Doc Was Born to Tell This Story

The world in one chart... Stocks reach a key 'inflection point'... Enjoy the relief, but don't be fooled... A retirement 'shock' is coming... Doc was born to tell this story... Mailbag: More on Twitter vs. Elon Musk...

Editor's note: Our colleague Dan Ferris is on the road at an investing conference in Colorado, so he isn't writing this week. But rest assured... he'll be back in his regular slot here next Friday.

For now, I (Corey McLaughlin) hope you'll enjoy more of our "regular" Digest fare. Today's essay includes analysis from Ten Stock Trader editor Greg Diamond, as well as critical details about a big prediction coming soon from our colleague Dr. David "Doc" Eifrig.

Let's get started...

We'll begin with a look at the world in one chart...

Specifically, we're talking about the Global Dow Index.

In short, this index is a barometer of price action from 150 of the world's bluest of blue-chip stocks. So ultimately, it helps us see the true global trend in stocks.

A little more than 40% of the stocks in the index are U.S.-based businesses – like Apple (AAPL), McDonald's (MCD), and Disney (DIS). The rest of the holdings come from elsewhere – like French bank BNP Paribas, telecom company China Mobile, and Japan's Nippon Steel.

That's important because inflation – the biggest narrative in the market today – is a worldwide issue. It isn't just happening here in the U.S.

With that in mind, when we think about where stock prices could be headed, it's worth zooming out as far as we can go. That's especially true during what has been a confusing time for many people who follow the markets.

Our friend and Ten Stock Trader editor Greg Diamond – who correctly called the market top earlier this year and is eyeing the next move in the markets today – thinks so, too...

After spending much of last night looking over various long-term technical charts, Greg shared the following one with his subscribers this morning. Take a look...

This is a weekly chart of the Global Dow Index going back to the start of 2018. It includes a pair of simple technical indicators of the appropriate short- and long-term trends – a 50-week moving average (50-WMA) and 200-week moving average (200-WMA).

WMAs are similar to daily moving averages, except each data point represents a week and allows us to look at longer-term behavior.

You'll see that the Global Dow Index recently reached a notable level. In short, prices have fallen near its 200-WMA. And as Greg explained to his subscribers...

I don't just look at one thing to determine a move. But you can see how in the past, this moving average is an important one to monitor. Back in 2019, it marked a low. And during the crash of 2020, it marked short-term support and then resistance...

Ultimately, Greg said, during the COVID-19 panic and ensuing market rebound, the Global Dow Index hovered around its 200-WMA and eventually broke out. Today, additional technical indicators suggest "oversold" levels in the index as well. So right now, Greg says...

At a minimum, this moving average is acting as a short-term inflection point.

When we think about how stocks have acted lately, this point hits us as correct...

The U.S. benchmark S&P 500 Index, for example, has traded sideways since its last big leg down in early June. And all the major U.S. indexes were up between 1.8% and 2.2% today.

But another potentially volatile time is nearing...

• Another Federal Reserve meeting is coming later this month.

• Second-quarter gross domestic product ("GDP") numbers will be released the same week.

• Earnings season continues.

• And "peak inflation" keeps going higher.

Of course, the question on a lot of folks' minds is, 'Where do stocks go next?'

Everyone with at least some interest in the market is currently wondering...

Have the markets hit bottom? Or is this the start of a longer bear market?

If anyone tells you they know with 100% certainty, they're either misguided or lying.

We all crave certainty. But when a big question is at hand... sometimes the best answer is to just look at the evidence in front of you and do what you can to prepare accordingly for all possible outcomes. (Hmm... maybe Dan is writing this week after all.)

As Greg wrote to his Ten Stock Trader subscribers today, everything happening right now is happening in the context of a bear market. With the leading stocks around the world resting on a key support level, we could be on the brink of another strong "relief rally"...

In the short term, Greg is eyeing this setup as an opportunity to actually recommend bullish trades for the first time in a while. But over the longer term, keep in mind that the overall trend is still down... So enjoy the relief if it comes, but don't be fooled by it.

As I wrote on Monday, we might see a few more relief rallies before we finally put the bear market behind us.

Moving on to more about Dr. David 'Doc' Eifrig's big prediction...

A few weeks ago, some of our colleagues were going back and forth on an e-mail thread that took a few different-yet-related (and entertaining) turns...

It started with a discussion about famed investor Howard Marks saying it was the right time to buy bargains in the market and an interview in which he said, "Everything we deal in is significantly cheaper than it was six or 12 months ago."

Somehow, the discussion turned to the retail market. More specifically, our colleagues started talking about how some companies are turning away returns from customers because they don't want to deal with the inventory and supply-chain headaches.

So instead, stores and e-retailers are refunding the money and letting folks keep the stuff. That's when the question was raised...

What does this mean about the economy today?

Some anecdotes and jokes were shared. Then, Doc chimed in...

Guys, that's been going on for several years... Depending on the cost for shipping and the cost of the product, many people don't make you return stuff on Amazon.

