The 1932 Lesson That Could Send Stocks Soaring

In today's Masters Series, adapted from the May issue of True Wealth Systems, Brett compares today's uncertain market with the Great Depression era... explains why the current market setup has immense moneymaking potential... and reveals how investors can take advantage of this unique opportunity... [Stansberry Research Logo] Delivering World-Class Financial Research Since 1999 [Stansberry Master Series] Editor's note: We've seen this cycle before, but not exactly like this... Many investors have been sitting in cash this year following the brutal bear market throughout 2022. According to True Wealth editor Brett Eversole, history shows this is creating the opportunity for a major boom in the stock market... That's why Brett says it's crucial for investors to remain prepared for a massive rally in order to avoid missing out on huge profits in the long term. In today's Masters Series, adapted from the May issue of True Wealth Systems, Brett compares today's uncertain market with the Great Depression era... explains why the current market setup has immense moneymaking potential... and reveals how investors can take advantage of this unique opportunity... --------------------------------------------------------------- The 1932 Lesson That Could Send Stocks Soaring By Brett Eversole, editor, True Wealth The Great Depression is hiding the key to big gains... Most folks will miss it, though. That's because everyone only focuses on the story of the "rise and fall"... the boom and the devastating bust that followed. In their minds, the story begins with the "Roaring '20s." It was a time of extreme greed, soaring stock prices, and speculation. Just about everyone was hellbent on becoming rich. Anyone who heard about their neighbor's fortune wanted in on it, too. And folks saw the market as a free ticket to unlimited wealth. Americans borrowed money left and right to invest... pouring an enormous amount of capital into the markets. In fact, folks bought $1 billion worth of investment trusts in the first eight months of 1929 – compared with the $400 million in all of 1928. All anyone could see was the stock market's huge moneymaking potential. What they didn't see coming was the bust... It was the worst crash in our nation's history. The Dow Jones Industrial Average fell 85% from September 1929 into June 1932. U.S. exchanges lost a total of $179 billion over that period. In today's dollars, that's more than $3 trillion. Most people close the book there. Lesson learned... They see just a classic boom and bust – a tale as old as time, and a warning to investors who get too bullish near a peak. But that's not the whole story. And if you look closely, you'll find an even more important lesson for investors... You see, the Great Depression didn't end until 1939. The unemployment rate had skyrocketed from the single digits in 1930 to roughly 25% in 1933. And it stayed above 20% through 1935... and above 14% from 1936 through 1940. The terrible times lasted for a decade. It was equivalent to the worst of the 2008 financial crisis. Yet it lasted five times as long. Despite the prolonged misery, the market bottomed in July 1932... and then staged an incredible recovery. By the end of 1935, stocks were up 202%. And by early 1937, they were up 342%. By now, you probably see what I'm getting at... With the Great Depression in full swing, the idea of a golden ticket to riches was long gone. After more than two years of a brutal crash, no one wanted to own stocks. Americans were more worried about how to keep food on the table. But stocks don't bottom when everyone is thriving and times are good. They bottom when everyone has given up... when they're all out of the market. The vicious cycle of selling doesn't go on forever. It makes sense when you drill down to how markets work... If everyone is already bearish and out of the market, only a few people are left to sell. From there, all it takes to start the turnaround is some positive news – a catalyst that sparks a rally. And because everyone is out, the upside can be truly tremendous when investors flood back in. Now, we aren't in a Depression-style crash today. But today's market has a similar underlying setup. We've gone from a buying frenzy in 2021 to many investors racing for the sidelines. Stocks are now at a decent value after last year's bust. Yes, we're facing some strong headwinds. But it's nothing compared with what investors faced in 1932. And even back then, stocks were able to take off when nobody thought they ever would again. Most important, the trend is starting to turn higher. And when you're looking for the safe time to act, that's your cue... The returns from here could be massive as well, thanks to the amount of cash sitting on the sidelines right now... --------------------------------------------------------------- Recommended Link: # [1907, 1929, 1998, 2007 – and Now 2023?]