The Beauty of This Thing
An unscripted game show... Our Stansberry Conference wraps up... The beauty of this thing... On sentiment trading... Frances Haugen says TikTok will be worse than Facebook... Get access to the presentations...
Bull, bear, or B.S.?...
We wrapped up our annual two-day Stansberry Conference yesterday... But the event continued today for Alliance partners, who got exclusive access to additional panels, stock picks, and other presentations as part of their membership.
And while I can't share all of the details from "Alliance Day" to all readers, I (Corey McLaughlin) can give you a taste of the meeting, like we've done the past two days...
One of my favorite discussions today was an unscripted, game-show-style exercise from a panel of our most popular editors, who were asked to answer the question: "Bull, bear, or B.S.?"
Our Director of Research Matt Weinschenk was the host...
Sitting onstage next to Stansberry Research senior analyst Matt McCall, Extreme Value editor Dan Ferris, Retirement Millionaire editor Dr. David "Doc" Eifrig, and Crypto Capital editor Eric Wade, Matt ran through a list of 10 market items and let the guys have at it.
For example, Matt pointed to a stat highlighted by famed investor Stanley Druckenmiller. He has observed that whenever inflation is as high as it has been today – 8%, by official measures – things didn't turn around until the Federal Reserve raised interest rates even higher than inflation.
So, Matt asked our guys: Will that happen this time? And does this answer make you bullish, bearish, or is it B.S.?
Matt McCall called B.S., contending that the widely followed consumer price index ("CPI") measure appears to be rolling over and could come down to around 3% by summer... to which Dan replied, "That's a really nice story."
Dan – likely to the surprise of very few people in the audience at the Encore Boston Harbor hotel and resort – said Druckenmiller's ideas fell in line with his bearish stance. He said the Fed has done nothing to indicate it's going to stop raising rates just yet, a headwind for stocks.
Doc chimed in that the Fed gets things wrong all the time, then offered his take. Responding to Matt, Doc said, "It scares me a little bit that this guy [is] out and about traveling – and I have a little inkling you might be right."
And on it went from there...
The guys covered stock market valuations, WeWork co-founder Adam Neumann, and Cathie Wood's recent open letter to the Fed. On that topic, Doc quipped what could be the line of the day: "A letter to the Fed is like a letter to Santa Claus."
They talked more about the metaverse... and consumer sentiment data showing that folks are less concerned about their savings than they have been ("confusing" was the most popular answer to that item), energy stocks, and cryptocurrencies.
The point, as Doc said later...
The beauty of this thing is we don't have one view, one voice. We're trying to help people sort it out by listening and gathering information so it fits your construct...
One thing they all agreed on... the recent slowdown in the housing market is a bearish signal. Eric noted that we have to "pay the piper" for the era of real estate last year where 50 people would make offers on the same home.
If you missed the discussions at our two-day Stansberry Conference earlier this week, Stansberry Alliance members and those who've purchased access to our livestream package will have access to recordings starting next week (though only Alliance members can get access to today's Alliance meeting).
Click here for more information on buying our livestream package now.
I've shared highlights here. But if you want to get the best experience, other than being here in person, the best thing to do is to watch all of the presentations at your own pace.
It has been a busy three days...
Given the jampacked schedule, the depth and breadth of all the information covered here over the past three days make it nearly impossible to cover on the fly. (Check out our Day One and Day Two reports here and here.)
This morning, for instance, began with a talk from Jared Dillian, author of the Daily Dirtnap newsletter. He dished on why sentiment trading (based on anecdotes and observations, really) has prevented him from taking any serious losses in two-plus decades of trading.
And he shared what he thinks sentiment is saying today and offered his take on the Fed's potential next moves...
One of the best ways you can use sentiment is with the Federal Reserve. You can predict their every move by one simple framework. They always pursue the path of least embarrassment...
What the Fed cares about is losing face. All government decisions follow the path of least embarrassment, and you can trust me because I used to work for the government.
Dillian attended the U.S. Coast Guard Academy and served five years. Then he joined Lehman Brothers in 2001 and lost his job in the bank's 2008 bankruptcy. He said about the government...
If you screwed something up and you ended up on TV or in the newspaper, it was catastrophic. If you screwed something up and nobody found out about it, nobody cared.
When applying this concept of the central bank, Dillian observed...
Think about what the Fed has done in the last 12 months. It was embarrassed by rising inflation. It was embarrassed that inflation was not transitory. The Fed made a mistake of one type. It will never make the mistake of the same type ever again. It will make a mistake of a different type.
