What Most People Don't Understand About Money

Both sides of boring... Most people don't understand this about money... Why interest rates matter... What works in a high-rate environment... How Doc has made most of his money...

Boring is beautiful...

I (Corey McLaughlin) am paraphrasing... But when I heard Stansberry Research partner Dr. David "Doc" Eifrig's brand-new presentation today, this idea is one of the first things that came to my mind...

Doc was talking about interest rates. And our Director of Research Matt Weinschenk, Doc's longtime right-hand man, had just mentioned that a lot of people might find interest rates "boring" or don't even care.

Doc countered that if you don't care about this stuff, you should. And while most people don't know this about him, Doc made the majority of his money not from his "regular" work back on Wall Street or everything he has done since, but from his income investments...

They're boring until they set you up for an income that lets you do everything you want in retirement with very little effort.

Till you're collecting cash yields of 10%... 15%... 20%... that could pay back your entire upfront investment in a few years and keep growing more or less forever.

"Boring" let me open a vineyard and restaurants. "Boring" paid for my houses around the country... let me travel the world... and eat at the best restaurants.

The results of these income-producing investments, you see, aren't boring.

If you're in or close to retirement – or any age, really – you want your investments to be boringly lucrative. You want your money to keep growing with minimal risk. You want your portfolio to produce enough income for you to do what you want.

Ask any successful long-term investor and they'll say some version of this...

You don't want to be chasing the headlines...

Don't feel bad if you missed a chance to put up crazy numbers by trading GameStop (GME) or any other "meme stock." Instead, there's a much less stressful way – that doesn't rely on timing the moves of any one stock or even the market in general – to live a rich life or retirement.

Instead, let the market work for you and your goals.

It's such a simple part of investing – real investing – that most people never learn, they or ignore or forget in favor of whatever is trending at the moment...

I can't even begin to describe how much better your life could be when you stop worrying about the news or guessing at the next big thing and just make the market pay you.

If I could only share one line from Doc's new presentation, it might be this.

Of course, you can only make the market pay you and work for you if you understand its fundamentals and the best places to make money with the lowest risk. Barring that, at least follow a trusted guide who understands these dynamics.

Doc (and Matt) fit that bill...

Why interest rates matter...

Doc and Matt's new presentation debuted this morning. It's totally free, and you can watch it in its entirety here. In it, host Amy Gamper asked simple yet powerful questions – like "what are interest rates all about and why should I care?" – that a lot of people are afraid to ask.

These are the type of questions that people should ask. With inflation still higher than it has been in 40 years, and interest rates higher than they've been in 15, there hasn't been a better time to collect income from "more expensive" money in many, many years.

As Doc said...

Interest rates are the price of money.

It really is that simple.

If you need money that you don't have – to buy a house, for example – you can get it. But there's a price, which is the interest you pay on your loan, in addition to eventually paying back what you borrowed.

Anyone who has ever had a mortgage understands this, but as Doc continued...

What most people don't think about is that this price of money is set the same way as the price of everything else – by supply and demand.

If there's a lot of money around and not many folks clamoring for it, rates are low.

If there's less money available and lots of people that want to fund things – houses or businesses or whatever – then rates will be high.

And as longtime readers know, interest rates in the market are heavily influenced by the Federal Reserve and what people think the central bank will or won't do. (That's why we write about the Fed often, even if we'd prefer not to.)

Since the Fed went on a furious rate-hiking cycle from near zero to around 5% in a single year, dollars have become relatively more expensive.

As Matt said during the presentation...

Your money is worth something.

These days, it's worth a lot more than usual.

Understanding this concept is the first step to truly recognizing the path to achieving your investment goals. (This assumes you have goals and aren't simply making trades based on your "gut" and a vague idea of "getting rich.")

Thinking this way is always useful, but especially when big trends are changing...

If you're expecting the broader U.S. stock market to pick up where it left off before the Fed started raising rates about a year ago, be careful. It's not as simple as interest-rate changes sending all stock prices automatically back up.

