Why the Rest of 2022 Is So Important for Stocks

This time is not different... A look at history... It's all about fear and greed... Why the rest of 2022 is so important for stocks... The biggest risk today isn't what you might think... A sector to get excited about right now... [Stansberry Research Logo] Delivering World-Class Financial Research Since 1999 [Stansberry Digest] This time is not different... A look at history... It's all about fear and greed... Why the rest of 2022 is so important for stocks... The biggest risk today isn't what you might think... A sector to get excited about right now... --------------------------------------------------------------- Editor's note: Today, we close out our brief "late-summer series" with an essay from Stansberry Research senior analyst Matt McCall. Matt brings a bullish flavor to his work, which may be a welcome change given our generally bearish tone in the Digest this year... As Matt explains, down markets often make for great long-term buying opportunities – and he doesn't think this time is any different. Today, he shows why... and introduces a specific, overlooked sector that he thinks is worth your consideration right now. --------------------------------------------------------------- 'This time is different'... Does this sound familiar? It's an infamous quote that's often used in the financial market. For as long as I (Matt McCall) can remember, folks have used it to refer to extremes. Typically, we hear this phrase when stocks are hitting highs and economies are booming. The bulls will proclaim that "this time is different"... that a bubble isn't forming and stocks won't fall prey to similar situations we've seen in the past. But we see that on the downside, too. And I'm starting to hear that notorious phrase a lot from market experts and economists when describing the current market environment. Now, the pessimists and bears are proclaiming that this time, everything is different. The common theme here – both when the market is rallying and when it's falling – is that we're in unprecedented times. But to really understand what that means, we need to take a step back and look at the past... Let's take a walk back through history... People got it wrong in early 2008 when they believed that the bull market would never end and that Wall Street knew what it was doing. We all know that naïveté resulted in the great financial crisis. The specific factors that drove the 2008 to 2009 collapse were different, but everything still revolved around the greed of both Wall Street and individual investors. The same can be said for economies outside of the U.S., too. The Japanese crisis of 1991 to 1992 led to a bust in real estate and housing prices. And three decades later, the country is still trying to get those markets back to their previous levels. Once again, the bulls let greed get the best of them. Anyone who has invested with me for some time knows that I don't subscribe to this theory. Sure, the factors driving stocks down today are not the exact same as those that created past bear markets. But... There's always one factor that remains the same... Human psychology. Today, we're concerned about inflation, higher interest rates, geopolitical unrest, above-average stock market valuations, and generalized fear over political leadership. But that's nothing new – the U.S. and other countries have dealt with similar situations before. Of course, the cause of inflation today is not exactly the same as it was in the 1970s. Back then, the masses didn't have access to the Internet, cellphones, or personal computers, whereas a constant stream of information is now the norm. So it's a similar situation... but still very different. The important point here is that the human psychology about today's falling stocks is the same. And it all comes down to fear. Humans are often driven by either fear or greed. Both can lead to volatile times in the market and in life in general. They're often viewed as extremes and can cause unrest. I view this emotional response as an opportunity... By understanding the large role that human emotions play in the stock market, we have the chance to take advantage of today's high level of fear. Eventually, this fear will subside, and when it does, we will see an overwhelming amount of "FOMO" – or the fear of missing out. By then, stocks will have already started the rally that I believe will begin in the second half of this year. And anyone who wasn't already invested will be left scrambling to chase the rally. So... when the bears tell you that "this time is different" and the world has never been in a situation like the one we're seeing today, simply smile and nod your head. Meanwhile, continue to stack your watch list with great companies to buy when the tide inevitably begins to turn. Opportunity lies in front of you. All