Back to the bear market grind... A stiffening cocktail of uncertainty... What pro money managers are doing today... There is now an alternative... Looking at Mr. Market's prefrontal cortex... A healthy reminder...
 That was quick...
After a one-day respite from a sea of red returns, the tumble is back on. Yesterday's relief for stocks – with the major U.S. indexes up close to 2% – turned back into "pain" today, to use Federal Reserve Chair Jerome Powell's preferred word of choice lately... The benchmark S&P 500 Index reversed all of its gains a few seconds after today's open. So did the tech-heavy Nasdaq Composite Index, the small-cap Russell 2000 Index, and the good old Dow Jones Industrial Average... And the sell-off accelerated from there. Each of these major indexes finished down more than 2% today. The market is near its June lows and below short- and long-term technical trends, as you can see here via the S&P 500... On the bright side, congratulations are in order for Greg Diamond's Ten Stock Trader subscribers who made a roughly 25% gain in less than 24 hours by betting against small caps. Upon closing this trade this morning, Greg wrote to subscribers... The major indexes are testing the lows again for 2022. Do they break or is there another bounce soon? Perhaps we'll find out tomorrow. In the meantime, Greg was happy to tell folks to book generous profits on a down day in the markets. That's a nice alternative to letting conventional "buy and hold 60/40" advice eat away at a portfolio like inflation into a paycheck. Today, it's like a bunch of people realized the story of 2022 hasn't changed... The Bank of England just turned around and essentially bailed out overleveraged pension funds. It should be an oxymoron, but sadly, it isn't. The funds were selling long-term bonds to meet collateral calls, which was driving a weakening British pound even lower... As soon as the U.K. central bank stepped in with this "emergency" intervention, people in the markets immediately began speculating that the Federal Reserve would do the same at the first sign of trouble in the financial system... Thus, we saw a brief "relief" yesterday... That, in turn, would maybe give the rest of the world a break when it comes to the strength of the U.S. dollar, which is up 20% in a year. (If you haven't listened to Dan Ferris' recent interview with Brent Johnson, the guy who created the oft-quoted "dollar milkshake theory" that suggests why the dollar is getting stronger, now is a great time.) Indeed, the Fed might "pivot" – like the fictional Ross Geller in the hit sitcom Friends trying to bring a couch up a New York apartment-building staircase... But we're not there yet... As Alfonso Peccatiello, a regular guest of our editor-at-large Daniela Cambone and author of The Macro Compass newsletter, shared on Twitter today... For now, those wise folks at the Fed who helped create today's financial mess are still chanting in unison (via various public-speaking appearances this week)... Inflation at 2%! Inflation at 2%! We will do what it takes! At this point, most folks believe them. The Fed will try to do what it can to lower inflation, likely raising interest rates the rest of the year and maybe into 2023, until its benchmark lending rate for banks is higher than its read on inflation. If a recession happens as a result, so be it... That's the message right now... And amid a stiffening cocktail of global uncertainty... In Europe, the British pound has been crashing. The U.K.'s new prime minster seems defiant to move ahead with new tax-cut proposals that are fueling the recent currency crisis and fears of even higher inflation. At the same time, the war in Ukraine appears to be escalating to new, frightening levels. Natural gas is leaking from pipelines in the Baltic Sea, and we could see annexations of parts of Ukraine soon, and more economic sanctions on Russia. As global news service Reuters reported, officials from the State Department and U.S. Treasury told the Senate Foreign Relations Committee yesterday that Washington would enact future sanctions in the financial sector and technology used for energy production... Elizabeth Rosenberg, Treasury assistant secretary for terrorist financing and financial crimes, said... The largest source of hard currency that Russia has now is from energy sales. It's in energy where we must focus our attention in order to deny Russia that revenue. And James O'Brien, the State Department "head of sanctions coordination," warned that India, which has been buying more Russian oil than it did before Russia's invasion of Ukraine, should "reconsider where it is positioning itself geopolitically," Reuters reported. Today, the world got a dose of shocking inflation reality... Germany notched a new high inflation rate of 10%, the first time its consumer price index ("CPI") has reached double-digits since the creation of the euro. As our Stansberry NewsWire editor C. Scott Garliss shared with me in a note today... Because Germany is the largest contributor to euro-area [gross domestic product] at roughly 30%, this is stoking concerns the regional inflation outlook is growing even worse. The issues could force the European Central