( The Washington economist who called the Lehman Brothers collapse says the exact same scenario that occurred in four of America's biggest economic calamities is unfolding again today. It all centers around an unregulated sector that could be on the verge of "blowing up" once again. [Critical details are posted here](. --------------------------------------------------------------- One of the best ways to know where investors stand is to look at the assets they own... Are they hoarding cash in fear of a bust? Or are they pouring money into stocks, expecting a boom? This gives us a clear look into investor sentiment... and an edge over everyone else. After all, as longtime subscribers know, you always want to bet against extreme sentiment. And today, folks are darn bearish... More than $5 trillion is sitting in money-market funds right now. That's the highest amount since 2020. Remember, 2020 was when the whole world was in quarantine. No one had any idea as to when things would get better. The federal government was sending out stimulus checks. Sentiment was about as bad as "bad" could get... So cash levels soared. Today, money-market assets are through the roof because of the higher yields they pay. You can earn a 5% return in a money-market fund with zero risk. That's darn appealing when banks are offering next to no interest... especially considering (as we've recently been reminded) that banks can go bust. Regardless, a spike in money-market assets shows investors are no longer pouring money into stocks. They want safe yields more than they want capital gains... a classic sign of fear. But here's the thing... When money-market assets peak, stocks often start to rise. I wrote about this in a Review of Market Extremes earlier this year. A subsector of money-market funds is at an all-time high. I'm talking about retail money-market assets. And these assets tend to peak when times are at their worst. Here's what I said... This measure has jumped more than $300 billion over the past year. And it has soared to an all-time high in the process. Take a look... Retail money-market assets have a history of peaking during the worst periods for stocks. (The gray bars indicate recessions.) That's because scared investors tend to pull money out of the market at the worst possible time. The fact is, an all-time high in these assets is a great sign for stocks going forward. The chart above shows retail money-market assets peaked in the early 1990s, 2002, 2008, and 2020. And after each peak, a multiyear boom in the stock market followed. Another thing to note is how big of a jump we've seen over the past year. Here's another snippet from that issue... Retail money-market assets jumped 30.4% over the past year. That's higher than what we saw during the pandemic... higher than the 2008 financial crisis... and much higher than the dot-com bust. Heck, only the increase that happened between the 1987 crash and the 1990s recession was more extreme. So not only is today's measure at a high... but it's rising at near-record speed. Retail money-market assets are one of many ways to see fear from mom-and-pop investors. And if you can buy when others are fearful, you'll do darn well. We're seeing a record amount of cash sitting on the sidelines. And that could spark a major boom in stocks. Retail investors aren't alone, though. Big-time fund managers are underweight the stock market, too... We can best see it in Bank of America's (BAC) Global Fund Manager Survey. Each month, it asks hundreds of fund managers all kinds of questions about the market... like if they're bullish on stocks or if they expect a recession. The beauty of this survey is that we get to see what these fund managers expect as a whole. And if they're all leaning one way, it's worth paying attention. Earlier this month, the survey polled 222 professionals who oversee $616 billion in assets. Again, these are the "pros." So on an individual level, you'd generally be wise to listen to them. But when they're all making the same bet, history shows you might want to think twice about doing the same. The latest survey reports that a net zero percent of fund managers expect stronger economic growth in the near future, marking the lowest level since last year. This stands in stark contrast to the 78% figure we saw this February. We're now on the opposite end of the spectrum. Fund managers are pessimistic about the future of the economy. They're certainly not ready for a stock market rally. The Great Depression is a perfect example of why this is so important. Stocks bottom when investors are least prepared. And it can happen even if tough times lie ahead for the economy. Remember, times were terrible for years after stocks found a bottom in 1932. But since everyone was on the sidelines, stocks could rally. We're in a similar position today. It might feel like the smart move is to sit in cash. But that's what everyone else is doing... And it's paving the way for big potential upside. Good investing, Brett Eversole --------------------------------------------------------------- Editor's note: Hiding your money on the sidelines won't get you anywhere in today's market. That's why Brett recently teamed up with The McCall Report editor Matt McCall for an urgent briefing to share their latest bull market prediction... They believe they've pinpointed the next group of stocks set up to rally. And they say that if you start acting now, this could turn out to be the biggest moneymaking opportunity of the past 30 years. [Watch the full replay here](... --------------------------------------------------------------- Recommended Link: # [The No. 1 AI Stock of 2023 (Not Nvidia)]( It's not Nvidia, Meta Platforms, Alphabet, or Amazon. But thanks to a recent major deal, an under-the-radar stock could become the No. 1 winner of the 2023 AI boom. "This company just teamed up with one of the biggest power players in the AI industry, yet you can still buy it for just one-twelfth the price of Nvidia. The time to buy is NOW," says Marc Chaikin. [Click here for the name and ticker](. --------------------------------------------------------------- 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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