Of course, Doc knew more about this subject than we did. A discussion or topic is rarely covered among our editors – or anywhere – in which he doesn't have some kind of valuable insight to share.

In this case, it was just a simple observation of a trend that might appear to be new... but really isn't.

The point is, as I've learned since I joined the Stansberry Research staff a few years ago, Doc calls things as he sees them... and you, our dear subscribers, are much better off for it.

This time last year, Doc delivered his 'retirement wake-up call'...

Essentially, he explained that stocks were more overvalued than they've been over much of the previous 150 years. And related to that, he said that over the next decade, they're unlikely to deliver the type of returns people have come to expect.

Doc also shared a warning about bonds that we didn't see anywhere else... With inflation running so high (yes, this was a year ago, but the numbers were already concerning), he said folks shouldn't expect "safe" government bonds to protect a portfolio if stocks sold off.

In other words, Doc warned that the conventional "60/40" stock-bond portfolio – used in millions of retirement accounts – was about to be in big trouble...

As an alternative, Doc and his research team conceived their Intelligent Retirement model last summer. This proprietary model considers investments in gold, real estate, and cash allocations in addition to stocks and bonds. And it's off to a great start...

Over the past 12 months through June, the 60/40 portfolio is down more than 10%. While the Intelligent Retirement model is about flat over that span, it has beaten the 60/40 portfolio by 12 percentage points. That's significant outperformance in this volatile market.

As Doc and his team shared in their June issue of Income Intelligence...

I started to say, "That's astonishing." But in reality, these results are in line with the back-tested results Doc and his team found before launching this allocation model last year.

As I shared in the July 1, 2021 Digest...

If you would've put $100,000 into a 60/40 portfolio in 1973, it would've grown to more than $7.5 million today. That's pretty good, but you also would've experienced drawdowns as high as 35%.

With this new approach, $100,000 in 1973 would've turned into $18 million... And get this, you never would've experienced a drawdown of more than 12%. It's more reward and lower risk at the same time.

I'm not sure Doc and his team have gotten enough credit for devising this portfolio model. It has held up through the first six months of the year unlike any other allocation we've heard about. So kudos to Doc... and to subscribers who've followed his lead.

Existing Income Intelligence subscribers and Stansberry Alliance members can find the latest quarterly allocation recommendation here. And they can get the full details about how the model works in the Intelligent Retirement Handbook.

That brings us to Doc's current warning...

In short, he believes we're on the verge of "the biggest shock to U.S. retirement" in his entire life.

As I mentioned yesterday, Doc says this story will be bigger than anything else in the past 40 years. It isn't primarily about inflation... the downturn in the markets... or who gets elected to Congress this year or to the presidency in 2024.

It's bigger. And everyone will be talking about it soon.

Now, anyone who follows Doc's work knows he doesn't like to make predictions just for the sake of it. He jokes that the only thing he predicts are volcano eruptions... and that when it comes to the markets, he's not bullish or bearish. Rather, he's a "realist."

But as Doc wrote recently in his free Health & Wealth Bulletin daily e-letter, when he finds a compelling idea to share, he doesn't hesitate either. From Doc...

From time to time, when I see something so enticing and so obvious to me, I can't help it but go public.

Today is one of those days.

Much like his warning about the trouble with the 60/40 portfolio last year... and another call in 2017 about home prices going up in the years ahead... Doc is "all in" on this prediction.

That's in part because, Doc says, it's the story he was born to tell...

He describes this prediction as a culmination of his life's work – which has included time working as a trader for Goldman Sachs (GS), becoming a board-eligible eye surgeon, and spending time as a businessman in addition to sharing his knowledge with Stansberry Research subscribers.

And Doc wants to make sure as many people as possible hear what he has to say. So rather than giving away everything here in today's Digest, we invite you to listen in – for free – to a brand-new presentation. That way, you can hear the message directly from him.

On Tuesday, July 19, at 10 a.m. Eastern time, Doc will explain exactly what's going on... how to prepare for it... and how to take advantage of this story for the chance to see 1,000%-plus gains, in some cases.

Without giving away too much, I can tell you that what Doc's going to talk about is really an opportunity as much as it is a warning. As Doc wrote in the Health & Wealth Bulletin on Wednesday...

There is a big and broad part of the market that is ripe for investment. Most folks tend to ignore this sector. And for the life of me, I can't understand why.

It's a big mistake.

I'll share more in the days to come. But trust me, if your portfolio has been hit hard over the past few months like the majority of investors, this is an opportunity you do not want to miss.

We're pretty excited about this idea around our Stansberry Research offices.

And again, Doc will explain all the details to everyone who's interested in just a few days. Don't miss his new presentation this coming Tuesday, July 19, at 10 a.m. Eastern time...

It's totally free. We just ask that you sign up in advance to make sure you don't miss a second. You can do that right here.

Doc's Beard Watch

Speaking of Doc, his "playoff beard" keeps growing...