Today, as Doc sees it, the broader U.S. stock market may not generate the type of returns that many people have come to expect in the past few decades. However, there's another difference... The right investments could compound wealth in ways he hasn't seen in decades, too.

You likely hear all the time how much this decade in the market resembles the 1970s, the last time inflation was this high. Well, as Matt said...

The secret that Doc and I came forward to share today accounted for 71% of all the gains in the market during that decade.

In the 1940s, another time of high inflation, it was 65%. Long story short, if you weren't using this approach, you were toast.

If there's anything that 2022 should tell you, it's to expect the unexpected in the markets...

About that...

The last time Doc and Matt got together for an event like this was nearly two years ago. In June 2021, they warned that the conventional 60/40 stock-bond portfolio was going to be in deep trouble soon.

With inflation on the rise and the Fed way behind the curve, it was the most likely scenario – stock prices down, and bond prices too (as interest rates and yields could only go higher). It's a simple idea, but most people didn't take the time to understand it... and suffered painful losses in their portfolios.

Those who followed Doc's alternative Intelligent Retirement model, though, outperformed the market significantly and have more money to put to work today... with strategies that they see as worthwhile now. Hence the reason for Doc's new presentation. As he said...

I think it really opens your eyes when you start to understand that money is just another commodity that follows the laws of supply and demand. When there's lots of money out there looking for a place to go, it's cheap to get your hands on some. When money is scarce or demand is high, obviously the interest rates will be a lot higher. Money becomes more expensive.

And if you have money to invest, you're basically in the lender position, even if you're not lending money directly.

Look, banking is complicated and I'm simplifying here a bit, but when you make a deposit, you're essentially lending the bank your money. And they can then turn around and use it to make loans.

You should be compensated for that.

So high rates can work for you, big time.

The thing is, though, the big banks are still offering only paltry returns on deposits today... There are better places to put cash today...

Without giving too much away, what Doc is talking about is a lower-risk investment strategy that can set you up for a series of cash yields as high as 29% and potentially hundreds of percent of capital gains in the longer term... even if interest rates go down.

And these are not speculations or junky investments. As Doc said, what he's talking about is...

[A] way to collect income that grows over time, in world-class, rock-solid companies, which are the only kind you should own in this environment.

Tune in to Doc's new, free event for all the details and how you can put the big idea he's talking about in action right now... Just for tuning in, you'll also hear the name and ticker symbol of one of Doc's top income recommendations today.

Stansberry Alliance members and Doc's existing Income Intelligence subscribers can also feel free to watch... But you already have access to this new research, including two brand-new special reports and an exclusive "Portfolio Booster" video with additional insight.

And, if nothing else, remember, let your money work for you... It's an incredibly freeing feeling to have once you grasp the idea. And however you put it into practice, it's one of the proven secrets to building real long-term wealth.

New 52-week highs (as of 4/12/23): Alamos Gold (AGI), Copart (CPRT), SPDR EURO STOXX 50 Fund (FEZ), McDonald's (MCD), Novo Nordisk (NVO), NVR (NVR), and O'Reilly Automotive (ORLY).

In today's mailbag, more feedback on Kevin Sanford's Tuesday Digest detailing warning signs for the U.S. economy... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.

"High interest rates and climbing consumer card debt, place consumers in a precarious state. If they cut back on buying a recession may ensue, which threatens their employment. A pending disaster. Except, a demand-led recession with falling sales only causes unemployment because that is the way the U.S. has chosen to deal with the problem. There is no economic necessity for unemployment to rise in a recession. We could as easily have a recession in which labor productivity falls, corporate profits tank, but the economy remains fully employed.

"It is a social choice to have the major burden of the recession fall on employees, rather than on profits. Much of Europe has legislation to forestall and/or prohibit large-scale unemployment during recessions. To repeat, it is not an economic law, but a social choice as to how the burden of lower demand will impact employment." – Paid-up subscriber K.M.

All the best,

Corey McLaughlin
Baltimore, Maryland
April 13, 2023