Markets ex China Fund (EMXC), Enstar (ESGR), Alphabet (GOOGL), KraneShares MSCI Emerging Markets ex China Index Fund (KEMX), Kinross Gold (KGC), Eli Lilly (LLY), Meta Platforms (META), Microsoft (MSFT), Nuveen California Quality Municipal Income Fund (NAC), Neuberger Berman Next Generation Connectivity Fund (NBXG), Oracle (ORCL), ProShares Ultra QQQ (QLD), Skeena Resources (SKE), ProShares Ultra S&P 500 (SSO), Teladoc Health (TDOC), The Trade Desk (TTD), Tyler Technologies (TYL), Vanguard S&P 500 Fund (VOO), Verisk Analytics (VRSK), and the short position in Cracker Barrel (CBRL). In today's mailbag, feedback on [last Wednesday's edition]( about the potential future path of interest rates... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com. "Absent from every missive about how important rate cuts are to the economy is the rational counterpoint that excessive business debt is predictive of excessive business failure and recession. Cause and effect. It is a mistake to add to that problem. Right now, deficit federal spending of $1.5 trillion annually is all that delays a severe recession. The total economy is expanding by only about $500 billion annually, meaning the private economy is in a severe recession of about $1 trillion contraction annually. "Moreover, savers are entitled to receive a risk free interest rate on savings that no longer forces them to purchase riskier investments in hope the market does not punish them. "It is time to take our medicine. Leave interest rates alone. Reduce federal spending. The recession will be difficult, but after it runs it's course, the economy will no longer be like the plate spinner on the Ed Sullivan show." – Subscriber Kelly F. All the best, Corey McLaughlin Baltimore, Maryland July 8, 2024 --------------------------------------------------------------- Stansberry Research Top 10 Open Recommendations Top 10 highest-returning open stock positions across all Stansberry Research portfolios Investment Buy Date Return Publication Analyst MSFT Microsoft 02/10/12 1,491.5% Stansberry's Investment Advisory Porter MSFT Microsoft 11/11/10 1,462.0% Retirement Millionaire Doc ADP Automatic Data Processing 10/09/08 863.2% Extreme Value Ferris WRB W.R. Berkley 03/16/12 722.5% Stansberry's Investment Advisory Porter BRK.B Berkshire Hathaway 04/01/09 629.0% Retirement Millionaire Doc HSY Hershey 12/07/07 455.3% Stansberry's Investment Advisory Porter TT Trane Technologies 04/12/18 430.8% Retirement Millionaire Doc AFG American Financial 10/12/12 425.4% Stansberry's Investment Advisory Porter NVO Novo Nordisk 12/05/19 413.5% Stansberry's Investment Advisory Gula TTD The Trade Desk 10/17/19 380.1% Stansberry Innovations Report Engel Please note: Securities appearing in the Top 10 are not necessarily recommended buys at current prices. The list reflects the best-performing positions currently in the model portfolio of any Stansberry Research publication. The buy date reflects when the editor recommended the investment in the listed publication, and the return shows its performance since that date. To learn if a security is still a recommended buy today, you must be a subscriber to that publication and refer to the most recent portfolio. --------------------------------------------------------------- Top 10 Totals 5 Stansberry's Investment Advisory Porter/Gula 3 Retirement Millionaire Doc 1 Extreme Value Ferris 1 Stansberry Innovations Report Engel --------------------------------------------------------------- Top 5 Crypto Capital Open Recommendations Top 5 highest-returning open positions in the Crypto Capital model portfolio Investment Buy Date Return Publication Analyst wstETH Wrapped Staked Ethereum 12/07/18 2,291.8% Crypto Capital Wade BTC/USD Bitcoin 11/27/18 1,409.7% Crypto Capital Wade ONE/USD Harmony 12/16/19 1,127.0% Crypto Capital Wade MATIC/USD Polygon 02/25/21 744.7% Crypto Capital Wade AGI/USD Delysium AI 01/16/24 318.9% Crypto Capital Wade Please note: Securities appearing in the Top 5 are not necessarily recommended buys at current prices. The list reflects the best-performing positions currently in the Crypto Capital model portfolio. The buy date reflects when the recommendation was made, and the return shows its performance since that date. To learn if it's still a recommended buy today, you must be a subscriber and refer to the most recent portfolio. --------------------------------------------------------------- Stansberry Research Hall of Fame Top 10 all-time, highest-returning closed positions across all Stansberry portfolios Investment Symbol Duration Gain Publication Analyst Nvidia^* NVDA 5.96 years 1,466% Venture Tech. Lashmet Microsoft^ MSFT 12.74 years 1,185% Retirement Millionaire Doc Inovio Pharma.^ INO 1.01 years 1,139% Venture Tech. Lashmet Seabridge Gold^ SA 4.20 years 995% Sjug Conf. Sjuggerud Nvidia^* NVDA 4.12 years 777% Venture Tech. Lashmet Intellia Therapeutics NTLA 1.95 years 775% Amer. Moonshots Root Rite Aid 8.5% bond 4.97 years 773% True Income Williams PNC Warrants PNC-WS 6.16 years 706% True Wealth Systems Sjuggerud Maxar Technologies^ MAXR 1.90 years 691% Venture Tech. Lashmet Silvergate Capital SI 1.95 years 681% Amer. Moonshots Root ^ These gains occurred with a partial position in the respective stocks. * The two partial positions in Nvidia were part of a single recommendation. Editor Dave Lashmet closed the first leg of the position in November 2016 for a gain of about 108%. Then, he closed the second leg in July 2020 for a 777% return. And finally, in May 2022, he booked a 1,466% return on the final leg. Subscribers who followed his advice on Nvidia could've recorded a total weighted average gain of more than 600%. --------------------------------------------------------------- Stansberry Research Crypto Hall of Fame Top 5 highest-returning closed positions in the Crypto Capital model portfolio Investment Symbol Duration Gain Publication Analyst Band Protocol BAND/USD 0.31 years 1,169% Crypto Capital Wade Terra LUNA/USD 0.41 years 1,166% Crypto Capital Wade Polymesh POLYX/USD 3.84 years 1,157% Crypto Capital Wade Frontier FRONT/USD 0.09 years 979% Crypto Capital Wade Binance Coin BNB/USD 1.78 years 963% Crypto Capital Wade You have received this e-mail as part of your subscription to Stansberry Digest. If you no longer want to receive e-mails from Stansberry Digest [click here](. Published by Stansberry Research. You’re receiving this e-mail at {EMAIL}. Stansberry Research welcomes comments or suggestions at feedback@stansberryresearch.com. This address is for feedback only. 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