Don't Get Punched in the Mouth

Some more on Mike Tyson's investing advice... Don't get punched in the mouth... Win the fight... Check out the Stansberry NewsWire... So much cash on the sidelines... It's fuel for the next bull market... Just do what Doc says...

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We've got you covered...

This note from subscriber Larry N. arrived in our feedback inbox over the weekend, in response to Dan Ferris' latest Friday Digest. If you missed the essay, check it out here.

Dan covered the recent bank crisis and how the failed banks could have done better by hedging in a higher-interest-rate environment. And he quoted legendary boxer Mike Tyson, who once famously said, "Everybody has a plan until they get punched in the mouth."

In response to that, Larry said...

Another beautiful mix of humor and seriousness! The Mike Tyson quote was funny, yet quite true. We who follow Stansberry have a plan, but most Americans do not. If the banking system fails, we all will get a punch in the mouth, but those of us with a plan can play defensively with our gloves up so the damage will be less than most Americans with no gloves on, who do not even know they are in the ring! Thank you Dan!

I (Corey McLaughlin) share this not to brag about anyone or anything, but because Larry brings up a good point that applies to a topic I want to highlight today... Most Americans don't have a plan when it comes to their money and any investments they may have.

If you're a longtime reader, you have a plan, and you're well past the novice stage. And if you've found us recently, congrats. Simply taking your own finances into your own hands, or even thinking about doing it, is an important first step to directing your future...

There was a big boxing match over the weekend...

It featured a pair of 20-somethings – Gervonta Davis and Ryan Garcia – in a pay-per-view event from Las Vegas that was billed as one of the bigger matches in recent years...

We bring this up because Davis is from Baltimore, where we live and work. In particular, he's from a neighborhood in the city's western reaches that's marked by boarded-up row homes and the persistent threat and reality of crime.

A 2015 Harvard University study found that boys in this neighborhood faced some of the worst odds of escaping poverty in America.

Davis wanted to make it out. As he told me many years ago when I was writing an article on the local boxing scene for Baltimore magazine, "The people that I was brought up with are either dead or in jail."

Now 28 years old, he has escaped those fates... with some help from mentors, and also not without controversy and drama that tend to follow him – or that he creates – to this day.

Several years ago, I was speaking with a Baltimore City police officer about the circumstances of his beat in the neighborhood where Davis grew up.

We talked about how common drug use was on the streets outside where we were talking... and a few other things before the conversation turned to what he felt was at the root of the issues: money and security. I've told this story before.

In this veteran officer's view, one major trouble for this neighborhood is that nobody has a financial education. Instead, they turn to what they know and see, like drugs and violence. As he told me...

Most of us – not until we're adults, get credit, and mess up – we're not learning how to save or invest or anything like that. That's why a lot of people get in the situations they're in... We don't find out about finance and investing until we're already in trouble, then we go looking to learn, and you have so much ground to cover. My son is 16. I'm teaching him, breaking it down, that way he doesn't have to make the same mistakes I did.

How's that for a plan? Everybody could use one... especially today.

We've written to you lately about the rising and rising and rising levels of debt taken on by consumers recently amid higher prices... and higher interest rates. Is that going to end well? No.

(By the way, Davis won Saturday night in a seventh-round knockout. He was guaranteed $5 million and then 50% of the pay-per-view revenue.)

Let me let you in on a little secret...

One of the most important parts of my daily plan now is reading our Stansberry NewsWire. It keeps me up to date on the headlines moving the markets, how various indexes and sectors and asset classes perform each day, and more.

This is an entirely free service, and it's required reading in my opinion... Just check out today's morning edition from analyst Kevin Sanford. He provided a look back at last week's numbers...

Kevin also looked ahead to the big stories that could be a headwind or tailwind for stocks... and more potentially headline-making events of the week ahead. This includes the latest personal consumption expenditures ("PCE") inflation data for March, which the government will publish on Friday.

Today's NewsWire also let us know that big companies like Coca-Cola (KO), Microsoft (MSFT), Alphabet (GOOGL), Visa (V), McDonald's (MCD), Boeing (BA), Capital One Financial (COF), and others are reporting their latest quarterly earnings numbers this week.

If you haven't checked out our free NewsWire service before, now is a great time. And if you're a regular reader, give it a close look, too. Recently, Kevin has been experimenting with some changes to the format, and we want to know what you think...

So, take a look at this morning's report, and check your inbox early tomorrow for the next one and over the next several days... and send us your thoughts in an e-mail of your own to feedback@stansberryresearch.com. And please put "NewsWire" in the subject line.

From there, of course, we always read what our editors and analysts are saying...

Even after working at Stansberry Research for several years now, it still blows me away the amount and breadth of research that subscribers have available...

For example, last night (on a Sunday!), Ten Stock Trader editor Greg Diamond updated folks on his thoughts on the market, as a few short-term trades haven't gone his way lately... He shared a plan for moving ahead and insight into how a pro trader thinks.

And over in DailyWealth this morning, senior analyst Brett Eversole noted that the amount of "cash on the sidelines" in money-market accounts among "mom and pop" investors just hit a record high...

This measure has jumped more than $300 billion over the past year. And it has soared to an all-time high in the process. Take a look...

Retail money-market assets have a history of peaking during the worst periods for stocks. (The gray bars on the chart indicate recessions.) That's because scared investors tend to pull money out of the market at the worst possible times.

In fact, retail money-market assets jumped 30% over the past year...

That's higher than the move to the sidelines that happened during the pandemic, the 2008 financial crisis, and the dot-com bust.

As Brett suggested... this means, yes, people are scared right now ahead of what might be the most widely expected recession in history and a bank-run story already part of the 2023 narrative. But as longtime readers know, a "scared mainstream" also means opportunity...

