Don't Get Lost in the Crowd

A conversation with 'Joe'... Why bear markets can happen... The stages of a bubble... Why we're probably in 'fear'... The power of independent thinking... Don't get lost in the crowd... Dan Ferris' latest market warning is moments away... My friend 'Joe' is a financial adviser... When I (Corey McLaughlin) recently spoke with Joe, he told […] [Stansberry Research Logo] Delivering World-Class Financial Research Since 1999 [Stansberry Digest] A conversation with 'Joe'... Why bear markets can happen... The stages of a bubble... Why we're probably in 'fear'... The power of independent thinking... Don't get lost in the crowd... [Dan Ferris' latest market warning is moments away](... --------------------------------------------------------------- My friend 'Joe' is a financial adviser... When I (Corey McLaughlin) recently spoke with Joe, he told me the last 20 or so phone calls he's gotten from clients are from frenzied folks wondering what the heck happened to the value of their 401(k)s this year. I didn't want to offend, but the first thought that ran through my mind was something like... It doesn't have to be this way. Think for yourself. I know way more than 20 people in America today feel the same way. Still, I was disappointed more than anything to hear the first-hand account, and I empathized with Joe's clients. I kindly mentioned to Joe [our warning]( back in January about the possible serious trouble ahead for the economy and markets in 2022. "Because you could see what was coming," Joe said, finishing my sentence. That was kind, and I don't bring this up to toot our own horn, but to make an important point. Nobody can see the future for sure, and we're not perfect. But at Stansberry Research, we do find it useful to at least think for ourselves about what could happen – and prepare accordingly. Many of Joe's clients are confused about what has happened in the markets this year. I don't think it is presumptuous to say that Stansberry's subscribers are much better informed and prepared for what could come next... and we strive to keep it that way. For instance, consider what happened late last year when the Federal Reserve said it would start raising interest rates. This would slow the economy... at the same time a slowdown was already likely, in light of the eye-popping growth that had fueled 40-year-high inflation. That's not a great scenario, and we told you so. Sure enough, [by February]( the conventional 60/40 stock-bond portfolio was already showing troubling weakness... Joe and I kept talking... He mentioned one of the goals of his firm is to keep clients around. In other words, the advisory has no incentive to warn folks about bad things that might happen in the markets. It's not in Joe's interest, and it's not what his boss pays him to do. Joe and his team are financial planners, not portfolio managers (though many people might expect them to be the same thing). Plus, in good times, most people don't want to hear dire warnings anyway. Who wants their personal financial adviser telling them on a nice winter day – while stocks are still hitting all-time highs – that the market could be in for major pain months from now? You'd think that guy is nuts, and you might take your money elsewhere. This is exactly how and why bear markets can happen... Bear markets and bursting bubbles are triggered for different reasons. In this case, it's record-high inflation and the removal of a 15-year, low-rate "easy money" punchbowl from central banks. But they all essentially have the same characteristics... It's very much like we described last week via "Adam Smith," the author of the great book, The Money Game... When stocks start down, the tendency is to wait until they come back a little before lightening up. They head down further, and the idea that you have made a mistake, that you have been betrayed by your own judgment, can be so paralyzing that you wait a little longer. Finally faith evaporates entirely. Below is a great illustration of the "stages of a bubble" from Hofstra University professor Jean-Paul Rodrigue. This chart became popular during the 2008 and 2009 financial crisis, and it is relevant again today... (Hat tip to "Wasteland Capital" on Twitter for recently resharing this chart...) In a "mania phase" of the stock market, media attention and enthusiasm turn to greed. This was pretty evident in the second half of 2020 and early 2021 (hello "meme stock" mania). This phase can also be described as a "Melt Up," to use the language of True Wealth editor Steve Sjuggerud. Eventually, greed turns to delusion at the tippy top. Then comes denial, followed by expectations or hope for a return to "normal," followed by fear that normal isn't coming back, then capitulation (crying uncle and giving up), and finally despair at "the bottom." If you're still standing when others are despairing or even going bankrupt, that's likely your once-in-a-decade opportunity to buy stocks and other assets at incredible prices. Where do you think we are now in this cycle?... We can't know for sure, but my vote is "fear"... First off, given the whole pandemic, general sociopolitical upheaval, inflation, and war in Eastern Europe, many people