The questions of the moment... The central problem investors face today... A familiar mantra... A robust approach from Stansberry Asset Management... The second-half playbook... Own what matters when it matters...
Editor's note: What really matters? When it comes to investing today – amid ongoing market volatility, war in the Middle East, and the emergence of generational technology like AI – it can often be challenging to know the best way to put money to work...
Today, I (Corey McLaughlin) am turning things over to Stansberry Asset Management ("SAM") Chief Investment Officer Austin Root to share his view... and detail how the folks at a professional money-management firm are thinking about things right now...
In this special guest essay, Austin begins by sharing a few questions he fielded recently from an AI and tech executive about the markets, then offers insight into SAM's "answers," including a mantra that should sound familiar to Digest readers...
At the end, Austin also shares how you can hear more about SAM's approach for the second half of 2026. We hope you enjoy...
Recently, a client e-mailed me (Austin Root) some of the most thought-provoking investing questions I've received in years...
It started simply enough...
"Even though I don't fully buy into the doom-and-gloom extremes... What happens to markets if AI really changes the economy?"
Keep in mind, this client is a senior executive at one of the most important artificial intelligence ("AI") and technology companies on the planet. This is someone helping build the future. Even he is wrestling with the same questions dogging so many investors.
He went on to ask, how do you position a portfolio to prepare for and profit from huge technological change in a world saddled with massive debts, persistent deficits, and expensive assets?
And he wanted to know how you can protect yourself from a major market drawdown and still participate in the market's rapid recoveries. He wrote...
On one hand, there's the 1999/2000 and 2008 type crashes, which took years and years to recover from. On the other there's the flash-crashes and rebounds of the last ~6 years, where a ~20%+ drop can occur and then a few months later we're fully recovered.
This tension captures the central problem investors face today. Many investors are still psychologically preparing based on the last crisis... while the market itself keeps behaving differently. And that creates a very difficult balancing act.
In responding to our client... I focused on two "mechanisms" we use at Stansberry Asset Management to pull off that balancing act. I want to share a version of my response with Stansberry Research readers because these mechanisms are vital tools for every investor trying to navigate today's volatile markets...
What matters most...
As our client referred to, you want to avoid drawdowns without permanently sidelining yourself when recoveries happen faster than anyone expects.
That's harder than it sounds. Many investors no longer know what they should be optimizing for...
- Maximum upside?
- Capital preservation?
- Inflation protection?
- AI disruption?
- Sturdy income?
They are simply unsure about what matters most. And that's why, when responding to this client, I started with an idea familiar to many Stansberry Research subscribers...
To start, we tend to be cautiously optimistic that the productivity gains from AI will more than offset the many displacements and disruptions that it will create. Eventually. But yes, it's hard to know when or exactly what will happen (and yes, high debt loads and excessive deficit spending up the ante and risk profile of the current market).
So that's why we like to say that we do our best to prepare rather than predict.
Why we prepare instead of predicting...
Regular Digest readers know that Stansberry Research's Dan Ferris may have been the first anywhere to champion this phrase.
And it captures an incredibly powerful idea. The distinction between preparation and prediction matters enormously.
Prediction is seductive. Prediction gives investors the illusion of certainty. It encourages us to believe we can forecast recessions, market tops, interest rates, technological winners, political outcomes, and economic turning points with precision.
But markets have a funny way of humiliating certainty. After all, who correctly predicted that during a war – with triple-digit oil prices, rising inflation, weak consumer confidence, and rising unemployment – gold would drop in price while stock indexes would repeatedly climb to new highs?
The future rarely unfolds exactly the way investors expect.
That's why we at SAM prepare for a wide range of outcomes.
I explained to our client that preparation "is the first mechanism to reduce large drawdowns in your portfolio" because "it matters what you own going into a potential market dislocation."
I put preparation into three buckets...
1) Security selection: At SAM, we want to own businesses we believe can survive and thrive through difficult environments: companies with durable franchises, healthy margins, pricing power, strong balance sheets, and management teams that allocate capital intelligently.
No business is immune to volatility. Nothing is. But truly high-quality businesses often emerge from difficult periods even stronger than before, taking market share from weaker competitors along the way.
2) Risk management: Don't assume diversification alone equals safety. Many portfolios appear diversified on the surface but are actually highly exposed to the same underlying risks. For example, speculative growth stocks, long-duration bonds, and highly indebted businesses can all suffer in periods of rising interest rates.
That's why we spend significant time monitoring not just sectors but also deeper risk factors like valuation, cyclicality, earnings quality, balance-sheet strength, and momentum.
3) Correlation reduction: This part is often overlooked by investors. In stressful markets, correlations between many assets tend to rise dramatically. Things that appeared diversified suddenly begin moving together. That's why we look for businesses whose drivers are different from the broader market's.
Look at financial exchanges. We love owning exchange businesses because they're regulated monopolies that tend to have more business when the world gets scary and volatile. Trading volumes rise. Activity increases. Fear itself can become good for business. Most of our exchanges are seeing record volumes in 2026.