you need to do is take it. Putting the start of 2022 behind us... The calendar has flipped to August – which means the first half of 2022 is behind us. Unfortunately, the first six months of this year will go down as one of the market's worst-ever starts to a year. Since 1928, there had only been five times in history that the S&P 500 Index fell at least 15% in the first half of a year. Well, 2022 marked the sixth. The index closed out June with a loss of 20.6% in the six-month period, while the tech-heavy Nasdaq Composite Index was even worse, down nearly 30%. Here's the good news: The last five times this happened, the S&P 500 climbed over the following six months with an average gain of 23.7%. And if that trend stays true, it would put the index around 4,690 by year-end – not far from its all-time high of 4,818. There's a lot of pessimism in the market right now. And I won't say that we've hit the bottom or that there won't be more volatility, but I do believe that better performance is in our future. The biggest risk today... The biggest risk for investors heading into the second half of 2022 is being unprepared for a rebound. Stocks will most likely be higher by the end of this year. And those gains could help mitigate the losses that many of us are sitting on. Let's take a look at what the charts are telling us. As you can see, the S&P 500 has an important technical "support" level at the 3,400 area. This was its high prior to the COVID-induced sell-off in early 2020. A test of that long-term support is about a 20% decline from current prices. Meanwhile, the sky is the limit on the upside... The two "I's" – inflation and interest rates – have been responsible for a lot of the movement in stocks during the past six months. Inflation climbing from a low of 0.12% in May 2020 to nearly 9% last month has forced the Federal Reserve to raise interest rates just as dramatically. The question now is whether the central bank can rein in inflation with higher interest rates without sending the economy into a recession. Some of the key components to the inflation gauge – like the consumer price index ("CPI") – have started to pull back from historic levels. Oil is down more than 20% from its high. Wheat and other food commodities are down more than 30%. And even housing prices are starting to fall after their unprecedented rise. If inflation starts to consistently move lower, it could allow the Fed to be less hawkish when it comes to aggressive rate hikes. That would be good for the economy and ultimately stocks, too. That makes the back half of 2022 an incredibly important time for the stock market. I expect the next six months to remain wild with the uncertainty of the Fed, inflation, and midterm elections in November still looming. But remember that we're not invested for just the coming months... We're investing in the long term... I continue to believe that this decade will go down as the greatest decade in the history of the stock market. And by the time the calendar flips to 2030, the first six months of 2022 will be nothing more than a blip on the chart. So, my advice today is to take the brutal start of 2022 as an opportunity to focus on companies that are changing the world and will be leaders during the Roaring 2020s. For example, in January, I wrote in [my free Daily Insight newsletter]( about a group of commodities with tremendous growth potential over the next 10 years – rare earth elements... They are a group of 17 metals used in a variety of industries – most notably for defense products along with batteries and electronics. As the world becomes more electrified, the demand for such materials will only increase. And with the U.S. relying heavily on imports from China, there's a big concern about supply-chain shocks. Demand for rare earth elements recently hit 125,000 metric tons – double what it was 15 years ago. By 2030, experts predict demand will more than double again to 315,000 metric tons. The rapid increase will be driven by growth in green energy, electric vehicles, batteries, and other advanced electronics. In order to create a stockpile and move away from our own reliance on China, the U.S. must turn to domestic rare earth mining – or other "friendly" countries. If this sounds like a big opportunity to you, I agree. It's not the only one, but it's one that I'm really excited about today... So much so that I put together a brand-new presentation to talk all about the opportunities I see in this sector right now... and a report with six new stock recommendations from the rare earths space. [Click here to catch all the details now](. Finding Opportunities in a Down Market Finding what's working in a down market takes out-of-the-box thinking. It also depends on your time horizon. In this episode of Making Money With Matt McCall, Matt covers all the details with Enrique