A beautiful, personal story from one of my colleagues; Just over 15 years since the bear market bottom in March 2009; What I did the year before

1) Longtime readers might remember my initial comments on the incredible weight-loss drugs from back in September 2022...

I've recently become aware of three new weight-loss drugs, which appear to be nothing short of miraculous, especially Mounjaro (tirzepatide), which seems to have fewer side effects (mostly gassiness) and results in the greatest weight loss.

I know many people on these drugs and they're all thrilled with them, having lost large amounts of weight with few side effects...

I've discussed these drugs many times in various e-mails since then – and shared plenty of links to stories and details about them. I've also heard from many readers in response. For example, as one reader e-mailed in late last year:

Thank you for [the] weight loss articles!!! Bless you, Whitney Tilson. You're helping me change my life, after dealing with obesity since I was a child.

And as I noted in my October 10 e-mail:

I know more than a dozen people on Mounjaro and they're all thrilled, having lost large amounts of weight with few side effects.

One friend has lost 90 pounds in just over a year – I can hardly recognize him! Meanwhile, the worst outcome among my friends is a still-amazing 22-pound loss in five months.

More recently, in my February 22 e-mail, I shared some excerpts from a powerful testimonial in Business Insider about them: My brain on Ozempic.

As the writer said, these medications were something "far more powerful and surreal" than just weight-loss drugs... they were "injectable willpower."

And now, one of my colleagues here at Stansberry Research, Ken, is sharing his own emotional story.

He struggled with binge eating and obesity for his entire life. He once weighed more than 300 pounds, had a serious drinking problem, and suffered from serious sleep apnea and crippling sciatica.

But when he started taking one of the new weight-loss drugs, it was "like someone had flipped a switch."

I'm so happy for him.

As Ken says in a video that you can watch here:

It changed my life overnight.

Now, of course, you cannot lose all the weight overnight.

But the change was immediate.

I felt it within about a day – feelings in my body I had never known before.

Seven months after starting the medication, he's down more than 80 pounds from his peak weight – with the sciatica (and knee and ankle pain) gone. He looks great:

And that's not all – as Ken also says:

I used to wear size 44 pants. I'm now in 36s... but they're already getting loose.

I need to replace pretty much all my clothes. I even hired a friend of my wife who's a stylist – since I might as well do it right.

People are nicer to me in public.

I don't know if it's them or me.

But I know I encounter the world today with a confidence that I have never felt in my adult life, and people feel that.

If you had told me a year ago that this was possible, I wouldn't have believed you.

I urge you to hear Ken's entire story for yourself – it's near and dear to my heart. Again, he shares it right here.

2) A hat tip to Charlie Bilello – in his latest Week in Charts, he flagged that five days ago was the 15th anniversary of the day the market bottomed during the global financial crisis, March 9, 2009.

Since then, he notes in this chart from his post that the S&P 500 Index has risen by more than 10 times, at a compounded annual rate of 16.7%:

I remember that time well, and there are many timeless lessons that can be learned from it.

But first, a little bit of history – a story I told in my 2009 book, More Mortgage Meltdown, but haven't written about here in my daily e-mails...

A year earlier, on a cold day in early February 2008, I biked to the Peninsula New York hotel in midtown Manhattan to meet Sean Dobson, the CEO of a mortgage analytics firm called Amherst. I was there because I was intrigued by this e-mail a friend had sent to me a few days earlier:

Sean is the best mortgage technician I know and has developed a unique database that includes virtually all mortgages originated since 1998, sliced by month of origination, product type and further stratified by a proprietary coding system that picks up loan-level characteristics with unusual predictive capability.

He has monthly delinquency and default statistics, new defaults as a percentage of current outstanding and [conditional prepayment rate] stats. Loans can be assigned to securitizations and you can see where you can go from there for [residential mortgage-backed security] tranches and [collateralized debt obligations].

He runs a mortgage broker dealer and advises many hedge funds and institutional accounts on their mortgage-related investments including [credit default swaps] and the various indexes. He is definitely someone you should get to know.

I listened closely as Sean presented slide after slide filled with wild, multicolor charts and squiggly lines, explaining them in a strange language I could barely comprehend.

