You Need an 'Emergency Beacon' in This Market
A guest essay from Marc Chaikin... Know where the danger is and when to step aside... A time of 'headline risk'... The stock market's dilemma right now... A way to profit amid the volatility...
Editor's note: Today, we're sharing a guest essay from Marc Chaikin, founder of our corporate affiliate Chaikin Analytics.
If you don't already know him, Marc is a living Wall Street legend with more than 50 years of experience. He has worked with many of the world's best-known investors, like Stanley Druckenmiller, Paul Tudor Jones, and Steve Cohen... and pioneered analytical tools that are now ubiquitous among Wall Street investors and have become part of trading platforms all over the world.
Marc initially retired in 1999. Then, after seeing the impact of the great financial crisis on millions of Americans' portfolios, including his own wife's, he decided to come out of retirement and help Main Street investors. That's how his proprietary Power Gauge stock-rating system was born.
In this essay – adapted from the February 6, March 4, and March 12 issues of Marc's free Chaikin PowerFeed newsletter – Marc talks more about this tool and makes the case for why having an "emergency beacon" for the market is essential in general. Plus, he shares his latest outlook amid the recent run of volatility we've seen.
In short, this is an environment in which you can make money, Marc says, but only if you know where to look and what to avoid...
For the first three days, Brittany Farrish's hiking trip was idyllic...
Farrish and a friend explored the Fryatt Valley of Jasper National Park in Alberta, Canada. And as nightfall approached on the third day, they relaxed on a glacial lake.
Some people spend a lifetime fantasizing about this type of trip.
But then... disaster struck.
As Farrish and her friend settled in for the night, they saw a flash of lightning in the distance. And as experienced hikers, they knew the area was suffering from a drought.
Still, it was time for bed. And a storm in the distance wouldn't ruin their adventure.
That all changed by morning, though...
Farrish awoke to several urgent messages on her emergency beacon. Friends and family members were desperately trying to contact her.
The lightning storm had ignited a wildfire. And officials were evacuating the park.
Farrish and her friend raced to the trailhead. They knew it was a life-or-death situation.
The two women got to their car and headed for the highway. But they weren't in the clear yet. Fallen trees blocked their way out of the area. And the trees were too big to move.
I'm sure you can understand their anxiety...
Stories of wildfires have once again filled the news recently. Images of people barely escaping the flames in California and other places are terrifying and tragic.
Fortunately, this wildfire-escape story ended well...
Remember, Farrish had her emergency beacon. I bet she never expected it to save her life. But serious hikers like Farrish buy these types of devices "just in case."
These devices weigh just a few ounces. They're the kinds of things you throw in your bag and hope you'll never use. But if you do need one, it could save your life.
That's what happened as Farrish's just-in-case scenario unfolded that day...
A Garmin inReach Mini 2 satellite communicator costs a few hundred bucks. But that small investment likely saved the lives of Farrish and her friend.
The fallen trees made their escape impossible by car. And the park was on fire around them.
But because of Farrish's Garmin device, the rescue team knew the exact location of the two women. They sent a helicopter. And in the end, Farrish and her friend escaped.
Folks, my point with this story is simple...
You need to make sure you have an emergency beacon for the market.
The market is currently fighting through a period of elevated volatility. That will likely continue to be the case in the coming weeks.
You need to know where the danger is. And you need to know when it's time to step aside.
Put simply, we're in a time of what I call 'headline risk'...
And I expect to see continued big swings in the market as a result.
I'm still "bullish" on stocks. My target for the year sees another 12% gain in the S&P 500 from here...
But looking ahead, the next few months will see a tug-of-war between a strong economy and the shifting sands of U.S. monetary, fiscal, and tariff policies. That will challenge the resolve of this bull market.
The broad market S&P 500 Index recently fell 10% from its record closing high of 6,144 on February 19.
Uncertainty surrounding President Donald Trump's tariff policies and the Department of Government Efficiency ("DOGE") downsizing of the federal workforce has roiled the stock market.
And that means extreme volatility.
We can see the mood of fear in the market through CNN's Fear & Greed Index. It's a gauge of investor sentiment based on seven indicators. And in a reading earlier this month, the index stood at 17 out of 100.
That marks an "Extreme Fear" level.
As the legendary Warren Buffett has famously said, "Be fearful when others are greedy, and be greedy when others are fearful." But he also said during a recent interview with CBS that tariffs are "an act of war, to some degree"... and that "over time, they're a tax on goods."
Meanwhile, Buffett's Berkshire Hathaway (BRK-B) is sitting on a record amount of cash.
The stock market's dilemma right now...
We see a deeply oversold market driven by fear and uncertainty over whether the president's agenda will push the economy into a recession and usher in a period of stagflation.
And two key economic reports contributed to the recent sharp sell-off...
The first was the Federal Reserve Bank of Atlanta's recent GDPNow forecast for first-quarter GDP growth.
Earlier this month, in the most dramatic shift on record, this model predicted an annualized GDP growth of negative 2.8% in the first quarter of 2025. That was down from a forecast of positive GDP growth of 2.3% just one week earlier. [Editor's note: The most recent projection, released Tuesday, calls for a 1.8% drop in GDP.]
Meanwhile, a recent Institute for Supply Management's ("ISM") Purchasing Managers' Index ("PMI") report also spooked the markets...
The ISM Manufacturing PMI fell in February and pointed to slower growth in the manufacturing sector of the U.S. economy.
