How to Guarantee You'll Get It 'Half Right'
A new benefit for our Alliance Partners... Unscripted and unedited views on the market... How to guarantee you'll get it 'half right'... The noisy short term... Where does the market go from here?... The road to recovery...
We begin today with a special note for our Alliance Partners...
We want to make sure you don't miss your latest member benefit. It's something that many of you have asked for in the past. And now, we're delivering it...
In case you missed the e-mail yesterday, we've published the inaugural edition of what we're calling the "Alliance Town Hall" video series. If you're an Alliance Partner, you can watch the first episode for no additional charge right here.
Hosted by our colleague Jessica Stone and Director of Research Austin Root, these videos have been designed to feature insightful, big-picture roundtable discussions with several of our editors... In general, they'll talk about what's going on in the market at any given time.
Obviously, there's a lot happening today... The good old days of the longest bull market in history have been replaced by the seemingly perpetual uncertainty of the COVID-19 era. As Austin puts it near the start of the Town Hall video...
The economic backdrop now is absolutely terrible...
We're going to have more than 20% unemployment. The stat recently listed by the government was that more than 40% of folks with salaries of $40,000 or less have already lost their jobs. We're going to see GDP of a decline of greater than 30% in the second quarter...
And yet, the market powers higher.
According to Austin, two big catalysts are causing this behavior right now – better-than-doomsday-scenario data on COVID-19, and the unprecedented money-printing and lending programs that the Federal Reserve has introduced into the economy...
So long as it feels like things are getting "less bad," and that we're getting closer to opening, people are OK looking through what will be a really bad 2020.
We've covered many of the twists and turns in the market over the past several months here in the Digest and in our free Stansberry NewsWire. Plus, our editors have continuously provided updates for their subscribers – including the best ways to profit from this situation.
But we know a lot of you have questions. And it's hard to stitch everything that everyone is saying together to understand what may be best for your needs so you can make the appropriate decisions for yourself and your portfolio.
So in these Town Hall videos, Austin, Jessica, and our team of editors and analysts will step back from the day-to-day movements, weekly updates, and monthly issues to share insight on how we got to where we are in the markets today, what they expect will come next, and how they recommend you position your portfolio accordingly. As Austin says in the video...
Our promise at Stansberry Research has always been to provide you the research that we would want if our roles were reversed, and this just the kind of event that we'd want... a grouping of our top editors that are sharing their unscripted, unedited views on the market.
I (Corey McLaughlin) just finished watching the first edition myself...
And I found it incredibly worthwhile, informative, and entertaining.
Our first edition features Stansberry NewsWire editor C. Scott Garliss, Stansberry's Credit Opportunities editor Mike DiBiase, Gold Stock Analyst editor John Doody, and Stansberry's Big Trade editor Bill McGilton.
They each have updates on why their strategies can help you to protect and supplement any long-term strategy. I've jotted several notes down from the video in my investing notebook.
In fairness to Alliance Partners, we won't share the details here. But we do want to relay at least one timeless piece of advice from John...
He took a breather from pounding the table on gold going to $3,000 and above to deliver some sage investing advice for people who are undecided on if or how much to invest in a particular position, given the unknowns of when the coronavirus pandemic will end. Here's what John suggests...
Do half. Buy half of what you would intend to spend or commit. That way, you'll be at least half-right. If it goes down, you can buy more. If it goes up, you're riding the half that you've already invested.
I think investors sometimes think they've got to spend it all right now. That's probably a mistake. Professional investors are going to add to winning positions and generally either pare losing positions or "average down."
The thought [behind "doing half"] is you have money in reserve if things either go right or wrong.
Again, we urge all Alliance Partners to take the time to check out our first Alliance Town Hall right here. You'll receive a ton more insight, information, and wisdom from our experts. We hope you enjoy it... Please let us know what you think or what we can do better with an e-mail to feedback@stansberryresearch.com.
And if you're not already an Alliance Partner and are interested in learning more, you can give our team a call at 888-261-2693, Monday through Friday, 9 a.m. to 5 p.m. Eastern time.
Now, as for that noisy short term...
For the shorter-term trader, the pertinent question today is... Where does the market go from here?
The benchmark S&P 500 Index is up 35% in the two months since its March 23 low, while "bad news" continues to arrive...
As regular Digest readers know, we believe it is useful – if not critical – to look at the "technical" indicators for some short-term guidance. It's what our resident traders like DailyWealth Trader co-editors Ben Morris and Drew McConnell and Ten Stock Trader editor Greg Diamond do every day.
As of late, they've been hedging their bets...
Call it the short-term trader's equivalent of John's "do half" idea.
Ben, Drew, and Greg see the potential for a continued push higher for the broader U.S. stock indexes, as well as a chance for a relatively small pullback over the next week or so.
In yesterday's DailyWealth Trader, Ben and Drew noted that the S&P 500 continues to push against a key "resistance" level in its long-term trend line, the 200-day moving average (200-DMA). We mentioned this key level in the May 14 Digest.
As Ben and Drew told DailyWealth Trader subscribers yesterday...
After such a big run higher, it would make sense for stocks to take a breather.