Bank to grow even more aggressive with interest rate hikes moving forward to combat rising prices... The change could cause the growth outlook to sink further. And to throw salt in the wound – as is the perverse way of financial markets – it was also reported today that weekly jobless claims in the U.S. decreased to their lowest level in five months. As we've said, a regular person would take less jobless claims as a good sign. Ostensibly, it means that people who want to work are able to. But this data point only means that the manipulators at the Fed have more reason to keep raising interest rates. It supports the idea that the economy is strong, even if real people are literally telling them to their faces that it isn't, as we reported on Monday. All in all, today took us back to the bear market grind. The dollar, as measured by the U.S. Dollar Index ("DXY"), was back up half a percent this morning, though it fell a little in the afternoon... bond yields continued climbing... and stocks were down again. Speaking of rising bond yields and a "higher for longer" interest-rate world, here is something to start thinking about... There is now an alternative... For years, many folks have said we've been in a "There Is No Alternative" – or "TINA" – environment, meaning there were no viable alternatives to stocks if you wanted a decent return on your money. A low-interest-rate, "easy money" market fueled ever-growing valuations... And the Fed being a major buyer in the Treasury market kept bond prices up and yields down. This year, these giant trends have reversed... and we're just starting to see the effects. Yesterday, we mentioned famed investor Stanley Druckenmiller's view on this. I want to share another take from venture capitalist Howard Lindzon, who I worked with briefly and who is still a mentor of mine from afar even if he doesn't know it. He wrote on his blog today... I have been droning on and on about the "valuation compression" in tech public markets and it is just now working its way down to seed investing which is great for my day job. For every other part of my investing life, the world mostly sucks right now. The U.S. dollar is screaming and the financial media will start banging the "currency war" drum soon. The $VIX is elevated now above 30 and the financial media loves this because "the higher the $VIX, the more clicks." You can get 4 percent in 1 year T-bills so I get the feeling there is no sense of urgency to "buy the dip." The Fed's normalization of interest rates is finally laying to rest the longest-running acronym in markets: TINA (There Is No Alternative)... Howard then pointed to a post by another market observer we've quoted here before, Compound Capital Advisors' Charlie Bilello. He started off by pointing out that FDIC-insured savings accounts are offering 3% interest for the first time in about 15 years. Bilello goes on... If you're able/willing to lock your money up a bit longer, the reward goes up to over 4% for 1, 2, and 3-year Treasury bills. Back in 2020 someone told me we would never see 4% yields on government bonds again because of the 3 D's (Debt, Deflation, Depression). Never say never in this business. Indeed, there is an alternative again. And it might take some getting used to... This transition to a higher-interest-rate world, as you might guess, isn't good for stocks that have enjoyed demand even at nosebleed returns. More precisely, a higher-interest-rate world is not as good for stocks... After all, if you are a U.K. pension fund or an institutional investor with a modest benchmark to hit and you can get a U.S. government-backed return of 4% over the next two years... would you risk that same allocation of dollars in stocks today? At the same time, if you think yields are going to keep rising, why would you buy a bond now if you can get it a few months later at a higher rate? As Scott, who worked on Wall Street for 20 years before joining Stansberry Research, wrote today in our free NewsWire, this scenario is playing out across the world. As he said... Money managers are voting with their feet... They're selling bonds and stocks on worries about the yield potential... and those institutional investors are trying to send a message to governments everywhere... The worst thing the British government can do right now is to spend even more money on trying to ignite growth. BOE Deputy Governor Dave Ramsden has already said it plans to turn around and sell the bonds it purchases to defend yields once markets cool down. That outcome could force interest rates even higher as money managers will likely hold out for attractive yields. Scott says this goes for the U.S. and German economies and policymakers, too. He continued... We've arrived at this point with soaring global inflation because too much was spent as a result of the pandemic. Yes, economic output was rescued from an abyss, but we have overstayed our welcome... Now, global central banks are having to deal with the fallout by tightening monetary policy and rising interest rates. And if countries continue to spend – which would further destroy the value of their sovereign currency – the problem is only going to grow worse... Rates will go