Market Wisdom From an Old, Fat, Rich Guy

Why falling markets can be a good thing... What you need to take advantage of them... Market wisdom from an old, fat, rich guy... The world versus central banks?... The first part of the 'bottom is (probably) in' checklist... [Stansberry Research Logo] Delivering World-Class Financial Research Since 1999 [Stansberry Digest] Why falling markets can be a good thing... What you need to take advantage of them... Market wisdom from an old, fat, rich guy... The world versus central banks?... The first part of the 'bottom is (probably) in' checklist... --------------------------------------------------------------- Rick Rule wouldn't mind if certain markets go lower... You might think he's crazy, but the ever-sensible investor says he wants prices to keep going down, including those of gold in particular... even though he owns a lot of it and the precious metal has been beaten down for more than a year. Rule, 69, is the former president and CEO of Sprott U.S., a money manager focused on precious metals and other "real" assets. He held that position for a decade until last year. He's spending his retirement as a self-described "loan shark" – meaning debt investor. Rule has also been a regular guest of our editor-at-large Daniela Cambone on our Stansberry Research media channels... and each time has delivered a heaping dose of market wisdom. [His most recent appearance]( is no exception... It has been a painful year for gold investors like Rule. Still, as he told Daniela as part of a wide-ranging conversation... Personally, I'm suited by lower gold prices in the near term. If gold were to advance to $2,200 or $2,300 [from $1,730 today], I wouldn't sell. It would evoke no action from me. If gold were to fall to $1,500, I would buy lots. It is in my interest, given the way I would like to organize my own affairs to see the gold price lower rather than higher. Now that will evoke a lot of hate in the comments section... People will say, "He's old and fat and rich." All of that is true. I suspect that if other people adopted the time frames that would allow them to become rich, that they would become rich, too. His point is, by getting caught up in short-term market movements – of a few days, weeks, several months, or even a year – you might make some costly mistakes and miss great buying opportunities right in front of you... and sell at the wrong times, too. Given the amount of fear in the market lately – and now a quick, two-day 5% rally in the S&P 500 Index – I (Corey McLaughlin) want you to hear Rule's perspective. Let's start with a basic requirement for successful investing... Be patient... and know your goals... Only then can you make deliberate decisions that align with those goals. Is there a certain amount of money you're looking to use in the next week, or next month? That's probably not the best cash to throw into a risky bet on the next market rally. But do you have your bases covered? Then you can pounce on the opportunities that will inevitably present themselves... or protect yourself in advance... and perhaps simply sleep better at night even amid all the turmoil and uncertainties in the world today. As Rule told Daniela... The idea that we're going to get the American house in order fiscally seems to be a non-starter... Investors must acknowledge that... and organize their own lives in a way that they can defend themselves as well as possible given the circumstances... Control what you can control... Exercise common sense. Buy high-quality companies that generate lots of free cash and have decent balance sheets. Own whatever type of liquidity appeals to you. Live within your means. For Rule, one opportunity is lower prices for gold. "I sleep better at night owning gold," he said. And as he also explained, one strategy he says is a must is having a good chunk of cash on hand to put to work, even with inflation as high as it is... While cash [means] that you are guaranteed a loss after inflation, you have to have cash anyway. Because in a period of declining liquidity, particularly if we have a replay of 2008, the cash will give you the tools and perhaps the courage to take advantage of a situation... It's true you're losing 4% or 5% of your purchasing power holding cash, but that negative interest rate that you suffer is really an option premium to allow you the liquidity to take advantage of the illiquidity of others. And as we have seen in 2022, losing 5% beats the hell of out losing 20% in other asset classes. Despite the pain, investors must continue to be liquid. For me personally, that liquidity includes gold. I am willing to sell my gold if another asset class becomes attractive to me... In general, he said investors should be defensive. And he means not only with their portfolios, but also – maybe more importantly – with their psyches, given risks like a potential recession and geopolitical turmoil. In any case, he told Daniela... You are going to continue to experience lots of volatility. And if you have a strong psychological framework in your investments, you are more often than not able to take advantage of volatility as opposed to taken advantage of by markets. For you, the opportunity might mean buying more shares of your favorite dividend-paying stock at a cheaper price and letting the dividends compound... or owning shares of a small-cap company in an emerging industry that you think has a bright decade ahead of it. If you have any money in the markets, you should hear Rule's conversation with Daniela... They covered everything from inflation to the Federal Reserve, real estate investing, U.S. dollar strength, government overreach, the crisis in Europe, whether the market and economy can "get worse," and more. Rule also shared a few free offers for viewers at the end. But I think you might find his straightforward advice the most helpful. Regular readers will find it echoes guidance we've shared in the Digest, but we still felt like we learned something new listening. As Rule concluded with Daniela... Investing is largely about discipline and common sense. Any of your listeners whose fear causes them to go into a cocoon, or "do nothing," and not take control of their financial future will certainly lose... In sum, Rule