This month, Doc closed out two more trades for profits in his Retirement Trader newsletter. Specifically, he closed trades on Apple for annualized gains of more than 25%. His win streak is up to 120 trades in a row... and as you can see, his beard grew even longer.

Remember, Doc isn't thinking about cutting his beard until the streak is over.

It's remarkable when you consider we're in a down market and Apple's share price fell from the time Doc recommended these trades. And yet, his subscribers made money. Selling options like Doc does in Retirement Trader allows you to make money even if stocks fall...

It's the ideal strategy to use when folks are afraid, like they are today. And it's one way to navigate a down market. Click here to learn more if you're interested in putting this strategy to work today in your own portfolio and getting on board with Doc's next winner.

New 52-week highs (as of 7/14/22): None.

In today's mailbag, feedback on yesterday's Digest, in which we mentioned Empire Financial Research founder Whitney Tilson's thoughts on Twitter's lawsuit against Elon Musk. We also received a few thoughts on the mainstream financial media. Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.

"With respect to Mr. Tilson's comment about Twitter and Elon Musk, his comments sound like sour grapes. 'Musk has been conditioned to think he's above the law, but he's about to get a massive, rude, expensive awakening.'

"I don't deny Musk has sometimes conducted himself in questionable ways, but two things Mr. Tilson doesn't mention is (1) the genuinely amazing accomplishments he's pulled off with his several ventures/companies and (2) Twitter's (potentially fraudulent – at minimum misleading) actions and statements in failing to provide accurate information which is certainly material to the sale of any business, i.e., the number and value of user/customer accounts." – Paid-up subscriber Theron M.

"Your and Whitney Tilson's explanation was the clearest explanation I've seen regarding Musk's obligation to purchase Twitter at $44B, but it still leaves one key point unanswered. Does the contract read that Musk can either purchase for $44B, not negotiable, or walk away for a break-up fee of $1B? A judge can force Musk to live up to the contract, but how can he force the purchase? Paying the $1B break-up fee and walking away is living up to the contract, isn't it? If the purchase can be forced, what is the purpose or usefulness of a break-up fee if Musk can't break-up the purchase by paying the fee?" – Paid-up subscriber Wiley C.

Corey McLaughlin comment: I'm not a lawyer, but these seem like reasonable and appropriate questions to ask. My sense is that this saga could end up being a long legal battle with a large number of billable hours on both sides – as long as it's worth it, at least.

Today, a judge set an initial hearing for July 19 to consider a request for a September trial featuring the world's richest person and one of its most famous social media platforms.

Meanwhile, our colleague and Stansberry Venture Technology editor Dave Lashmet – another guy with a wealth of knowledge – sent us some thoughts on this story last night. And as you'll see, Wiley, he agrees with you. As Dave told us...

The deal won't go through because the high-tech stock market bubble popped, lowering the fair value of Twitter, and also of Tesla.

Instead, the $1 billion break-up fee is the card Musk can play. That's his maximum to walk away...

Some experts in contract law might disagree. But it's going to be argued in court, and I can think of a billion reasons why Musk will get the top lawyers.

Whatever the initial adjudication, [there will be] appeals and then re-appeals to the U.S. Supreme Court. All this takes time, and during that time Twitter gets nothing.

Arguing that Twitter is in legal breach of its [U.S. Securities and Exchange Commission] reporting responsibilities and that Twitter is lying to its advertisers is Musk's way to whittle this billion down.

Twitter doesn't want Musk as its CEO, either... Thus, the longer they take to settle, the more damage he will do to Twitter's staff – which is just as painful as the court of public opinion.

So, he will walk away for around $500 million. His lawyers will get a percentage of any savings vs. the billion owed. And Twitter's board gets around $500 million in free publicity.

"I had a good laugh Wednesday watching the noon hour broadcast on CNBC with them discussing the 9.1% June inflation number. First there was Jim Cramer of Mad Money – aka Mr. Permabull – hyperventilating and trying to put a bug in [Fed Chairman] Jerome Powell's ear that even though the inflation number was higher than expected, you don't have to raise rates a full 1%... 0.75% will be good enough. LOL...

"Next, they were talking to Professor Jeremy Siegel of the Univ. of Pa. Wharton School, trying to get him to agree with them that 'maybe just maybe this is the peak inflation we've been looking for and that now the next few months the numbers will be a little lower. And then, maybe just maybe we can start investing in stocks in the fall of this year.'

"Judging by the look on Prof. Siegel's face, it didn't look like he agreed with that scenario. But he begrudgingly said there was a possibility that could happen.

"Being a religious reader of the Digest, I know these guys at CNBC are pipe dreaming." – Flex Alliance member Kenneth S.

McLaughlin comment: Thanks for the report, Ken. You hit on a few of the reasons why, if we do watch anything on CNBC (which is rare), it's mostly to see what the mainstream media is saying. And then, we can use that as an indicator itself to make our own decisions.

All the best,

Corey McLaughlin
Baltimore, Maryland
July 15, 2022