Porter's latest prediction is already coming true... 'The Battle for America' has begun... Keep an eye on the Dow...
Earlier this month, Porter and his research team made a startling new prediction...
In short, the next U.S. presidential election will be the ugliest in history... And it will end with a "progressive demagogue" – with the most radical liberal politics we've ever seen – in the White House in 2020. From the Stansberry's Investment Advisory special report titled "The Battle for America," published this month...
If you were put off by Hillary Clinton's 2016 campaign... or couldn't believe how popular Bernie Sanders's socialist platform was – just wait. The 2020 presidential campaign will "out-liberal" anything you've ever seen.
Our next president will proudly proclaim her socialistic, "social justice" roots, and will offer our fellow citizens more handouts than every other president, combined...
Ordinarily, someone this radical wouldn't have any chance at being elected. But there's a new, incredibly powerful hidden force in our country. This new political force virtually guarantees she'll win.
Now, if you're like most folks, you may find this far-fetched...
But you don't need to look any further than this week's congressional primary elections to see that this force – the same force that is driving calls for a "debt jubilee" – is already far stronger than even many liberal politicians have realized. As the Wall Street Journal reported Tuesday night...
In a major upset for the Democratic Party establishment, Rep. Joe Crowley of New York lost his primary election Tuesday, unseated by a young progressive newcomer who reflects restiveness in the left wing of the party.
The Associated Press declared Alexandria Ocasio-Cortez, a 28-year-old former Bernie Sanders organizer, the winner of the race for New York's 14th congressional district, which includes parts of Queens and the Bronx...
Ms. Ocasio-Cortez, who has been endorsed by national progressive groups including the Black Lives Caucus and Moveon.org, and Mr. Sanders' political group, Our Revolution, triumphed with a grass-roots campaign against an incumbent who was also head of the local political machine, had a vast campaign war chest and for years had gone without challenge.
"These results are also a shot across the bow of the Democratic establishment in Washington: a young, diverse, and boldly progressive Resistance Movement isn't waiting to be anointed by the powers that be," said Matt Blizek, elections mobilization director for Moveon.
Despite getting virtually zero coverage in the mainstream liberal media... and despite spending less than one-tenth on her campaign than her 10-term incumbent opponent... Ocasio-Cortez won in a landslide. And she did it on a radical platform that should sound frighteningly familiar to regular readers: free health care and college for all... subsidized housing for all... and a guaranteed federal job for every American, among other promises.
As usual, what is left unsaid is that it will be those who have worked hard to save for retirement – wealthy and middle-class Americans alike – who will pay for these promises.
Porter and his team cover all this and more – including what's really driving this trend, and what you can do now to protect yourself – in this special report.
Stansberry's Investment Advisory subscribers can access it for free right here. If you're not yet a subscriber, you can click here to learn about a 100% risk-free subscription.
On Tuesday, we mentioned a key stock market level had been breached...
The Dow Jones Industrial Average had just closed below its 200-day moving average ("DMA") for the first time in nearly two years.
While this is typically considered to be a bearish sign, we also noted that it isn't always the case. In fact, the last time the Dow closed below this level – in June 2016 – it actually marked a significant bottom for the market.
Our colleagues Ben Morris and Drew McConnell recently dug even deeper into the data.
They looked at every similar breakdown over the past 40 years, and they came to the same conclusion: These occurrences alone aren't very meaningful. As they explained in Tuesday's issue of DailyWealth Trader...
Since 1978, the Dow has held above its 200-DMA for at least a year, then broken down, just 10 other times. The table below shows a summary of the returns in the months that followed those breakdowns...
These returns are – for the most part – worse than the typical returns for the Dow across all time frames. And the likelihood of a gain versus a loss (the "% Positive") is lower, too...
You can see this by comparing the table above with the summary of the Dow's returns over all periods in the table below. (For example, the "1-Month Average" below is the Dow's average return including every single 1-month period in the past 40 years.)
Based on history, you could say the Dow has tended to do worse than average following these breakdowns...
But that's far from the super-bearish message most folks would assume. In addition, these occurrences have led to both double-digit declines and double-digit gains in the year that followed. More from Ben and Drew...
This next table shows each of the 10 times the Dow broke its 200-DMA for the first time in at least a year. Below those occurrences, we averaged the gains by themselves and the losses by themselves.
You'll see that what comes next is a good chance at either big losses or big gains...
However, their research turned up something important...
You see, they also looked at each of these occurrences individually. And while the breakdowns alone weren't particularly meaningful, they discovered that what the Dow does after a breakdown can be a powerful "tell" for the market...
Here's what we want to see... After breaking down, the Dow generated double-digit 12-month gains four times. Each time, it rallied almost immediately after closing below its 200-DMA... And after the first rally, the Dow never hit a new low...
Here's what we don't want to see... After breaking down in 1981 and 1984, the Dow continued lower. These breakdowns – which led to weaker-than-average 12-month returns – look a lot different...
As Ben and Drew noted, it was a similar story in 1987, 1990, and 2007. In each case, the Dow fell to significant new lows – including an outright crash in 1987 – within a week of the initial breakdown. Only one year behaved differently. More from the issue...