says do whatever is in your control to take advantage of the situation today rather than being taken advantage of. For more, [click here]( to watch the entire interview – for free – on StansberryResearch.com. The world versus central banks... [Yesterday]( we reported that a United Nations agency had implored the Fed and other central banks to stop their interest-rate-hiking plans, given the risk of damage to the rest of the world. Well, later yesterday, after our publishing deadline, we saw the International Monetary Fund ("IMF"), another financial agency of the U.N., come to central banks' defense. The IMF argued that fiscal policy should fall in line with inflation-fighting policies (meaning less spending). In an interview with global news agency Reuters during a visit to Saudi Arabia, IMF Managing Director Kristalina Georgieva said, according to the outlet... Fiscal policies that indiscriminately support everybody by suppressing energy prices and providing subsidies are working against monetary policies' purposes. "So you have monetary policy putting a foot on the brakes and fiscal policy putting a foot on the accelerator," she said, after taking part in a conference on food security in the Saudi capital Riyadh. Though she added one significant caveat... Georgieva called on the Fed to be extremely prudent in its policies and be mindful of the spillover impact on the rest of the world, adding its responsibility "is very high." That's a softer warning than one we shared yesterday from the United Nations Conference on Trade and Development that central banks "must change course." But it's essentially the same message. Will they cave to mounting pressure? I'm going to stop this conversation right here for now. But just know the Fed "pivot" discussion has quickly made its way back into speculatory circles. Lastly, let's start getting into the 'bottom is (probably) in' checklist... Thanks to those of you who wrote in with your feedback and encouragement to put together the "bottom is (probably) in" checklist I said I was considering. In the parlance of new U.K. prime minister Liz Truss, "we have listened." Over the past few weeks, I've narrowed the list of what I will call potential "big bottom indicators" to five items (plus a potential sixth). We've written about each of these indicators this year, but based on your feedback, enough of you think it would be a welcome thing to compile them all in one spot. I'm happy to oblige... I'll keep the focus on the U.S. benchmark S&P 500. Starting today, I am going to share some detail on each of these indicators. When I'm done, I will then put together an easy-to-read chart with all of them in one place... keep track of them... and update you on whether they've been met. Again, we're not trying to be a hero and call "the bottom" necessarily. But in the interest of protecting and the growing our wealth as much as possible, we would like to get close. And I'm fairly confident that as these indicators are "checked off," they will show that a bottom for U.S. stocks – as measured by the S&P 500 – is in the rear-view mirror, or perhaps ongoing, rather than still ahead. The first indicator is 'market breadth'... I last wrote about "market breadth" in some depth back in [the June 16 Digest](. I said then... What if I promised you could get a read on the long-term trend (up, down, or sideways) of all of the stocks that trade on the New York Stock Exchange ("NYSE"), with essentially one number or chart? Yes, promised you. I don't do that lightly. After all, I'm speaking with certainty about the direction of the entire U.S. stock market – thousands of stocks of all kinds of businesses, large and small, in every sector you could think of. Well, here's the simple way to figure out which way they're trending... and whether we're near a bottom: You look at market breadth. From there, we talked about our colleague and DailyWealth Trader editor Chris Igou's use of the "advance-decline line," a basic technical indicator that measures the number of stocks going up versus down on any given day. This is a cumulative indicator that you can apply to different indexes. For example, if 100 more stocks rose today than fell, you would add 100 points to the advance-decline line's rolling total. If you do this day after day, you can get a good unbiased view on whether more stocks are rising than falling over a given period of time. It may sound simple, but as I've written before, a wise man once told me that it's impossible for the stock market to go up if there are more individual stocks going down than up. And vice versa... The market won't go down if more stocks are going up than down. Like I said in June... Apologies to longtime subscribers who I might be offending. But I've seen so much nonsense in the mainstream financial media lately, I feel compelled to share this idea with every Digest reader. When you compile individual stock performances into a big market-wide number, that's basically market breadth. Once you can determine whether more stocks are going up than down – and right now even with a sharp rally so far this week, the longer-term trend for the S&P 500 is still "more are going down" – you can move on to the next part of this breadth analysis... How many stocks are trading above their long-term trend?... Specifically, I like to look at what percentage of stocks are trading above (or below) their 200-day moving average. As regular readers know, this "200-DMA" is a simple technical measure of a long-term price trend... When you apply this measure in a market "breadth" analysis, it becomes even more powerful. We can look at exactly how many stocks in the S&P 500 are trading above their long-term trend on any given day... and then whether that percentage is rising or falling... and how many are making new highs and lows. That information gives a good indication of underlying market strength or weakness, even if the overall index is making new highs or lows... This was the case in early and mid-2021, when we noted that "all is not well" with U.S. stocks even as the major indexes were making new all-time highs. As we shared [in the July 6, 2021 Digest](... The number of individual stocks hitting new highs each day has been decreasing as of late... Plus, an