The Biggest Misperception in the Markets Today

In today's Masters Series, adapted from the February issue of True Wealth Systems, Brett explains why the worst-case scenario is already over for one beaten-down sector... details how this could create the opportunity for massive gains... and reveals how investors can position themselves to profit from this shift in the markets... [Stansberry Research Logo] Delivering World-Class Financial Research Since 1999 [Stansberry Master Series] Editor's note: Most of the damage has already been done... Investors fled the markets in droves in 2022 as sky-high inflation and heightened geopolitical tensions weighed on several important asset classes. And with inflation still far from the Federal Reserve's target rate, this chaos is poised to drag on. But there are still opportunities to profit in today's turbulent market – if you know where to look... That's why Brett Eversole – senior analyst of True Wealth – says it's critical for folks to ignore the scary financial news headlines and focus on what's actually happening in the markets. In today's Masters Series, adapted from the February issue of True Wealth Systems, Brett explains why the worst-case scenario is already over for one beaten-down sector... details how this could create the opportunity for massive gains... and reveals how investors can position themselves to profit from this shift in the markets... --------------------------------------------------------------- The Biggest Misperception in the Markets Today By Brett Eversole, senior analyst, True Wealth The all-time greatest investors made their money by focusing on one strategy. It might seem painfully simple. But putting it into action – and being successful – well... that's another story. It's how Benjamin Graham, the father of value investing, made 20% a year from 1936 to 1956. It's how Warren Buffett has been successful for more than 50 years... becoming one of the richest people of all time with a net worth of more than $100 billion. These Wall Street legends did the same thing... They bought good assets at great prices. We know this idea is important. But what most investors miss is why assets become cheap in the first place. You see, value isn't the star of the show. It's a side effect of something bigger – something that's fundamental to the core of all markets... It's about fear and misperception. Take what happened in the housing market in 2008. A record 2.3 million foreclosures took place that year. Widespread panic was pulsing through the housing market. And it crushed any stocks related to real estate. Fear was no longer in the back of investors' minds. It was the only thing on their minds. The idea of "losses forever" took over. And the perception was that things would get much worse. More people lost their homes as the months went on. By early 2009, the story around real estate stocks was as grim as it could get. Take a look at this headline from March 9, 2009... If you know your market history, though, you'll notice something right away... This headline ran on the exact day the stock market bottomed. Homebuilder stocks in particular went on to soar 100% in less than six months. And it was the start of a decadelong bull run... one that ultimately soared to 454% gains. Importantly, the bad news wasn't over by then. Far from it. Foreclosures continued to happen after March 2009. In fact, 2009 would top 2008 for the number of foreclosures. So when folks assumed that things would get much worse, they turned out to be absolutely right. []There's an important point, though... Prices don't have to keep falling just because things are sure to get worse. It's actually the opposite. Real estate stocks were cheap in March 2009 because the news was bad. The expectation for more pain had created incredible value. But at a certain point, the worst was already priced in. And stocks began to rally... even though the outlook remained bleak. This is what creates the opportunity to buy at great prices. You need investor perception to turn sour enough that all anyone can see is more losses ahead... and investors decide that no price is worth paying for a particular kind of stock. Then, prices fall until they are cheap enough to attract interest. That's the moment the investing "greats" are waiting for. We want to act when the bad news stops mattering just enough for an uptrend to start. We're seeing that same kind of misperception in the housing market today... --------------------------------------------------------------- Recommended Link: [HUGE Stock Announcement]( If you've been watching stocks slip this week, you may be wondering, "Is this it?" But there's something you need to see immediately. Two legendary investors who called the 2020 crash are stepping forward with an urgent stock prediction. It involves the recent volatility... a devastating market shift no one sees coming... and a rare investment that could help you five times your money as a result – even if the S&P 500 falls another 20%. [Get the full details here](. --------------------------------------------------------------- The