It will hike too much because the consequences of hiking too little and not bringing down inflation are too great. That's actually when they start losing their jobs. If you understand this about the Fed... you will be able to predict their every move.
Dillian believes the Fed will continue to hike rates "until the pain of recession exceeds the pain of inflation." Notably, he thinks we're about there... He told folks that U.S. stocks' lows earlier this month could have marked a bottom.
Then we switched gears and heard from Facebook 'whistleblower' Frances Haugen...
She explained her conclusion that artificial-intelligence ("AI") censorship simply "doesn't work." Haugen worked as a data engineer at four social media networks in her career.
Last fall, she went public as the person who disclosed roughly 22,000 pages of documents demonstrating that Facebook knew its products were harming children and hid those details from the Senate.
In her words today, she also said the company was actively aware it was pushing public discourse to extremes on both sides of the political spectrum. And Haugen also criticized Facebook for entrusting its content policing to AI...
The other thing that people think they know about me is that I'm pro-censorship... The reality is AI censorship is ineffective. It doesn't scale to those who need help the most... The reality is Facebook knows how to keep us safe without using censorship and they chose not to because it makes them more money.
Another thing that stood out to me was that Haugen said while the company now known as Meta Platforms (META) has its troubles, she said one of its rivals is "going to be substantially worse" for society.
Digest readers might remember that last week, we shared a guest essay from fellow Stansberry Conference presenter Scott Galloway in which he argued that TikTok – a wildly popular social media app for sharing videos – should be banned.
Based on her own expertise from working at Facebook and elsewhere, Haugen recounted her reaction to trying the TikTok app for the first time: "Well, this was designed by a totalitarian country." That's China, of course. She said...
While Facebook has ways of designing itself so it could be safe, TikTok is designed to only be safe if it is censored...
The reason things go rocketing up to virality, why random kids doing a funny dance gets 3 million views or 10 million views, is because TikTok designed such that every day they can cover maybe 80% of everything everyone in the world sees with maybe a few thousand videos.
And they do that because if they can condense the content into a small enough stream, they can literally have a human evaluate every video for compliance...
Haugen also offered advice to folks who might be worried that their kids or grandchildren are spending too much time on social media platforms. Talk to them, she said... about how these products are "designed to be compulsive."
Practically, they should understand why they need to have "rate limiters" on their phones. That means restrictions that cut off access to certain apps after someone has used them for a predetermined number of hours or length of time per day.
There's still more to come here...
Last night, we also heard from Colonel Jonathan Shaffner, who works at the Pentagon...
Shaffner – a friend and former student of Altimetry founder Joel Litman – offered an unvarnished take on what's happening with the war in Ukraine. It was a fascinating talk and one that our Matt McCall said made him "more bullish," given the weaknesses of the Russian military effort that Shaffner pointed out.
I'm planning to share more about that, and more from the Stansberry Conference and Alliance Meeting, in tomorrow's Digest. I will look to empty my notebook as best as I can, but as I said earlier, the best way to consume the ideas presented – if not in person – is via our livestream archives.
With that access, you'll have the ability to watch recordings for 60 days so you can take in all the information as many times as you want. If you're interested, click here for more details, including pricing information and to purchase access now. Again, though, only our Alliance members get access to today's speakers, and the video replays will be available starting next week.
Recessions Are Cyclical
On this episode of Making Money With Matt McCall, recorded at our conference in Boston, Matt sits down with Lakshman Achuthan, co-founder of the Economic Cycle Research Institute... They cover a lot of ground, including why Lakshman thinks a recession is coming...
Click here to watch this episode right now. And to catch all of Matt's shows and more videos and podcasts from the Stansberry Research team, be sure to visit our Stansberry Investor platform anytime.
New 52-week highs (as of 10/25/22): AutoZone (AZO), Booz Allen Hamilton (BAH), Black Stone Minerals (BSM), Comfort Systems USA (FIX), Huntington Ingalls Industries (HII), Hershey (HSY), Humana (HUM), Northrop Grumman (NOC), O'Reilly Automotive (ORLY), and Schlumberger (SLB).
In today's mailbag, more feedback for Ten Stock Trader editor Greg Diamond... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.
"Greg Diamond is still killing it for his subscribers! He never leaves me feeling unprepared for the market's next move. He must work tirelessly to provide not just the amount of analysis, instruction, trades, and updates that he posts, but also always first-class in quality too!" – Paid-up subscriber Ryan R.
All the best,
Corey McLaughlin
Boston, Massachusetts
October 26, 2022