Now Is Not the Time for Risk-Taking

In today's Masters Series, adapted from the February 2 issue of the free Altimetry Daily Authority e-letter, Joel talks about today's murky inflation outlook... explains why you should be concerned about ongoing volatility as we navigate 2024... and details how investors should approach this heightened uncertainty moving forward... [Stansberry Research Logo] Delivering World-Class Financial Research Since 1999 [Stansberry Master Series] Editor's note: It's impossible to predict what will happen next in the markets... That's why it's crucial to make sure you're prepared for as many outcomes as possible. And according to Joel Litman – chief investment strategist for our corporate affiliate Altimetry – a key way to achieve this is by avoiding the urge to chase short-term profits right now... But in order to ensure you're prepared for what's to come with stocks, you must also understand why now isn't the time to short the market... and where stocks are likely to go from here. In today's Masters Series, adapted from the February 2 issue of the free Altimetry Daily Authority e-letter, Joel talks about today's murky inflation outlook... explains why you should be concerned about ongoing volatility as we navigate 2024... and details how investors should approach this heightened uncertainty moving forward... --------------------------------------------------------------- Now Is Not the Time for Risk-Taking By Joel Litman, chief investment strategist, Altimetry Ask three different people how inflation is doing, and you'll get three different answers... It all depends on where you look. Some folks have felt more hopeful recently. The Federal Reserve's most powerful tool for curbing inflation is raising interest rates. And it hasn't hiked rates since July... including at its first meeting of 2024 two weeks ago. But despite that hopeful sign, 2023 ended on a bad note. U.S. inflation hit 3.4% in December, which was a bit more than the 3.2% everyone was expecting. It was also a jump from November's 3.1%. And if we leave out volatile food and energy costs, inflation was at 3.9%. Those numbers are bad news for the crowd that thought a "soft landing" was a guarantee. Volatility should be the No. 1 concern for investors in 2024. So today, I'll discuss how you should approach the market during these unpredictable times. The folks in charge at the Fed have made it clear... They don't intend to take their foot off the gas until inflation is under control. "Control" is the opposite of what we saw in December. With prices starting to creep up again, the Fed's work is far from over. Many investors were hoping for interest-rate cuts as soon as March. But with inflation on the rise again, the central bank could delay that timeline. We may be looking at weeks, or even months, of uncertainty. All that uncertainty is what makes the current investing climate so tricky. Nobody is sure what's going to happen in the coming months. Setups like these are some of the most dangerous times to buy into the market... and to leave risky investments in place. And it's not just uncertainty that's adding risk to today's market. Even in 2020, when COVID-19 had investors heading for the hills, companies were in way better shape. We can see this through the Credit Cash Flow Prime ("CCFP") analysis... --------------------------------------------------------------- Recommended Links: [MUST-SEE: Bad Omen for 1 in 3 U.S. Stocks?]( One man used a set of proprietary data to predict the 2008, 2020, and 2022 crashes. Now, as market optimism soars, he's stepping forward with a new warning: "Most Americans can't see the looming dangers in the market right now. There's a DANGEROUS pattern occurring in a third of public companies – [and your portfolio is likely at risk]( --------------------------------------------------------------- ['This Is How I'd Invest $1 Million Today']( Legendary investor Whitney Tilson just posted a new portfolio of stock picks. He isn't buying the Magnificent Seven... or putting an equal amount of cash into each. Instead, he's using the Monte Carlo Method to see which of 4,817 stocks could double your money. [Click here for the full details](. --------------------------------------------------------------- Deep credit research gives us a more accurate sense of the market's overall health. Our macro CCFP takes the Uniform cash flows and cash reserves for U.S. companies outside the banking and real estate sectors and compares them with their annual obligations. The chart below shows the aggregate CCFP for the S&P 1000 Index, which tracks 1,000 small- and mid-cap companies in the U.S... the part of the market that's more likely to struggle during an economic downturn. Specifically, it shows S&P 1000 companies with debt outstanding as of April 2020 – back when corporate America was still in good shape. The blue dots represent the total cash in aggregate, while the blue line represents cash flow in relation to the obligations. Here's what we were looking at back then... As you can see, in 2020, cash flows exceeded all obligations. Said another way, corporate America had plenty of cash to keep the lights on... and then some. Debt started to rise last year. And as we enter 2024, cash flows no longer cover all obligations. I wouldn't blame you for looking at that chart... and assuming it's time to short the market. However, as I said, this is a tricky environment. When the market is having a complete meltdown – like it did during the early stages of the Great Recession – it's easy to bet on an imminent plunge. The toughest setups are like today, when there are signs in both directions. Credit risk is high. We've been vocal about a looming chain reaction of bankruptcies... which could plunge us into a recession. Until that happens, though, we can't say it's time to short the market. While January's inflation number was higher than expected... if this month's figure is better, the market could bounce back in the short term. One thing is for sure... Volatility will drive the market for the foreseeable future. Wishing you love, joy, and peace, Joel --------------------------------------------------------------- Editor's note: This ongoing volatility isn't the only issue you need to monitor throughout 2024. You see, Joel sees a trend developing in the markets that could send stocks crashing... That's why he recently teamed up with Dr. David Eifrig for an online presentation to talk about how this looming crisis could open the door for huge gains in a specific group of stocks moving forward – creating the opportunity for triple-digit upside. [Learn more here](... 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. Or e-mail info@stansberryresearch.com. Please note: The law prohibits us from giving personalized financial advice. © 2024 Stansberry Research. All rights reserved. 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