The Key to Surviving the Coming 'Credit Collapse'

The bankruptcies are just beginning... You can make a killing... The key to surviving the coming 'credit collapse'... A tradition unlike any other... A big golf merger... Time to think about post-COVID plays... The surest bet...

It's becoming clearer every day that the next 'credit collapse' is just around the corner...

In fact, some folks would argue that it's already underway.

Longtime Digest readers know we've warned about this approaching storm for a while... And our colleague Mike DiBiase most recently shared his detailed thoughts on the serious trouble facing the U.S. economy and most businesses just last week.

You see, Mike – who is the editor of our Stansberry's Credit Opportunities service – likely watches the credit and debt markets closer than anyone else we know. And right now, he's warning of a critical inflection point, one that will wipe out many companies...

With the blows to our economy from COVID-19 and the subsequent response to the pandemic, Mike explained that a wave of bankruptcies is coming in the months and years ahead... and has actually started happening. As Mike wrote in last Thursday's Digest...

According to credit-ratings agency Standard & Poor's ("S&P"), 124 U.S. companies have defaulted on their debt so far this year.

The default rate has steadily climbed from 3% at the start of the year to around 6% today. That means 6% of all U.S. corporate borrowers have defaulted over the past year.

But it's going to get much worse...

S&P currently predicts that the default rate will rise to 12.5% by next June. That would be the highest default rate since the Great Depression in 1932. A 12.5% default rate means that another 240 companies in the U.S. will go bankrupt over the next year.

And as Mike explained last week, that's a conservative estimate...

By his count, a default rate between 12.5% and S&P's pessimistic forecast of 15.5% would work out to between $100 billion and $250 billion in defaulted debt – and worse, billions of dollars of credit losses for unsuspecting investors. As Mike noted last week...

It would be the worst period for corporate defaults that we've ever seen.

It's a terrible thing for a lot of Main Street workers and the folks in the corporate offices, of course... The scene we saw a few months ago at a local Modell's Sporting Goods store in its final days before closing, for instance, was downright sad.

You probably know it's best to stay away from investments in these companies today...And you're right.

But the thing is, smart, long-term investors actually get excited during these periods...

In fact, some of the world's greatest investors wait for moments like this. They're not scared of a recession or a "credit collapse"... far from it.

Experts like Warren Buffett, John Paulson, and Wilbur Ross pounce by putting their cash to work in an investment that's little known to most individual investors. But as our founder Porter Stansberry has said over the years, you owe it to yourself to at least become familiar with this idea...

This is a sophisticated investment. And if you understand and use it correctly, you will not only survive the coming crisis, but you'll also have the potential to boost your profits outside of stocks, with a shot at equity-like gains... and with far, far less risk than putting your money to work in individual stocks.

You just have to know where to look and what to do... That's where Mike comes in. I (Corey McLaughlin) will spoil the suspense for a moment...

We're talking about bonds, but not just any old bonds...

The investments that Mike identifies drop to incredibly attractive prices – a fraction of their value – primarily because of the nuances of how this market works.

Like we said, most investors simply don't understand this less-traveled area of the financial markets... or that these investments are simpler to access than you might think. But we're here to tell you, it's worth making time to learn all the details...

Mike recently put together a brand-new special report that gets into much more about how everything works... It's called "The Complete Guide to the Coming Credit Collapse," and it can be yours with a subscription to our Stansberry's Credit Opportunities newsletter.

Not only does Mike outline and detail everything you need to know about the nuts and bolts of the "debt dam" that's about to break – but he shares just precisely how you can make a killing during it. And you'll learn his top three ways to profit from this strategy right now.

Best of all, you can get a single year of Stansberry's Credit Opportunities today for 50% off what it would normally cost. It's the best price we've EVER offered for this research.

And it's all possible thanks to a deal we made last summer with one of our subscribers who retired at age 52 in part because of this strategy. Click here right now for the full story. (Existing Stansberry's Credit Opportunities subscribers can access Mike's latest research right here.)

Moving on, let's talk about 'a tradition unlike any other'...