But from what little I did understand, the message was clear: the U.S. housing market had experienced a bubble of enormous proportions and countless mortgages were now defaulting at unprecedented, catastrophic rates.

More important, there was no sign of a let-up. In fact, Sean argued that things were likely to get much, much worse.

I started to ask him a lot of questions, trying to figure out what all the squiggly lines and acronyms he was using meant.

Fortunately, Sean was patient. And as I began to understand what he was saying, my eyes got big and my jaw hit the floor as I realized: "Holy cow, he's right! This bubble is much bigger and more far-reaching than almost anyone realizes, and it's only in its early stages of bursting."

This conclusion was in sharp contrast to the consensus view among investors, government regulators, and policymakers, who thought that the worst was behind us.

It wasn't an unreasonable view, given that almost a year had passed since subprime mortgages had started to default at high rates and defaults in other areas weren't yet at alarming levels.

Additionally, the fallout seemed to be contained to a handful of firms and funds that had blown up – such as NovaStar, New Century Financial, and the Bear Stearns hedge funds.

But Sean's data told a very different story: We were in the second inning, not the seventh inning, of the mortgage meltdown.

I had been following the housing and mortgage markets for years and had long believed that a significant bubble had occurred and was in the process of bursting.

I was skeptical of the calm assurances throughout 2007 and well into 2008 that the worst was behind us by President George W. Bush, Federal Reserve Chairman Ben Bernanke, Treasury Secretary Hank Paulson, the CEOs of financial and real estate firms, and Wall Street "analysts" who – with very few exceptions – simply parrot what CEOs tell them.

Given my skepticism, by the time I met Sean, I had already sold a number of stocks in the hedge funds I managed that were exposed to the housing market – even ones that had previously been among my favorites, such as USG and Mueller Water Products.

I had also shorted a number of financial stocks – including Allied Capital, Ambac, Farmer Mac, Lehman Brothers, and MBIA.

Nevertheless, on that day in February 2008, I was still much too sanguine about the economy and the markets and thus had left my funds dangerously exposed... with a long portfolio nearly four times the size of my short portfolio.

Fortunately, my meeting with Sean led me to start doing a lot more work.

I went back to the office that day and started digging... and digging... and digging, seeking to understand the U.S. housing market and what the future held. Every data point I uncovered confirmed Sean's thesis that millions of mortgages were almost certain to default.

This in turn convinced me that the U.S. housing market, followed by the mortgage market (the world's largest debt market), followed by the financial system, followed by the stock market were going to collapse in the not-too-distant future.

So I took action, trimming my long book and increasing my short exposure. These steps enabled me to survive the carnage of 2008.

A number of the smartest value investors lost 40%, 50%, 60%, or more during late 2008 and early 2009 as markets around the world crashed. I would have likely been in the same boat had I not developed the huge conviction about how bad the mortgage meltdown would be and acted on it.

I didn't keep what I was learning to myself – far from it... I put together an in-depth presentation and began shouting from the rooftops about the impending calamity.

For example, here's a 61-slide presentation I gave at my Value Investing Congress conference on May 7, 2008. I cringe today when I look at the graphics, but my analyses were prescient – as were the stock picks:

So the first lessons here are:

• Keep an eye out for massive bubbles that can cause a market crash.
• However, also be mindful that such events are rare, so most of the time you should ignore the ever-present gloom-and-doomers who always have intelligent-sounding arguments – but who are usually wrong (as the saying goes, they've predicted 10 of the last two market crashes).
• Be aware that neither economists, government officials, nor the mainstream media are likely to warn you about things like the bursting of the tech/internet bubble, the housing bubble, or the pandemic – the three things that did cause market crashes. Instead, you have to do your own work.

Tomorrow, I'll continue this story – and other lessons from it – by recounting my appearance on 60 Minutes in December 2008, turning bullish months too early, suffering as the market declined in early 2009, but ultimately being richly rewarded when the market finally bottomed and stocks rallied strongly...

Stay tuned!

Best regards,

Whitney

P.S. I welcome your feedback – send me an e-mail by clicking here.