The Year I Didn't Buy Stocks

In today's Masters Series, adapted from the September 29 issue of the free Altimetry Daily Authority e-letter, Rob compares today's market with the market preceding the 2008 financial crisis... details how current market conditions signal that a slew of buying opportunities is poised to open in the credit market... and talks about how investors can capitalize on this unique setup... [Stansberry Research Logo] Delivering World-Class Financial Research Since 1999 [Stansberry Master Series] Editor's note: Don't miss out on this rare setup... Investors have been flooding into stocks throughout 2023 after hiding their money on the sidelines amid last year's bear market. But according to Rob Spivey – director of research for our corporate affiliate Altimetry – history shows bonds offer much safer investments than stocks. That's why Rob stresses it's crucial for investors to understand why focusing all their efforts on stocks can cause them to miss out on huge gains. In today's Masters Series, adapted from the September 29 issue of the free Altimetry Daily Authority e-letter, Rob compares today's market with the market preceding the 2008 financial crisis... details how current market conditions signal that a slew of buying opportunities is poised to open in the credit market... and talks about how investors can capitalize on this unique setup... --------------------------------------------------------------- The Year I Didn't Buy Stocks By Rob Spivey, director of research, Altimetry The world was burning... and my portfolio manager looked like a kid in a candy store. In late 2008, I was working on the 16th floor of a hedge fund in New York City. My portfolio manager's office had a massive floor-to-ceiling window that looked over New York harbor, from Battery Park to the Statue of Liberty and onto Staten Island. Sometimes, he'd call me into his office and we'd watch thunderstorms roll in from New Jersey. You could see the rain running across the water from one side of the harbor to the other. But this time, the storm was coming from the opposite direction... just two blocks over and a little ways up the road from our offices, at the headquarters of the New York Stock Exchange. Another analyst and I walked into the portfolio manager's office. And as I sat down and looked out those massive windows, he declared we needed to make a massive pivot. Most of our time had been devoted to stocks thus far. But this approach just didn't look promising anymore... In late 2008, stocks were in freefall. Lehman Brothers had gone under and AIG was in need of rescue. The stock market was a sea of red for months. If memory serves me correctly, my portfolio manager had gotten a call from our broker at one of the big investment banks. They were desperate to move some high-yield bonds that no one was bidding on. That was enough to pique his interest. You don't top the list of the world's best money managers 16 times by missing massive opportunities when they fall in your lap. So he sent my fellow analyst and me into the bond market to take advantage of the opportunity. Since those days, I've come to learn setups like this only happen once or twice a decade... if that. And importantly, as I'll explain today, we're gearing up for a similar situation right now. From September 2008 to March 2009, it felt like there was no bottom in the stock market... The sky might as well have been falling for equity investors. And the bond market seized up, too... at first. In November 2008, the average high-yield ("junk") bond yielded 19.6%. The U.S. government was borrowing at 2.3% during the same time. Said another way, the market was betting that one out of every seven bonds would go bankrupt in the next five years. That hasn't happened in the past century – not even during the Great Depression. The Lehman crash kicked off the craziest 45 days for the financial markets in almost a century. It took a moment for bond investors to catch their breath. But once they did, they looked around... and saw paradise. The S&P 500 Index's average annual return has been a little less than 12% since its inception. Bond investors could now make almost twice as much. Better yet, unlike with stocks, their returns were legally guaranteed. When the hedge fund I was working at saw this amazing setup, we completely shifted our strategy... --------------------------------------------------------------- Recommended Link: [This Strategy Has an 87% Win Rate – Here's How to Use It]( The same ironclad "law" of finance that predicted 2008 says the next three years could be dangerous and painful for stockholders. But there's a "backdoor" strategy that could show you high-double-digit income and triple-digit gains right through this crisis. And now, a generational opportunity is beginning, where the upside could be extraordinary. [Full details here, in plain English](. --------------------------------------------------------------- We found bargains left and right... like a bond from health insurer Coventry Health that paid a 6.3% coupon and matured in 2014. The bond traded for $0.59 on the dollar in the midst of the crisis. It yielded around 19%. You were getting paid 11% per year from the coupon payment alone. As long as Coventry didn't go bankrupt, it was a guaranteed return equal to the S&P 500. This wasn't a fly-by-night, unregulated shadow bank whose funding had dried up... or a small oil and gas company battling plunging energy prices. It was a regulated health insurance business with plenty of capital and a reliable customer base. Coventry would have no issues making its interest payments and paying off its bonds. It had great asset backing if it ran into any problem. And yet, it was trading like a company with a 1-in-7 chance of going under. By 2012, the Coventry bond was trading well above par value... the original "face value" of the bond. Anyone who bought it at the height of the crisis more than doubled their money. That included our hedge fund. The Coventry bond was just one of many extraordinary opportunities during the 2008 financial crisis. And here's where it gets exciting... It wasn't a once-in-a-lifetime setup. In any recession, investors panic. They sell stocks and bonds blindly – both the ones that deserve it and those that don't. A credit-market setup like this happens once or twice a decade... And if you're patient, you can find incredible opportunities buried under the rubble. We're headed toward another recession. Interest rates are high, and the Federal Reserve is signaling it won't be ready to lower them for some time. Corporate defaults are rising. Consumers are struggling to make payments. Banks are making it harder to borrow... and many corporations will need to borrow soon. If they don't, they'll go bankrupt. The setup in stocks will get worse from here. But bond opportunities, like the one from Coventry Health in 2008, are already showing up. Investors who are willing to explore the world beyond stocks have a chance at healthy income streams and equity-like capital gains. Plus, as I mentioned, bondholders' returns are backed by legal protections. So those high returns come with much less risk and a higher degree of predictability than you'd find in stocks. I've been investing in and researching the credit market for a decade and a half... and it's clear to me that we're about to see one of the best bond-buying opportunities since the Great Recession. If you're worried about where the economy and the stock market are going – and based on the signals we're seeing, you should be – this is the No. 1 place to put your money today. Regards, Rob Spivey --------------------------------------------------------------- Editor's note: Smart investors won't panic about the coming collapse in the equity markets. They won't be pulling their money out of every investment, content to sit on the sidelines. And they won't let their portfolio be dragged down alongside all the people who didn't see this crisis coming... Instead, they'll be patiently waiting to pounce in the credit market. You can't afford to miss out on Rob's latest warning about this looming disaster – especially if you're holding stocks. [Learn more here](... --------------------------------------------------------------- Recommended Link: [New AI System Predicts Where Any Stock Will Be in 21 Days]( A $1 billion money manager is unveiling a new type of investing that could triple your portfolio by using an AI system that can predict where any stock will trade in 21 days – with 82% accuracy. It recently predicted Netflix within 7 cents! 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