increasing number of stocks are starting to trade below their long-term averages (though that is only down slightly from a record high [of roughly 90%]). When this combination happens, it's usually an early indicator that a broader sell-off in stocks could be ahead... or at the very least, that we're closer to a top than a bottom. Fifteen months later, we're on the other end of the conversation... Today, the number of S&P 500 stocks trading above their 200-day moving averages checks in at 20%. On the surface, this is encouraging... Let's look back at the last 15 years or so, the time frame for which this data is readily available. When the number of S&P 500 stocks trading above their long-term trends has gone above 20%, it has been a sign that breadth is a new uptrend. And that coincided with notable market bottoms... For example, using this measure, S&P 500 breadth bottomed in February 2009, just ahead of the U.S. benchmark index's March 2009 low... The timing was about the same in March 2020 and in corrections in 2011 and 2018. But at the same time, what you need to know is this breadth indicator can be volatile in the shorter term. The fact that it reaches a certain level should not be taken as a cut-and-dry "buy" signal... but as a piece of the analysis puzzle. Last week, fewer than 10% of the S&P 500's stocks traded above their long-term trend, just like during the low in June. At the end of the last bear market rally in August, the number skyrocketed close to 50%. Then it still fell back to its June lows of around 10%. In short, I would be a bit more patient with this indicator... Could last week have been the bottom? Maybe, but note that the most recent major bottoms (in 2009 and 2020) have coincided with low single-digit readings in this percentage... I'm talking 1% and 2%. That means the only way to go was up... We haven't seen that yet this time. Things could get worse. But, to be clear, it's also possible that point won't arrive... and this bottom turns out to be more like pullbacks in 2011 and 2018, when the number of S&P 500 stocks bottomed closer to 10%. We'll find out soon... If this market-breadth indicator for the S&P 500 makes higher highs and higher lows above 20% in the weeks and months ahead, it will be a stronger sign that a bottom is or was recently in. And if it falls below 10%, you probably also won't need me to tell you a bottom is in, either. The mainstream media will be in panic mode at that point. And folks with no interest in stocks will be talking about how bad the markets are. These will be surefire signs. It might feel like March 2020 or the depths of the financial crisis 15 years ago. In sum, for now, I'm not checking this box off the brand-spanking-new "bottom is (probably) in" checklist. Market breadth for the S&P 500 is definitely closer to a bottom than a top, but there is also enough of a case to suggest stocks could fall further. --------------------------------------------------------------- Recommended Links: ['Here's the EXACT Day to Sell Your Stocks']( He received notice of the March 2020 crash a week in advance. And he got an alert saying stocks would enter a bear market weeks before stocks fell more than 20% earlier this year. Now this expert says it's time to prepare for another extraordinary shift in the markets... and timing it correctly could be the most important move of your financial career. [Click here to ensure you aren't blindsided](. --------------------------------------------------------------- [Have You Claimed Your 2022 Stansberry Conference Ticket?]( You can still claim your spot to view the entire annual conference live from the comfort and convenience of your own home. You'll get access to all of the speakers, recommendations, and investing ideas... all for 60% OFF the price of an in-person ticket. But time is quickly running out... [Click here for conference livestream details](. --------------------------------------------------------------- New 52-week highs (as of 10/3/22): None. In today's mailbag, thoughts on the last real estate bust, as fears of another one rise today... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com. "I recall 2008, as I had bought my first home in 2007 in Phoenix. My friend with an ARM [adjustable-rate mortgage] was first to lose his home and not by choice. But a year or so later after my house was upside down around 33% I walked too. So did a few other peers of mine who could all afford to pay. All buddies who worked as mechanical engineers (although just starting in their careers). It did not make sense to throw good money away month after month, when a recovery was not at all clear. "The key to the housing crash was the price decline, not subprime loans per se. If home prices correct enough this time a lot of recent buyers will walk too, like my friends and I back in 2008 and 2009. "A continued rise in interest rates will depress prices enough over time to precipitate a crash." – Paid-up subscriber Rex H. All the best, Corey McLaughlin Baltimore, Maryland October 4, 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 11/11/10 860.4% Retirement Millionaire Doc ADP Automatic Data 10/09/08 822.2% Extreme Value Ferris MSFT Microsoft 02/10/12 738.2% Stansberry's Investment Advisory Porter HSY Hershey 12/07/07 534.6% Stansberry's Investment Advisory Porter ETH/USD Ethereum 02/21/20 483.3% Stansberry Innovations Report Wade AFG American Financial 10/12/12 403.2% Stansberry's Investment Advisory Porter BRK.B Berkshire Hathaway 04/01/09 383.7% Retirement Millionaire Doc WRB W.R. Berkley 03/16/12 370.6% Stansberry's Investment Advisory Porter ALS-T Altius Minerals 02/16/09 288.2% Extreme Value Ferris TTD The Trade Desk 10/17/19 283.8% 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 4 Stansberry's Investment Advisory Porter 2 Extreme Value Ferris 2 Retirement Millionaire Doc 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 ONE-USD Harmony 12/16/19 1,161.5% Crypto Capital Wade ETH/USD Ethereum 12/07/18 1,152.0% Crypto Capital Wade POLY/USD Polymath 05/19/20 1,086.1% Crypto Capital Wade MATIC/USD Polygon 02/25/21 836.8% Crypto Capital Wade BTC/USD Bitcoin 11/27/18 422.4% 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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