A Legendary Investor Just Issued a Major Warning
Stanley Druckenmiller is one of the most successful investors of all time.
He's most known for putting up 30% annualized returns for 30 years. Even more impressive, he didn't lose money in a single year over that stretch.
Druckenmiller doesn't do many public appearances anymore. But when he does, investors tune in to hear his thoughts. And recently, he has raised some red flags...
Headline No. 1:
Druckenmiller believes that investing in stocks will be tough over the next 10 years.
McCall's Call: On Wednesday, Druckenmiller sat down for an interview with CNBC to discuss the broader market. He highlighted various concerns...
The U.S. government's spending habits were one. He said the governing body is spending money "like drunken sailors" – which is a big problem because of the sharp rise in interest rates.
Higher rates mean that interest payments on debts will be much higher in the future.
Given the rising rates, Druckenmiller understands why bond prices have fallen. (Remember, bond prices and interest rates move in opposite directions.) But what he doesn't understand is why stocks have yet to adjust to this new reality.
He also pointed out that it's unlikely stocks will continue trading at 20X earnings multiples in the current environment. For reference, the S&P 500 Index currently trades at 19X.
As a result of all these factors, Druckenmiller believes the next decade could prove to be challenging for a lot of investors.
So, how do we navigate these shifting tides?
Druckenmiller compared the current market environment with the 1970s – when there was high inflation and bumpy economic growth. Making money won't be as easy as throwing a dart at the dartboard. Folks will have to be more selective.
In other words... we're entering a "stock pickers" market.
That's OK by me. I've always recommended investing in individual stocks with strong trends at their backs. Then, you can diversify your portfolio – and reduce your risk – by buying a basket of those stocks.
It's like buying an exchange-traded fund ("ETF")... except you're creating your own and deciding which stocks you want exposure to and which you don't.
This has been the core of my investing strategy for a long time. And it has proven incredibly successful over the years.
So even with stocks facing some major headwinds today – including high interest rates and ballooning government spending – I believe there's always money to be made in the stock market.
If stocks are beaten down further, companies will trade at bargain levels. That's a good thing for long-term investors. It means you can scoop up shares of growing businesses in new and exciting industries for cheap.
Those are the kinds of opportunities my subscribers and I will be looking for.
Still, I suggest you prepare for yet another volatile year in 2024. If Druckenmiller is correct, stocks could be in for a wild ride as investors wrangle with how to invest in this environment.
Headline No. 2:
Microsoft (MSFT) just launched a new artificial-intelligence ("AI") service for Microsoft 365 users.
McCall's Call: AI is coming to your office in the form of a new AI assistant called Copilot. It uses AI technology to draft e-mails, summarize webpage information, and even perform actions in Windows.
This feature became available for use on November 1 and costs an additional $30 per month on top of the price of a Microsoft 365 license. But that's not putting anyone off. Microsoft said that 40% of Fortune 100 companies have been using Copilot during its testing phase.
Analysts have huge expectations for Copilot...
Investment bank Piper Sandler estimated that the AI assistant could provide Microsoft with more than $10 billion in annual revenue by 2026. That would be great – as long as it can meet those lofty expectations.
Regular readers know that I believe that AI technology could be one of the biggest breakthroughs of the next decade. It's already being used in various parts of our lives – like your Spotify-generated playlists and Google searches.
And there's no doubt in my mind it will grow and touch every aspect of our lives in the future. Consider the health care, industrial, and agricultural sectors, for example...
AI can speed up drug development by running through all possible scenarios faster than computers. It will help boost automated-manufacturing systems. And it can operate a driverless tractor or help determine which crops need water and fertilizer.
Major companies are getting in on this trend. Microsoft, Amazon (AMZN), and Alphabet (GOOGL) are investing heavily in AI products that are expected to roll out soon. But these aren't the companies I'm betting on for big stock market gains.
Investors are scrambling to get into the next "hot" AI stock...
And I recently shared my three favorite ways to invest in this space with my McCall Report subscribers. These companies work in a variety of industries – providing instant diversification to a portfolio – and are still buyable at their current prices.
Click here to find out how to get their names and ticker symbols.
Even with the flood of headlines and crazy stock moves we've seen this year, this trend is in its early days. Investors who get into the right companies now will reap massive rewards over the long term.
Here's to the future,
Matt McCall
Editor, Daily Insight
November 3, 2023
Did You Miss My Latest Podcast?
Stocks have taken a beating in recent months. But one asset class has stood out among the rest – bitcoin (BTC). The world's largest cryptocurrency has outperformed other assets by a mile so far in 2023. And in the past three weeks, a plethora of bullish headlines has pushed the coin up more than 30%. So on this episode of Making Money With Matt McCall, crypto expert Scott Melker joins me to break down the latest action in the sector.
The big story propelling cryptos is the potential approval of a spot bitcoin ETF. Scott shares his view on how likely this approval is and what it means for bitcoin trading in the future. Plus, he gives us his thoughts on Ethereum (ETH) and reveals the names of a few small coins that have been outperforming bitcoin recently. This is a must-watch episode for anyone who owns bitcoin... wants to own bitcoin... or has any interest in learning more about the crypto space.