That's the tagline for the annual Masters golf tournament in Augusta, Georgia.

The first round of one of golf's most famous events started today at the beautiful Augusta National Golf Club... It's a bucket-list destination for many of us. In the meantime, we'll be watching all the action from our living rooms over the next few days.

Golf, like investing, can be a hard game... Anyone who has tried to string a few great shots (or trades) together knows exactly what we're talking about.

So it's fun to watch the pros do it so seamlessly for a living, especially in the picturesque landscape of Augusta National. (And of course, it's also nice to see that they're human, too, when they hit an occasional bad shot like we do frequently.)

What's more, we feel a sense of joy every time we see the Stansberry Research logo on our sponsored golfer Kevin Kisner's shirt... You can see it on the left side of his chest in the picture below during his round today. Kisner finished 1-under for the day. (That's good.)

In any case, we know this isn't a sports-focused newsletter...

We bring up golf and the start of the Masters today to make an investing point related to the game, the sports and entertainment industry, e-commerce, and the economy in general.

One of the more familiar golf names in the stock market is Callaway Golf (ELY)... Coincidentally, the company also sponsors Kisner (on his hat), and he plays with its clubs.

Callaway is one of the world's leading golf club, ball, and apparel makers. And the company's sales have actually benefited from the pandemic... After all, golf is a game that can be played outdoors pretty much as normal, even under "social distancing" restrictions.

As Stansberry NewsWire analyst Daniel Smoot wrote yesterday, Callaway CEO Chip Brewer said on the company's third-quarter earnings call this week...

The world is embracing golf in a way that has led to a record quarter for the industry and our company. Our golf business is now experiencing unprecedented demand and our soft goods business is recovering significantly more quickly than we expected.

The company's earnings before interest, taxes, depreciation, and amortization ("EBITDA") for the third quarter totaled $476 million, compared with the expected $451.3 million. Most of the boost came from the company's online sales, which were up 108% in the quarter.

E-commerce, of course, has been a consistent theme among thriving companies this year. But another part of Callaway's business piqued the interest of a few of our editors, too...

You see, it speaks to the idea of which investment opportunities are worth considering in a post-COVID world...

Callaway recently announced plans to merge with Topgolf...

If you've never heard of Topgolf, here's a brief primer...

Its 63 locations worldwide are a mix between a driving range, an outdoor restaurant or bar, and a video game... You hit real golf shots, see your "numbers" and shot results on a screen next to you, and eat and drink with friends or family members at the same time.

It's like an outdoor bowling alley for golf.

Since 2006, Callaway has owned 14% of Topgolf. And last month, it announced plans to buy the remaining stake in an all-stock deal that values the open-air entertainment company at around $2 billion. Callaway is also taking on Topgolf's net debt, which is around $555 million.

With COVID-19 cutting into foot traffic at restaurants and bars, Topgolf's revenue is down this year... But it made $1.1 billion in revenue in 2019, says it has 90 million customer "touchpoints" a year, and has grown its revenue by 233% over the past three years.

If the deal goes through, it would happen in early 2021, and Topgolf would make up roughly 46% of the combined company. As our Director of Research Austin Root told us in a private note, this merger is intriguing for a few reasons...

This is a potentially game-changing investment for Callaway, either for the good or bad of the company. At the end of October, Callaway spent BIG to acquire the share of Topgolf it didn't already own – $2.5 billion.

The market didn't love the news because it's such a big deal and Topgolf locations aren't nearly as profitable now as they were pre-COVID. But I think this deal makes ELY a "reopen" play in addition to an outdoors, COVID play.

We don't formally recommend Callaway in any of our model portfolios right now (and I want to make it clear that we're NOT suggesting you buy shares today). Like Austin said, it remains to be seen how this deal will play out... It requires more research.

But we bring up a brief discussion of the company today primarily because it applies to a big idea worth thinking about today... "post-COVID" plays.

Our editors were talking about this concept on a video call just yesterday.

We're not in a post-COVID world yet, but we will get there at some point...