higher and consumption will slow even more until something ultimately breaks. So, until big-money managers get a sense the message is being delivered, the near-term investing outcome will remain the same. Either central banks and governments act in a more coordinated and concise manner... or the global economy is going to experience much more pain. Not doing so will likely result in higher bond yields, a strengthening dollar, and falling stocks. From a fundamental stock-price analysis perspective, Treasury yields also often act as the "discount rate" when analyzing the present value of a business's future cash flows. You can think of it as "taking a cut off the top" of any expectations for future stock returns... You can probably see how the appeal of buying stocks and government bonds, if you are an investor and trader with a quarterly benchmark goal, isn't very high right now. Thus the 60/40 portfolio's failure as a strategy this year... What comes next... At the moment, we're taking things day by day – keeping an eye on our potential bottom indicators – while remembering our philosophies as long-term investors... But looking ahead just a bit, we're about to head into third-quarter earnings season, where the fundamentals of businesses, revenue growth (or decline), and future expectations will become front and center in Mr. Market's prefrontal cortex again. I expect dollar strength will be at least one theme of CEO and CFO commentary on calls with Wall Street analysts – along with talk about the uncertainties and influence of high inflation and the war... In other words, it's about to be another make-or-break time... and the major U.S. indexes are trading at their year-to-date lows. This is a good time to pay attention and prepare for more volatility... (And we haven't even mentioned midterm elections yet.) But let me leave you with this reminder... It's easy to get caught up in being right or wrong about what may or may not happen. But nobody has a crystal ball. And, as you know, editors and analysts at Stansberry Research often have differing views on where the market could go, which is healthy... But, to paraphrase some guidance from our founder Porter Stansberry, one of the things you want to be right about the most is something boring that often goes overlooked. It's fully within your control... your position sizing. Position sizing refers to how much money you put into one portfolio position or trade – which could end up being right or wrong on its own. If you're smart with your sizing and have an exit strategy, the losses won't hurt as much... and you can still enjoy the gains. This is why when our editors make a recommendation or introduce you to their investment advisory or trading service, they outline how much money they suggest allocating to a position, or how to think about fitting their recommendations into your portfolio. These instructions often get overlooked, but they are important and can make a huge difference in the returns you see over the long run. In fact, some studies have shown that position sizing has more influence on portfolio returns than the stocks people pick. Our colleague and DailyWealth Trader editor Chris Igou made this important point to his subscribers today. After sharing some data showing that this bear market won't last forever, he told his readers... We aren't out of the woods just yet. We will continue to be picky about what we go long on. Position sizing is still extremely important. A general rule is to never put more than 1% of your money at risk in any given position. We also recommend using stops to protect your downside risk. Another baseline rule is using a 25% stop. If the stock you buy closes 25% below where you bought it, sell immediately – no questions asked. Now, this particular advice is geared toward the type of trades Chris recommends in DailyWealth Trader, which tend to be shorter term in nature. But the general idea can apply to a long-term portfolio, too. The team behind our Stansberry Portfolio Solutions products, for instance, is also careful to manage risk throughout our model portfolio allocations to protect against significant losses from any single position. Like we said a few months ago, generally speaking, we don't suggest anyone put more than 5% of their portfolio into any one position. Doing this will limit the potential damage from any single holding, especially if you use trailing stops. And remember our note about the power of owning "low volatility" stocks from back in January. If you do any or all of these things, you'll be ahead of most other people in the markets at growing and protecting your wealth over the long run. | | | | Watch the Stansberry Conference Live Our annual Stansberry Conference is right around the corner. From October 24 to 26, our editors, special guest speakers, and many of our subscribers will gather at the Encore Boston Harbor resort for the 20th anniversary of our conference... If you're not able to make it to Boston, though, we have good news. You can be "in the room" and watch the presentations from the Stansberry Conference via our livestream – all from the comfort of your couch or office. Click here for more details and pricing... 