As I explained, we're building portfolios that are resilient across a broad range of market forces. It's a form of active management that serves most investors far better than passively owning index funds, particularly in times of rising volatility and extreme concentration around just a few mega-cap tech companies.
Then we stay agile and humble...
We utilize a second "mechanism" at SAM as we seek to optimize risk-adjusted returns. It's one that too few professional investment managers employ. It requires a significant level of agility and humility.
In short, when the world changes, we need to be nimble and tactical to change our investment approach along with it. We do this in two main ways...
First, we are comfortable making large changes to the portfolios when we see the need.
In late 2021, we saw that inflation was ramping up and therefore the Federal Reserve would be raising rates. We elected to not own a single bond in any of our strategies for any client. (When interest rates rise, bonds with fixed coupons go down in value, especially ones that are longer duration.)
This was very different from the "set it and forget it" mentality of many investment managers.
Afterward, the "safe" broader bond index (Bloomberg Barclays Aggregate) lost more than 18% of its value in early 2022, and "sturdy" 30-year U.S. Treasurys lost more than half their value.
The other part of being nimble and tactical with your investing might be the most important... and least common. It involves marrying two types of investing that many folks consider disparate.
I'm talking about combining fundamental, qualitative investment research with technical, quantitative investment tools.
We start with the investments we love from a fundamental perspective and then utilize a set of quantitative risk-management tools to filter what is best to own right now.
A lot of data and analysis goes into this approach, but the short of it is simply this: We're seeking to own the right investments at the right time.
And after nearly three and a half years deploying this tactical, quantitative approach in the real world, we at SAM are absolutely thrilled with the results that it has delivered clients...
This approach not only protected clients from significant market drops in early 2025 (from the tariff tantrums) and 2026 (with the Iran conflict) but also had clients robustly participating in the faster-than-ever market recoveries that followed.
I want to tell you more about this...
And a week from today – on Wednesday, June 10 – our investment team at SAM is holding an event to do just that.
More broadly, we'll provide tangible answers to the burning question on all investors' minds as we move into the second half of the year:
What should investors focus on from here?
In addition, we'll walk through how we're interpreting the current environment, where we think consensus may still be incomplete, what risks and opportunities we're paying closest attention to, and how we're positioning portfolios for the second half of the year.
We'll also discuss many of the same themes raised by our client's thoughtful questions. We'll talk about:
- Preparing versus predicting
- Balancing risk and opportunity
- Navigating AI disruption
- And building portfolios designed to perform well across a wide range of market environments.
Click here to access this special event.
I look forward to seeing you there.
New 52-week highs (as of 6/2/26): ABB (ABBNY), Altius Minerals (ALS.TO), Applied Materials (AMAT), Advanced Micro Devices (AMD), ASML (ASML), Broadcom (AVGO), BHP (BHP), Alpha Architect 1-3 Month Box Fund (BOXX), Ciena (CIEN), Canadian National Railway (CNI), Cisco Systems (CSCO), iShares MSCI Emerging Markets ex China Fund (EMXC), Cambria Emerging Shareholder Yield Fund (EYLD), Freeport-McMoRan (FCX), Hewlett Packard Enterprise (HPE), iShares Convertible Bond Fund (ICVT), Marathon Petroleum (MPC), Cloudflare (NET), Nucor (NUE), Ormat Technologies (ORA), Invesco WilderHill Clean Energy Fund (PBW), Ryder System (R), ProShares Ultra Technology (ROM), ProShares Ultra S&P 500 (SSO), Taiwan Semiconductor Manufacturing (TSM), Twist Bioscience (TWST), and State Street SPDR S&P Semiconductor Fund (XSD).
In today's mailbag, someone wants to find Stansberry Research senior analyst Brett Eversole's "Melt Up Master Plan," which we've mentioned in recent weeks... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.
"Can you send me the 'melt up' master plan? Thanks." – Stansberry Alliance member Brian G.
Corey McLaughlin comment: Alliance members and Brett's True Wealth subscribers can find this special report in the subscribers' section of our website here... and we don't blame you for wanting to read it right now.
In the report, Brett explains that while you never know exactly what will spark a stock market boom, there are certain parts of the market that tend to take off higher than most in Melt Ups, and he shares two simple, effective recommendations to profit in your portfolio.
Warm regards,
Austin Root
Towson, Maryland
June 3, 2026
Disclosure: Stansberry Asset Management ("SAM") is a Registered Investment Adviser with the United States Securities and Exchange Commission. File number: 801-107061. Such registration does not imply any level of skill or training. Under no circumstances should this report or any information herein be construed as investment advice, or as an offer to sell or the solicitation of an offer to buy any securities or other financial instruments. For more information on SAM, please visit here.
Stansberry & Associates Investment Research, LLC ("Stansberry Research") is not a current client or investor of SAM. SAM provides cash compensation to Stansberry Research for Stansberry Research's advisory client solicitation services for the benefit of SAM. Material conflicts of interest may exist due to Stansberry Research's economic interest in soliciting clients for SAM. Certain Stansberry Research personnel may also have limited rights and interests relating to one or more parent entities of SAM.
For important information about Stansberry Research's relationship with SAM, click here.