But based on what we've seen so far, we have no reason to expect a large or long-lasting pullback. More likely, stocks could drop 3% to 7%, then continue to climb.
They also noted that volatility, as measured by the CBOE Volatility Index ("VIX"), is down drastically from its historic March highs to below 30. However, it's still above average levels of "fear."
That makes sense, Ben and Drew say, considering the great unknowns associated with global central bank intervention in the economy today. (Will it be enough? What will be the unintended consequences?) As they wrote...
Volatility is typically considered to be high when the VIX is above 20. Over the five years from the start of 2015 through 2019, the VIX averaged 15.
So right now, volatility is about twice its normal levels. This aligns a lot more with our internal warnings than the recent price action does.
Higher-than-normal volatility means you need to expect the unexpected.
Greg sees a similar technical picture...
Sectors that have lagged over the past few months – like financials and transportation – have regained some losses as of late. That's an indicator of "sector rotation," and a good sign of a bull market, but Greg is remaining cautious...
In an update to Ten Stock Trader subscribers yesterday, he said he expects to see either "a small correction or the market simply [exploding] higher" next week, adding, "I plan on trading both scenarios."
In particular, Greg is keeping an eye on the small-cap Russell 2000 Index, which reflects the price action of what are considered "riskier" assets compared to, say, large-cap tech stocks.
If any pullback in the index holds its May 14 low, Greg believes a rally will follow. He detailed precisely why in a May 23 update, and told subscribers yesterday...
We have the setups and I'm going to give us some time in case there is a pullback to trade next week, but make no mistake about it, we could be looking at a major rally over the next few weeks.
As a reminder, you can get all of Greg's intraday market analysis for free right here.
Finally, we'll end today's Digest with one more note about 'what to do'...
If "doing half," as John suggests, isn't your thing, and you're interested in a more definitive bullish or bearish sign to show you the way, we suggest you check out what our friend and Empire Financial Research founder Whitney Tilson has going on at 8 p.m. Eastern time tonight.
In a special "Recovery Investing Event," Whitney will be joined by a guest who will explain how he has helped more than 50,000 real investors determine the perfect time to buy or sell any stock in the market. As Whitney wrote in his free daily e-letter earlier today...
Not only will you walk away with a clear picture of what to expect from the market in the coming months... But you'll also learn a special strategy of determining the exact day to buy back into all of your favorite stocks.
And as a bonus for showing up for the event, I'll be sharing the name and ticker symbol of the stock that should be at the top of your "buy" list right now.
This event is completely free to attend. And Whitney will share what he believes will happen next in the markets, too. He only asks that you reserve a spot in advance. Click here to do that right now.
How Brazil's Surging COVID Cases Impact Investors
Brazil is the latest country being hit in full force by the coronavirus. International editor Kim Iskyan shares how this is impacting commodities, currencies, and trade worldwide in this video with Jessica Stone.
Click here to watch this video. And remember to subscribe to our YouTube page so you can access more free video content as soon as we post it.
New 52-week highs (as of 5/27/20): BlackLine (BL), Cognex (CGNX), Dollar General (DG), GrowGeneration (GRWG), and Home Depot (HD).
In today's mailbag, feedback on our first-ever Alliance Town Hall... a response to a letter in yesterday's mailbag... and a few more Great Depression books to add to your summer reading list. Do you have a comment or question? As always, send it to feedback@stansberryresearch.com.
"Thank you for hosting the Town Hall this evening. My wife and I thoroughly enjoyed listening to your panel and hearing the different perspectives about the current market conditions and Jessica is exceptional in her role, too!
"The value of our Lifetime Membership continues to pay huge dividends. We have benefited so much from your service since we became members more than 15 years ago. We will make the Town Hall quarterly sessions a part of our routine going forward. We appreciate your efforts!" – Stansberry Alliance member John H.
"I was impressed to see a letter from one of the Roth family [in yesterday's Digest]. I have a copy of The Great Depression, A Diary. Quite moving reading. I like how Mr. Roth went back and made later comments entered when he had benefit of hindsight. Some as late as the 1970s, if I recall.
"One lesson I gleaned from it that Dan and Porter would agree with – cash is king. I was especially impressed where Mr. Roth detailed another Youngstown family who had cash, and was using it to buy savings passbooks from people who couldn't access their cash because banks were shut down, of course at a significant discount to face value.
"They then turned around and used those passbooks to take foreclosed properties off the banks hands, at still another discount. They did quite well. Sounds like the strategy of Credit Opportunities. Good investing & stay healthy." – Stansberry Alliance member Doug V.
Corey McLaughlin comment: Thanks so much for the note, Doug. We were very pleased to read Daniel Roth's letter in our inbox as well, and equally happy that we can connect folks over common interests like this one in the Digest.
"Stories and Recipes of the Great Depression is excellent. I greatly enjoyed the book, which is written by one author with comments from countless people and the 'make do' food and clothes they wore. An absolutely fascinating story. I love real stories more than any other. I will be reading all the suggestions." – Paid-up subscriber JoAnne R.
"The Creature of Jekyll Island. A true history of what really has happened since the creation of the Fed." – Paid-up subscriber John A.
All the best,
Corey McLaughlin
Baltimore, Maryland
May 28, 2020