A livestream ticket also includes access to on-demand recordings of our speakers, which include familiar names like Steve Sjuggerud, Dr. David Eifrig, and Eric Wade... and guests such as NYU professor of marketing Scott Galloway and hedge-fund manager Hugh Hendry. | | | | |
| Recommended Links: | |  TODAY: 'A Severe Financial Crisis Is Underway' It doesn't matter if you have money in the markets right now or you're waiting on the sidelines. The short period we're about to enter could have the power to make – or destroy – fortunes. And what you do in the coming days could determine your wealth for the next decade. Don't get blindsided. See what's coming and how you need to prepare immediately, right here. | |
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New 52-week highs (as of 9/28/22): SPDR Bloomberg 1-3 Month T-Bill Fund (BIL). In today's mailbag, feedback on yesterday's Digest, which featured an analogy between cheesesteaks and bear markets "wit or witout" a recession... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com. "Funny, the analogy to the Philly cheesesteak. My friends, accounting clients from England, were here this weekend. He is experiencing cash flow issues because he is paying for inventory with USD and selling product in the U.S. for GBP. The funniest part is that he ordered a Philly cheesesteak at a restaurant without the cheese!" – Paid-up subscriber Tim L. Corey McLaughlin comment: Tim, I'm glad you (and hopefully a few others) could appreciate the analogy... I was once gently admonished by a former boss for even thinking about getting a cheesesteak without Whiz and melted American cheese instead... All the best, Corey McLaughlin
Baltimore, Maryland
September 29, 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 | 861.7% | Retirement Millionaire | Doc | ADP
Automatic Data | 10/09/08 | 821.2% | Extreme Value | Ferris | MSFT
Microsoft | 02/10/12 | 739.2% | Stansberry's Investment Advisory | Porter | HSY
Hershey | 12/07/07 | 538.9% | Stansberry's Investment Advisory | Porter | ETH/USD
Ethereum | 02/21/20 | 487.4% | Stansberry Innovations Report | Wade | AFG
American Financial | 10/12/12 | 397.0% | Stansberry's Investment Advisory | Porter | BRK.B
Berkshire Hathaway | 04/01/09 | 381.9% | Retirement Millionaire | Doc | WRB
W.R. Berkley | 03/16/12 | 352.1% | Stansberry's Investment Advisory | Porter | NTLA
Intellia Therapeutics | 12/19/19 | 291.6% | Stansberry Innovations Report | Engel | TTD
The Trade Desk | 10/17/19 | 288.4% | Stansberry Innovations Report | Engel | 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 | | 2 | Retirement Millionaire | Doc | | 1 | Extreme Value | Ferris | | 4 | Stansberry's Investment Advisory | Porter | | 3 | Stansberry Innovations Report | Engel/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 | 1,159.6% | Crypto Capital | Wade | ONE-USD
Harmony | 12/16/19 | 1,159.4% | Crypto Capital | Wade | POLY/USD
Polymath | 05/19/20 | 1,090.9% | Crypto Capital | Wade | MATIC/USD
Polygon | 02/25/21 | 821.9% | Crypto Capital | Wade | BTC/USD
Bitcoin | 11/27/18 | 416.5% | 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%. | 
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