have likely forgotten that at the start of 2020, the end of a record-long bull market in U.S. stocks was already overdue. It sure ended quickly in February and March 2020 when COVID-19 reached the U.S. But then it essentially restarted thanks to trillions of dollars of stimulus from the Fed and Congress that acted as lighter fluid for the economy and markets (and inflation). With that idea as our base – that the record-long bull market never really ended and was elongated into a massive bubble – let's take a look at the S&P 500 Index since the later stages of the 2010s bull market. It's remarkably close to the "stages of a bubble chart" outline above... Let's take the arguably generous liberty of calling the COVID-19 panic of early 2020 and brief bear market a glorified "bear trap." From there, let's say the second half of 2020 and almost all of 2021 was a "speculative Melt Up boom," as our colleague Brett Eversole wrote [in July's issue of our True Wealth newsletter](. Earlier this year was the top... the "denial" period was this spring... hope for a return to "normal" was the story of the summer... and we're at least in the ballpark of "fear" today. Lately, sentiment surveys from individual investors have shown rare, extreme bearish readings... That is the definition of fear... Seeing this and not being caught up in it can actually be a great thing for long-term investors, but be careful of getting greedy too early. And, anecdotally, my conversation with Joe is just one story... But after about 10 months in a bear market, more and more people are calling up at least one financial adviser asking what to do now... It's because they're scared. That's fear, too. What do you say then? Well, Joe said he has been telling people his own portfolio is down, too, and it might take a year or two for the markets to recover. But that presumes we've already seen the bottom... which might not be the case. This scenario is actually a big part of our friend and colleague Dan Ferris' message that he will deliver at 8 p.m. tonight. [Tune in for all the details]( but know that Dan – Stansberry Research's longest-tenured analyst – says stocks could fall by another 75% before bottoming. That may sound scary, but it's the message Dan wants to share now. Importantly, he also has guidance for how folks can prepare their portfolios for this scenario. You won't want to miss his message, and the event tonight is totally free. Joe is a really good guy... He means well. And I'm not sharing this story to say for certain that all financial advisers act the same way. But if you do what the crowd does, and just follow along conventional wisdom because "it's always worked," you will get the same results as the crowd, too. In "good times" of bull markets, few people think this is a problem. Everyone is a genius. But in bear markets, going with the crowd can be [a guaranteed way to lose money](. We used these precise words in 2021 when warning that the conventional 60/40 stock-bond portfolio appeared to be in for some serious trouble. That was based on how "expensive" stocks were and rising inflation concerns from several members of our team, like Dr. David "Doc" Eifrig. Back then, Doc made a great point that many present-day financial advisers had never lived through a high-inflation environment... They wouldn't know what to do. As Doc pointed out in his "retirement wake-up call," the S&P 500 was trading at eye-watering levels. The benchmark index for U.S. stocks was trading at an inflation-adjusted 38 times earnings, implying it would take 38 years to earn back your purchase price in earnings. Doc told viewers to call up their money manager to talk about this fact and ask about it. He said... The best-case scenario is that they take you seriously and investigate the ideas for what I'm sharing with you right now. The worst-case [scenario] is they brush you off and keep telling you the same old lie about splitting your money between stocks and bonds, because the market will magically take care of the rest. Lo and behold, the 'crowd' is hurting this year... The major U.S. stock indexes are down more than 20%. Supposedly "safe" government bonds are down double-digits, too. As Charlie Bilello, Compound Capital Advisors founder and CEO, wrote on October 6... The 10-Year Treasury bond is on pace for its worst year ever (-16.7%), and a 60/40 portfolio of the S&P 500 and 10-Year bond (-21%) is on pace for the 2nd worst year ever, trailing only 1931. Stocks and Bonds falling together, while rare, has happened before (1931, 1941, 1969, and 2018). But if the year ended today, it would be the first time in history that both stocks (S&P 500) and bonds (10-Year Treasury) were down over 10% in a calendar year. The smarty-pants Wall Street hedge funds are down 15% this year, according to data compiled by Bloomberg. Less than a quarter of hedge funds have positive returns in 2022. Tiger Global, the worst performer among the large funds, is off 52%. Fear is rising, and the reality of the bear market is going "mainstream." That's the observation of Bloomberg analyst Mike McGlone, a recent guest of our editor-at-large Daniela Cambone. Why are stocks and bonds on pace for the worst performance in almost 