Importantly, it showed demand easing while prices paid were increasing. That's the classic definition of "stagflation."
Some commentators are discounting the negative GDP forecast and the increase in prices paid as caused by front-running in February by corporate purchasing managers ahead of the expected tariffs.
We'll have to wait and see about that. It's another uncertainty in an extremely uncertain period.
For now, the fear and likelihood of stagflation is very real. And that's weighing on stock prices.
As my regular readers know, my "bull market" scenario for 2025 is based on a strong economy and the past 100 years of election-cycle data that show strong stock market performance in a post-election year.
But if stagflation becomes a reality and earnings suffer, I'll adjust my outlook.
So while I'm bullish on the stock market for 2025, I'm cautious in the near term as stocks seek to bottom out in these uncertain and volatile times.
Now, I created the Power Gauge, in part, to navigate challenging markets like these...
With custom alerts, you can get updates on your most important positions. And by following the ratings system, you can avoid the market's most dangerous areas.
The Power Gauge takes 20 quantitative factors into account. It's a boatload of data. It looks at everything from price performance... to fundamentals... to insider buying trends... to expert consensus.
Collecting and analyzing the data that the Power Gauge uses would take months for most individual investors. And that's assuming you even know what to look for and where to find the data.
But fortunately, the Power Gauge pulls all this data together in a matter of seconds...
With the Power Gauge, you just put in the ticker of the stock you're interested in. It pulls all of the data using our 20 factors almost instantly... and builds a complete report for you.
You can see the readings on each of the 20 factors that the Power Gauge uses. And more importantly, you get a simple overall reading – from "very bearish" to "very bullish" – on the stock.
Here's an example of the Power Gauge at work...
At the bottom of my free Chaikin PowerFeed daily e-mail, I include a section called "Top Movers."
In short, it displays the market's biggest gainers and losers from the previous trading day.
Now, you can find the best- and worst-performing stocks almost anywhere on the Internet. That's not the special part. Rather, our breakdown is better than others for one reason...
We provide the overall Power Gauge rating for each of these stocks. And we do it for free.
Here's one example from a few years ago...
Do you see what I'm talking about? If not, it's simple...
The top five gainers don't include any "bearish" stocks. And the top five losers don't include any "bullish" ones.
Folks, this doesn't happen every day. But it happens enough for it to not be an accident.
And the thing is... I expect these types of results.
After all, I developed the Power Gauge. It's the culmination of my life's work. And the 20 factors tracked in the system combine to produce a reliable overall rating for each stock.
In other words, the "bullish" and "very bullish" stocks will outperform the "bearish" and "very bearish" stocks more often than not. That's the power of this one-of-a-kind system.
So it's no surprise when the top gainers don't include any "bearish" stocks and the top losers don't include any "bullish" stocks. It's precisely how I've designed the Power Gauge.
In today's rapidly evolving market, a "bearish" rating can alert you to avoid a particular stock or sector, and a "bullish" rating can be just what you need to find the next opportunity to pursue. Either way, the Power Gauge can help you.
But no matter what tool you use, I implore you to have a plan in place...
A small investment – in time, tools, or both – can make a big difference. It can be the deciding factor between great returns or investing disaster.
Editor's note: A week from tonight, Marc is going to go in depth on his market outlook and how he suggests navigating today's volatility... in a brand-new free presentation.
Even with big hedge funds on a selling spree, top tech companies losing billions in value, and President Trump making announcements that move the market every other day, Marc says you can make several moves in the next 90 days to deliver potential double-digit gains.
You just have to know where to look – and what areas of the market to avoid.
Next Thursday at 8 p.m. Eastern time, Marc will explain all the details. He's also going to give away two free recommendations... one stock to buy and one exchange-traded fund to avoid at all costs. You'll also hear about a special report he put together for Stansberry Research subscribers.
Click here to sign up for this free event now to make sure you don't miss anything.
New 52-week highs (as of 3/19/25): Alamos Gold (AGI), Antero Resources (AR), Alpha Architect 1-3 Month Box Fund (BOXX), Berkshire Hathaway (BRK-B), Blackstone Mortgage Trust (BXMT), Cencora (COR), Dimensional International Small Cap Value Fund (DISV), SPDR Euro STOXX 50 Fund (FEZ), VanEck Gold Miners Fund (GDX), SPDR Gold Shares (GLD), Intercontinental Exchange (ICE), Kinross Gold (KGC), Sprott Physical Gold Trust (PHYS), Sandstorm Gold (SAND), Torex Gold Resources (TORXF), Tradeweb Markets (TW), ProShares Ultra Gold (UGL), VeriSign (VRSN), Vanguard Short-Term Inflation-Protected Securities (VTIP), and Wheaton Precious Metals (WPM).
In today's mailbag, more feedback on a reader note about inflation from earlier this week, and thoughts on Wednesday's Digest by Nick Koziol... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.
"To Subscriber Nelson D. [in Tuesday's mailbag]... AMEN!!! Since statistically you have 22.9 years left to endure this madness, I guess I'm a bit luckier than you. I'm already in overtime – statistically no years remaining. Thank God! But I worry about my children and grandchildren." – Subscriber Bill K.
"Nick, Good article, helpful insights. Wednesday markets seemed to ignore [Fed Chair Jerome] Powell's cautious note. When the Fed is lost in space, something bad invariably this way comes." – Stansberry Alliance member Bill B.
Good investing,
Marc Chaikin
Roxbury, Connecticut
March 20, 2025