If you can buy when others are fearful, you'll do darn well as an investor.

This is no guarantee that stocks can't fall further. But it means that when the bull market emerges, it'll be a powerful one. Trillions of dollars are sitting in money-market funds right now. And retail money-market assets are at a record high.

Once investors get over their fear, that money will funnel back into the market. That has happened after every similar setup in the past. And it'll happen again.

A trillion dollars or more in "cash" is out of the stock market right now.

Eventually, when the trend reverses higher, as Brett said, "that will be a massive amount of fuel to light a fire under the new bull market." We can't predict the future with certainty, but you can prepare and position accordingly now.

Now is a great time to look at 'recession proof' stocks...

I mentioned about a month ago that the team behind our flagship Stansberry's Investment Advisory recently recommended buying shares of one such business... in a sector that has tended in previous instances to hold up better than most others during a recession.

And we've also said that the stock market tends to bottom before the worst economic impacts of a recession are felt in reality. That doesn't mean there can't or won't be more downside ahead, especially in specific sectors or stocks...

Today's setup also doesn't mean that the broader market can't see more downside ahead. New factors could emerge that considerably change the economic picture, or sentiment could simply change without a specific reason.

In DailyWealth Trader today, for example, our colleague Chris Igou shared a concerning indicator everyone might want to take a look at before getting overly bullish right now. (Chris' subscribers and Alliance members can see his report here.)

Anyone who tells you they know exactly what's going to happen isn't telling you the truth. But even if things get worse, there are "recession proof" stocks that will benefit and buying opportunities to jump on...

One action to take right now: Just do what Doc says...

Our publisher Brett Aitken shared a great note over the weekend that caught my attention (and not only because I agree). It's something everyone who follows our research should know.

Referring to Stansberry Research partner Dr. David "Doc" Eifrig, Brett told any newer subscribers that we might have to "just do what Doc says." For folks who have been around a while, it's a good reminder, too...

Doc has one of the best stock-picking track records over a decade or more at Stansberry Research. He hasn't done this by following investing fads... but through blue-chip stock ideas and a conservative approach to asset allocation.

This has led to steady, market-beating returns with less risk than most others take. As Brett shared...

• In his flagship Retirement Millionaire letter, he has shown readers gains as high as 910%... with a win rate as high as 88% and an average gain of as much as 90% on open positions.
• In Retirement Trader, readers have seen a streak of 156 consecutive winning trades, with no losers – and it's still going! – and a staggering 94% all-time win rate.
• In Income Intelligence, he has found a way to nearly triple the performance of the traditional "60/40" portfolio... in a back-test stretching back nearly 50 years... while showing readers the market's best low-risk yields.

Now, Doc has come forward with what he says is the most important idea he has ever shared in more than 15 years here at Stansberry. Blue chips... steady returns... low risk... Maybe this isn't what you want to hear, but it's how Doc knows how to build long-term wealth.

It's especially important in today's climate when fear is so high... So just listen to Doc, as Brett said...

I'm absolutely certain that simply listening to Doc and following the approaches he recommends will make you far wealthier and more secure than anything else you could possibly do – at Stansberry or anywhere else.

Watch Doc's latest presentation and get all the details about the market's "best-kept secret," insight on what he does with his own money, and much more... including how to position your portfolio no matter what happens next with inflation, the Federal Reserve, or interest rates.

In brief, Doc is recommending folks buy a basket of high-quality, income-producing investments that he says can help everyone secure their financial futures. What's more, just for tuning in, Doc will share one of his favorite buys today that's paying out 8% before any capital gains. Click here to hear Doc's latest message now.

New 52-week highs (as of 4/21/23): ABB (ABB), CBOE Global Markets (CBOE), Copart (CPRT), DraftKings (DKNG), SPDR EURO STOXX 50 Fund (FEZ), Hershey (HSY), Eli Lilly (LLY), McDonald's (MCD), Motorola Solutions (MSI), Novo Nordisk (NVO), NVR (NVR), Novartis (NVS), Flutter Entertainment (PDYPY), PulteGroup (PHM), Stryker (SYK), and Unilever (UL).

In today's mailbag, feedback on Dan Ferris' Friday Digest... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.

"Regarding the situation with banks, how is the general public supposed to know the financial situation of the bank they use? I think the real problem is when people rush to the bank to pull out all their money because they fear the bank is in trouble. For those that have over $250K insured by the FDIC, it makes sense to pull what you have over $250K, though it would make more sense to make sure you don't have more than $250K to begin with. I can understand taking out perhaps what you might need for a week or two in case the bank closes its doors temporarily, but everybody pulling out all they have is a sure way to bankrupt the bank.

"Regarding the study by the university professors, I wonder how many of them have managed banks. I've read [Steve] Sjuggerud's comments about why his professors were teaching instead of getting rich by applying what they were teaching. It's a strong argument he makes. It reminds me of the line in the movie The School of Rock, 'if you can't do, you teach.' I'm not sure I trust the professors' research." – Paid-up subscriber Luis A.

"I would debate that cheap money caused the downfall of SVB, etc. How could those genius MBA bankers put so much of their $$ into long-term bonds earning essentially zero income? How much knowledge does anyone need to understand buying bonds at their top, with virtually no upside possible in appreciation, but huge downside due to interest rate risk, was idiotic at best? Are there more bankers out there who did the same? No doubt, as per H.L. Mencken's observation: 'No one ever went broke underestimating the intelligence of the American public.'" – Paid-up subscriber Robert B.

"Good job, Dan... Those banks just got a margin call of 100%. Maybe all our government officials (elected or otherwise) should be required to have 'Skin In The Game'. Oh wait, who on earth would bond them." – Paid-up subscriber Dan T.

All the best,

Corey McLaughlin
Baltimore, Maryland
April 24, 2023