100 years? Why have mortgage rates doubled in less than a year, suddenly putting homeownership out of reach for many buyers? Oh, these are just those "[relatively high-class problems]( that Fed Chair Jerome Powell once condescendingly spoke about... like inflation, which the central bank helped create and which everyone is dealing with today... After calling inflation "transitory" for way too long, keeping interest rates near zero, and fueling a massive bubble, now the Fed is doing what it can to lower inflation and taking the air out of the speculative frenzy. But one way or another, we're going to keep having inflation... We had inflation before the string-pullers created fresh "dollars" in response to the pandemic panic and amid government-directed shutdowns, and we have plenty more today. It's the nature of fiat money. A pertinent question is how much more inflation we'll have in the future. And when does it break down the common expectations most folks have had for the last several decades in a low-rate, easy-money world? Well, you could argue we're already seeing this breakdown. See the 60/40 portfolio in 2022. Moreover, nobody wants constantly accelerating prices that outpace any increase in paychecks. But this is today's world. We could go a lot of different directions with this discussion, but they all lead to the same conclusion... Put your financial future in your own hands as much as possible... Nobody else can do it for you like you can... And please know the risks (and rewards) of investing in stocks, bonds, or anything else as best you can. Nobody's time and resources are limitless (unless you're a Fed money printer), so if you need a trusted guide, use one. Once you find us at Stansberry Research, we want to keep you around, too – like Joe and his clients. But as independent publishers of research, we're free to do it with an approach you simply won't see in the mainstream. We analyze the markets and research investments for your benefit... Nobody has a perfect record, of course. But our editors and analysts have made some great calls over the past year, and the insight and wisdom they've shared is unmatched. I hesitate to cherry-pick highlights for fear of missing something or sounding like a bragger, but, again, to make a point... Our Ten Stock Trader editor Greg Diamond called the "top" for U.S. stocks in January. We published an essay from Greg titled "[This Is How Bull Markets End]( on January 8 of this year. I still think about a message we received earlier in the year from a subscriber who said Greg saved him millions of dollars. And that was many months ago. Our colleague and Stansberry's Credit Opportunities editor Mike DiBiase warned in late 2021 that "[2022 Will Be the Year the Markets Crash]( – the headline of his December 23, 2021 Digest – because of inflation. Dan said "[This Could Be the 'Mother of All Melt Ups']( in February 2021, and he was right, too... (Cathie Wood's ARK Investment Management firm selling branded T-shirts, sweatshirts, and baby onesies definitely qualified as evidence of a top.) The legendary Jim Rogers, a longtime friend of Stansberry Research, delivered a "[bear market warning]( to our Daniela Cambone in early March. I don't think CNBC had that one... And if you've followed along in the Digest this year, you've heard us advising caution. We've told you cash is your friend, to heed your stop losses, to beware of "bear market rallies," and to know the circumstances you are stepping into when buying stocks or any other investment. Falling stocks can create generational buying opportunities in high-quality businesses. But there are still risks in the market in the meantime. I don't enjoy delivering "bad" news, and being surrounded by it wears on me like anyone else. But we plow ahead and do it anyway if necessary... so you have the information to make the best decisions for your situation. In a world that seems increasingly less receptive to independent thinking, doing just that – thinking differently – might be the most important thing you can do when investing today. To this point, at least consider our latest big message... As I mentioned, our friend, Extreme Value editor and regular Digest essayist Dan Ferris goes live at 8 p.m. Eastern time tonight with what might be our scariest prediction our company has made in more than 20 years of publishing. That's saying something... and I can tell you a few hundred thousand people have signed up to watch this free event – for good reason. Dan plans to talk about a major market event about to take place that will take most Americans by surprise... and could ravage millions of folks' retirements. He plans to explain all the details in just two hours, including how everything you know about investing could be about to change... or already has. To hear his full case, check out tonight's presentation. From what Dan has said about the event, it should be informative, entertaining, and well worth your time. Among other things, just for tuning in, you'll hear the names of two popular stocks that Dan says folks should sell immediately. We just ask that you sign up in advance to make sure you don't miss a minute and get all the information Dan wants to share. [You