It may seem strange or even ghoulish to think about with reported cases back on the rise in many states, but now is the time to consider the companies that are well-positioned for when "this" is all over.

It's the kind of "one step ahead" investing approach you want to take before everyone else starts doing it... And as you can see, Callaway and Topgolf fit into this conversation.

In a post-COVID world, people will want to be entertained and have fun in groups again all the time – you know, like "normal." We want this now. And as Austin told us, Topgolf is a "unique" place to do this... There's nothing else like it out there at its scale.

And either way, Topgolf can be a vehicle for Callaway's growth if people show up. Its revenue last year is roughly what Callaway's sales could be for all of this year, even with the record demand that its CEO detailed.

Topgolf locations are an entertainment destination. They introduce casual observers to the game of golf a lot of times... And then, maybe those folks will want to buy clubs, balls, and clothes after that to start playing "for real" on the course. In the end, that would all benefit Callaway's business in the long run.

Again, please note that we're not recommending Callaway shares today. But it's worth thinking about ideas like this as you consider ways to invest your hard-earned money in the months ahead.

There are bigger trends in place revolving around pretty much every company out there, like "What does a post-COVID world look like?" Stay tuned for more on this front as we move closer to it.

And in the meantime, if you're interested in learning more from Austin and our entire research team, we suggest you start by giving our flagship Stansberry's Investment Advisory newsletter a try risk-free for 30 days. Right now, you can sign up at 75% off the regular price. Get started right here.

One last thing before we sign off for the evening...

Please take a minute to let us know if you would like to hear more ideas like what we discussed today (not formal recommendations, but simply "food for thought" like this) from time to time in the Digest... You can drop us a line at feedback@stansberryresearch.com.

The Surest Bet? More Government Spending

Our colleague Jessica Stone speaks with Retirement Millionaire analyst Matt Weinschenk, who contends that a bet on big government spending is the safest bet for investors...

Click here to watch this video right now. For more free video content, subscribe to our Stansberry Research YouTube channel... and don't forget to follow us on Facebook, Instagram, LinkedIn, and Twitter.

New 52-week highs (as of 11/11/20): Analog Devices (ADI), Morgan Stanley China A Share Fund (CAF), Corteva (CTVA), Cloudflare (NET), Intellia Therapeutics (NTLA), T-Mobile (TMUS), Verisk Analytics (VRSK), Vestas Wind Systems (VWDRY), and Zebra Technologies (ZBRA).

In today's mailbag, more discussion about "soft power"... Do you have a comment or question? Keep them coming to feedback@stansberryresearch.com.

"I see all the chat about China and soft power. Simply put, China is not a soft power place, never has been and why would they change? They have been effectively making their largest competitor on the world front look bad for years. You write China is not doing well at soft power? Who is influencing the U.S. more today than China? Why doesn't China allow Facebook, Google, Twitter in their country? Because of how easily it can be used to cause internal strife on a nation.

"Look at the level of hate between our political parties in the U.S.? Yes, Facebook, Google and others created the algorithms to show us what they want us to see, but who in the world is manipulating us more, on a grand scale? China does not need to beat us in an outright conflict, they will use social media manipulation to cause us to defeat ourselves. If you do not believe that or see it, you are not paying attention. Sadly, for the long term success of our nation.

"We talk about our soft power going down over the last four years, as Kim alludes to. I would disagree and simply say it shifted to different parts of the world. I spend the majority of my time in the middle east, and in this part of the world, our soft power and hard power have made incredible strides in the last four years. When was the last time the Arab world had peace with Israel? Never? They do now.

"Are U.S. relations with China worse? Yes, but you also do not have an administration catering to them at this point so that would make sense. China wants/needs to be a reserve currency, I think we all see this. How do they get there? By becoming a world soft power player, completely against everything they are? Or, do they simply make the current world power look bad in the eyes of the world? They are winning this battle because we as Americans are letting them." – Paid-up subscriber Todd B.

All the best,

Corey McLaughlin
Baltimore, Maryland
November 12, 2020