financial media is screaming that the sky is falling. They'll have you thinking that the next financial crisis is underway... that the housing bubble is bursting and you need to run for the exits. But even as the bad news keeps rolling in, the worst-case scenario is off the table for homebuyers, as I'll show. You see, we're in the worst housing market for homebuyers in decades... But it's time to get bullish. "Why the heck would I be bullish on housing stocks if nobody can buy a house?" I hear you. Buying a home right now is costly. Rising mortgage rates have made homes less affordable. And prices are falling as a result. It feels like the terrible news will continue for years to come. But those facts are already pricing in the worst. And it's the market's misperception that things will only get worse from here. Right now, most folks don't realize that the worst-case scenario for homebuyers is already over... To gauge housing affordability in the U.S., you have to consider three factors: mortgage rates, home prices, and income. And if there's one factor that stands out over the past few years, it's mortgage rates. Rates have gone up so much that the cost of a monthly home payment is up more than 50% over the past few years. And there is a big reason for it... Inflation was running wild last summer. By June 2022, the U.S. inflation rate was 9.1%. And the Federal Reserve was hiking interest rates at the fastest pace in recent history to prevent runaway inflation. As interest rates rise, the cost to take out a mortgage goes up. So when interest rates rose to bring soaring inflation down, 30-year mortgage rates increased, too. That's what we saw play out last year. The 30-year mortgage rate hit 6% in June... up from 2.8% in early 2021. That increase caused affordability to fall. And the housing market seized up. But that wasn't the end... Mortgage rates continued to rise. The 30-year fixed rate peaked at 7.35% in November. And that spooked investors even more. Folks see the dramatic rise in rates and think the housing market has more pain ahead. But most investors don't see that inflation is finally declining... And that means interest rates don't need to go dramatically higher from here. Inflation has fallen to 6.5% today. That's still high. But it's a far cry from June's 9.1%... and from the headlines that called for double-digit inflation prints in late 2022. The nightmare scenario of double-digit inflation is gone. That tells us mortgage rates are unlikely to climb significantly from here. And that means that while things are still bad for housing today, they're unlikely to get worse. Mortgage rates are also starting to fall back to Earth. The current 30-year average fixed rate is 6.3%. Take a look... This is where the opportunity comes in. Financial news headlines everywhere are blaring, "The housing bubble is bursting." And they're saying that for many of the reasons I mentioned. For example, check out this headline from Fortune magazine back in November... Or this one from the New York Times... What these headlines won't tell you is that inflation is easing and mortgage rates are starting to drop. Are 6.5% mortgage rates terrible compared with the sub-3% rates we had in 2021? Absolutely. But they're less terrible than 7%-plus. If that trend lasts in 2023, we should expect homebuyers to be in better shape than they are today... and in much better shape than folks would have thought last summer. We may still see home prices drop a little bit from here. After all, we're coming off a multiyear boom. So it wouldn't be surprising if home prices came down slightly as a result. But remember, just because things are getting worse doesn't mean the wheels have to fall off. The widespread perception is that there's no way housing could do anything but bust from here. But that idea misses this key shift. And it's why the potential surprise is to the upside, not the downside, for U.S. housing this year. Good investing, Brett Eversole --------------------------------------------------------------- Editor's note: That's not the only shift coming to stocks in 2023. That's why investing legend Dr. Steve Sjuggerud recently stepped forward to discuss a historic reset he believes is about to hit the markets... one that could help you collect multiple 1,000%-plus winners. He hosted an online presentation to share the full details. But if you missed it, [click here to watch the full replay](... --------------------------------------------------------------- Recommended Link: [A Financial Fraud BIGGER Than FTX and Madoff?]( The man who called the 2008 crash reveals a financial fraud that could be BIGGER than FTX and Madoff combined... and could soon impact millions of Americans. [Click here for the details](. --------------------------------------------------------------- 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. For questions about your account or to speak with customer service, call 888-261-2693 (U.S.) or 443-839-0986 (international) Monday-Friday, 9 a.m.-5 p.m. Eastern time. 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