can register for free right here](... We urge you to do just that. And like we said yesterday, Dan's existing Extreme Value subscribers and Stansberry Alliance members have access to his research already, but we invite you to tune in to hear his warning as well. Markets Preparing for '1929-Like Scenario' Mike McGlone, senior commodity strategist at Bloomberg Intelligence, tells our Daniela Cambone that global markets are preparing for a recession ahead... a "1929-like scenario." Watch for all the details... [Click here]( to watch this episode of the Daniela Cambone Show right now. And to catch all of the videos and podcasts from the Stansberry Research team, be sure to [visit our Stansberry Investor platform]( anytime. --------------------------------------------------------------- Recommended Links: # [Tonight's Important Warning]( He successfully predicted the fall of Lehman Brothers... the bitcoin crash... and the top of the Nasdaq. Now, Dan Ferris says the biggest mega-bubble in stock market history is about to burst... and you need to prepare immediately. [Click here for the full details, then tune in tonight](. --------------------------------------------------------------- # [Major Patent Alert: October 23, 2022]( A major announcement on that day could force a wave of money into THREE companies. Their exclusive patents could soon be worth up to $150 billion... and lead to multiple gains up to 400%-plus, no matter what's happening in the market. [Click here for the breaking story](. --------------------------------------------------------------- New 52-week highs (as of 10/18/22): Booz Allen Hamilton (BAH). In today's mailbag, feedback [on yesterday's Digest]( which included our colleague Dave Lashmet's description of a "hidden connection" between fire sprinkler systems and a potential new cancer treatment... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com. "I enjoyed [yesterday's] Digest as I normally do but wanted to offer some insight on how a fire sprinkler system/head operates as it was mentioned in the Digest. I own a fire protection company. "1. In a residential system only the sprinkler heads affected by the heat activate. These are called Wet pipe sprinkler systems not Deluge type systems that flow water from every head when a fire is detected. Deluge systems are common in Special Hazard environments (think oil refineries where water and foam are sprayed around an entire area to contain a fire). "2. Sprinkler heads are plugged by thermosensitive elements – typically a glass bulb or solder link. The color indicates the temperature at which the bulb will break, thereby releasing water onto a deflector and through the coverage space. "The operation of these life safety systems is one of the many things Hollywood gets wrong to the detriment of our industry. While significant water damage can occur it is usually limited to the area of the fire and damages are considerably less than caused by uncontrolled fires which is why insurance companies have discounted rates for homes with these systems. "Here's [a quick video]( illustrating sprinkler operation better than I can describe. Thank you for the excellent content as usual." – Stansberry Alliance member Ben S. Dave Lashmet comment: It's all well and good to consider current systems, but our system was built in the 1990s and the fire department couldn't figure out how to shut it off. So I know we got drenched. Now, I wasn't there for the fire – it was out before I arrived. I'm not exactly sure which sprinkler heads were set off by heat and which plum exploded from pressure. All I know is, I needed to use galoshes to walk on the main floor... and the carpets were up and drying for weeks. Still, as I said yesterday, I'm not a fireman. I really used this topic to talk about fevers and cancer. I can discuss those topics in greater detail. Actual full-scale sprinkler systems? I'll defer to the experts. All the best, Corey McLaughlin Baltimore, Maryland October 19, 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 11/11/10 852.1% Retirement Millionaire Doc ADP Automatic Data 10/09/08 831.2% Extreme Value Ferris MSFT Microsoft 02/10/12 730.9% Stansberry's Investment Advisory Porter HSY Hershey 12/07/07 541.4% Stansberry's Investment Advisory Porter ETH/USD Ethereum 02/21/20 479.5% Stansberry Innovations Report Wade AFG American Financial 10/12/12 421.0% Stansberry's Investment Advisory Porter WRB W.R. Berkley 03/16/12 404.5% Stansberry's Investment Advisory Porter BRK.B Berkshire Hathaway 04/01/09 399.4% Retirement Millionaire Doc TPL Texas Pacific Land 11/05/20 316.3% Stansberry's Investment Advisory Porter FSMEX Fidelity Sel Med 09/03/08 281.2% Retirement Millionaire Doc 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 3 Retirement Millionaire Doc 1 Extreme Value Ferris 1 Stansberry Innovations Report 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 1,145.2% Crypto Capital Wade ONE-USD Harmony 12/16/19 1,141.7% Crypto Capital Wade POLY/USD Polymath 05/19/20 1,099.3% Crypto Capital Wade MATIC/USD Polygon 02/25/21 854.2% Crypto Capital Wade BTC/USD Bitcoin 11/27/18 414.5% 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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