Abeyta of our corporate affiliate Empire Financial Research... [Click here]( to watch or listen to this episode right now. And to catch all of Matt's shows and more videos and podcasts from the Stansberry Research team, be sure to [visit our Stansberry Investor platform]( anytime. --------------------------------------------------------------- Recommended Links: # [MUST SEE: $890 Billion Flooding Into This ONE Tiny Sector]( One Stansberry Research analyst has followed a strange trail of spending coming from Washington, D.C. Nearly $1 trillion in government funding is being pushed into ONE tiny, nearly forgotten U.S. sector. It's creating a massive industry boom that's practically certain to end in six different 1,000% gains... no matter what the markets do next. But with a new bill passing in the White House, time is running out to stake an early claim. [You can still get the details right here](. --------------------------------------------------------------- # [Oil's New Inflection Point (Prepare NOW)]( It's a new turning point for oil that could drastically alter our economy this year. Goldman Sachs says it's the crux of its next 2022 play... And numerous top hedge funds have just changed their oil positions. [Click here for the full oil story](. --------------------------------------------------------------- New 52-week highs (as of 8/16/22): Automatic Data Processing (ADP), AutoZone (AZO), CTS (CTS), W.W. Grainger (GWW), Huntington Ingalls Industries (HII), Hershey (HSY), Cheniere Energy (LNG), UnitedHealth (UNH), Waste Management (WM), and the Utilities Select Sector SPDR Fund (XLU). The mailbag is full today with replies to [yesterday's installment of our "late-summer series"]( about financial literacy. What's on your mind? As always, you can share your thoughts and observations on the markets with us at feedback@stansberryresearch.com. "Uncle Eric could help that officer and his son." – Paid-up subscriber Norman G. Dean Jones Jr. comment: Thanks for the reminder, Norman. In fact, Digest editor Corey McLaughlin recently wrote about the Uncle Eric series as part of [a similar feedback comment in early June](. As he noted, a lot of folks in our offices believe the series by longtime financial writer Richard Maybury should be required reading in every school in America. Perhaps that sentiment should extend to every police department in America, too. "Really? [From yesterday's Digest...] In 2019, the Treasury Department recommended mandatory financial literacy classes to college students. You can read the 44-page report with the guidance right [here](. In its recommendation, the department urged college kids to learn the basics of financial planning, and also pointed out that "the complex financial choices students must make are compounded by the fact that, for decades, the cost of college has been rising far faster than incomes. "Am I the only one who finds government advice laughable? The Feds spend like a drunken sailor." – Paid-up subscriber Dan T. "I retired after 37 years from a successful career in aviation... then became a Substitute Teacher for kindergarten through 12th grade. "An opportunity arose in High School to teach Financial Algebra. After some basic research, I found the financial website [Next Gen Personal Finance](. "There are many courses on this website that provide classes on all the financial information that everyone should have... and it's all FREE. "Any local school can sign up for the program and get the whole curriculum with lesson plans, and tests, and the answer keys. Anyone can access the lessons, but only verified teachers can get the answer keys. It has well thought out lessons, and the organization is always adding content. "Parents should ask their district to add these classes. Two things to save the school districts... memorization of the multiplication tables up to 12, and financial literacy from websites like NGPF." – Paid-up subscriber Rob C. "An 18-year-old girl came before me, arrested for passing bad checks. She pleaded not guilty. "When she was shown one of the fraudulent checks, she readily admitted to cashing it. 'It can't be a bad check... I still have many of them.' "She didn't realize she needed money in the bank to cover them. Clueless." – Paid-up subscriber Bob H. "I was only in elementary school when I would sit in the backseat of the car with paper and pencil at various times and use different amounts of money and different rates of interest and watch it grow. "Compound interest fascinated me. It was fun to see how fast or slow it would grow depending on the details. "I look forward to continue to learn about financial matters. One of my first investments was recommended by [Stansberry Research founder] Porter Stansberry, and I still own some of it. I also like to read what Doc [Eifrig] writes." – Paid-up subscriber Janice H. "I'm in my eighties, but early on (circa age 5 or 6), my mother took me in to the stock brokerage where there were a lot of men smoking cigars and watching the ticker tape move above a large blackboard where the only woman (besides my Mom) was walking across a platform erasing and changing numbers on the board. Presently, my mother went to the cage and gave the man several large bills to buy a certain stock. "Many times, my mother went to the lockbox area of our local bank and took large sheets of paper and cut coupons from them. She then took them to the teller and cashed them in. My mother taught me at a very young age about saving my allowance and buying Series E and Series H bonds that earned interest that created cash. "After my daughter turned 10, she was 'investing' her allowance and bought UGI stock, one or two shares at a time because she could see and smell the product in our home. She now has a daughter (my granddaughter) who has a bank account in her own name – she just celebrated her 7th birthday. "I wasn't great in math, but due to my mother's knowledge of money and how to make it grow, several generations have benefited." – Paid-up subscriber Cedric E. "I totally agree with your assessment that teaching finance in schools is mandatory. How can they expect anyone to survive in this crazy world without some kind of indoctrination in handling your own income and expenses? "Even the basics of credit cards and interest costs and how to handle debt is totally foreign to the majority of people who are sent out into the world to fend for themselves after high school and even college. "I started investing in my early 30s... I knew I had to do something different from my parents and my circle of friends and relatives. "It was a brutal beginning... My tax person at the time sold me on an investment in raw land here in my local area. He told me he was even investing his mother's money into the setup. I took all of my investment capital and put it in this 'sure-thing opportunity' (and it was in my retirement account). "So imagine my mental state of mind when it all disappeared. I swore off investing for several years, I was so angry. "But eventually, after telling myself I was a complete idiot, I learned a valuable lesson... "Never put all your eggs in one basket, no matter who is giving you the pitch. The learning I have done since then gives me confidence to navigate through the maze of endless opportunities in the markets today. "Start investing early in your life, expect you are going to make mistakes, expect you are going to lose money. But learn from each mistake, and don't repeat." – Paid-up subscriber John M. Here's to the future, Matt McCall Baltimore, Maryland August 17, 2022 --------------------------------------------------------------- Stansberry Research Top 10 Open Recommendations Top 10 highest-returning open positions across all Stansberry Research portfolios Stock Buy Date Return Publication Analyst MSFT Microsoft 11/11/10 1,051.0% Retirement Millionaire Doc ADP Automatic Data 10/09/08 909.8% Extreme Value Ferris MSFT Microsoft 02/10/12 905.0% Stansberry's Investment Advisory Porter ETH/USD Ethereum 02/21/20 649.7% Stansberry Innovations Report Wade HSY Hershey 12/07/07 547.3% Stansberry's Investment Advisory Porter BRK.B Berkshire Hathaway 04/01/09 443.7% Retirement Millionaire Doc AFG American Financial 10/12/12 427.4% Stansberry's Investment Advisory Porter WRB W.R. Berkley 03/16/12 371.3% Stansberry's Investment Advisory Porter FSMEX Fidelity Sel Med 09/03/08 320.4% Retirement Millionaire Doc TTD The Trade Desk 10/17/19 315.1% 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 3 Retirement Millionaire Doc 1 Extreme Value Ferris 4 Stansberry's Investment Advisory Porter 2 Stansberry Innovations Report Engel/Wade --------------------------------------------------------------- Top 5 Crypto Capital Open Recommendations Top 5 highest-returning open positions in the Crypto Capital model portfolio Stock Buy Date Return Publication Analyst ETH/USD Ethereum 12/07/18 1,457.4% Crypto Capital Wade ONE-USD Harmony 12/16/19 1,276.4% Crypto Capital Wade POLY/USD Polymath 05/19/20 1,079.8% Crypto Capital Wade MATIC/USD Polygon 02/25/21 873.2% Crypto Capital Wade BTC/USD Bitcoin 11/27/18 535.3% 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 Band Protocol crypto 0.32 years 1,169% Crypto Capital Wade Terra crypto 0.41 years 1,164% Crypto Capital Wade Inovio Pharma.^ INO 1.01 years 1,139% Venture Tech. Lashmet Seabridge Gold^ SA 4.20 years 995% Sjug Conf. Sjuggerud Frontier crypto 0.08 years 978% Crypto Capital Wade Binance Coin crypto 1.78 years 963% Crypto Capital Wade 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 ^ 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%. 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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