The only occurrence we didn't cover yet was the 2004 breakdown, which was trickier. The Dow broke down, rallied, then dropped to a new low three months later. It was a weak year with a 2.9% gain, but not terrible...
In other words, if the bull market is intact, history suggests the Dow should rally soon...
We should see it trade back above its 200-DMA and avoid making a lower low in the weeks ahead. If it doesn't, history paints a more bearish picture...
If stocks continue lower over the next couple weeks, watch out. We're likely in for a rough year.
If we're going to have a good 2018 and first half of 2019, the Dow needs to rally... and soon.
We always like to point out that the past doesn't tell us exactly what will happen in the future. But it's often an excellent guide.
If you want to know where the market's going from here, keep an eye on the Dow for clues.
Finally, we'll end today with a special note from our colleague Steve Sjuggerud...
We've received dozens of letters from readers worried about what's happening in Chinese stocks... and for good reason. Many of these stocks – including some of Steve's favorite opportunities – have suffered dramatic declines over the past several weeks.
Steve addressed these concerns in detail in the latest issue of True Wealth Opportunities: China, published earlier today. But because he knows many Digest readers have been following his bullish thesis as well, he asked us to pass along his latest thoughts here today. Here's Steve...
I (Steve) completely understand the fear and worry...
Those who have followed my work on China for years are doing just fine... We're still up big on nearly every recommendation in my True Wealth Opportunities: China service. But those who just bought in are down quite a bit.
I know that's frustrating. Folks rightly want answers. They want my perspective. I get it.
Unfortunately, I don't have a crystal ball. I can't tell you exactly where Chinese stocks will head
But I can share two important points...
These, in my mind, are the only things that matter if you own Chinese stocks...
1. In the long-term, there are plenty of reasons why Chinese stocks will soar.
We're still in the early stages of a flood of money moving into China. The first step happened just a couple weeks back as MSCI included local Chinese A-shares to its indexes.
This flood of money will continue for years to come. It'll be a massive tailwind for Chinese stocks along the way. But it won't mean a one-way market.
That brings me to the second point...
2. In the short term, Chinese stocks WILL be volatile. And they could head lower before the next boom.
I know you don't want to hear this... But the long-term picture doesn't matter much in the short term. The reality is that a market that can soar 100% in 12 months – like Chinese A-shares have done several times – can drop just as quickly.
My answer to this uncertainty is the same it has always been...
It doesn't matter if it's Chinese stocks, gold stocks, or commodities...
You have to vigilantly follow your stops. If you hit a stop loss, sell. No questions asked.
We could stop out of several positions in my China newsletter. If it happens, we'll sell and move on.
But it won't mean we're done with those investments for good. It'll simply mean we're waiting for the downside to clear up before we get back in.
Most folks don't like to sell if they might get back in later. I'm OK with this, though. It's the only way we can take advantage of the long-term opportunity given the short-term weakness happening right now.
I'm not worried about China. And please, don't give up on China because of a few bad weeks. We have to stomach these difficult times to be on board for the next major boom.
New 52-week highs (as of 6/27/18): none.
Several more readers weigh in on America's savings crisis. What's on your mind? Let us know at feedback@stansberryresearch.com.
"I didn't find anything about Charlene P's note mean-spirited and I think it is telling that Brian O's response assumes that she doesn't do anything worthwhile towards those in poverty. Most of the affluent that I know are rather quiet about their charity and I see a lot of generosity that happens under the radar. Yet many of those same quiet, generous people are still hugely concerned about the current embrace of entitlement and having their wealth taken by force in one or more government redistribution schemes. Not because they object to narrowing the wealth gap but because government programs have been abject failures while many of their personal efforts have resulted in substantial improvements in the lives they touch with their generosity.
"It is always the case that one can find people in poverty seemingly 'through no fault of their own'. And none of the wealthy within my sphere of personal knowledge are opposed to helping those people who have genuinely had a truckload of cosmic detritus rain down around them. But there is a crucial difference between their assistance and a government program – a government program declares success when they have given away all the money they have taken from productive people and businesses in the form of taxes. Personal assistance declares success when the recipient achieves financial stability or a meaningful improvement in their quality of life.
"One approach creates dependency and despondency; the other approach creates independence and self-sufficiency. While I would agree that there are some genuinely sad cases out there, I can point to many more that are the result of people choosing a victim status for themselves and acting on it. In many of these cases, non-government assistance is rejected because of the risk that assistance accompanied by genuine caring might damage the case for victimhood.
"A lot of this boils down to what we believe about the roles and responsibilities of government, families
"The 2020 elections will almost certainly find us contemplating candidates who openly promote the further elevation of the state over the individual. The chances that a larger government that sucks up even more of our GDP will meaningfully address poverty is infinitesimally small. Much better we should start to find our way back to direct personal responsibility to and for one another." – Paid-up Stansberry Alliance member Paul W.
"Note to Brian O. There are 3 musts not to be poor in America. Graduate High School. Don't have children out of wedlock. Save at least 10% of your gross income. There will always be your 'bad luck' cases. The overwhelming majority are due to bad choices." – Paid-up subscriber Jim L.
"Reply to Brian O: I think you have missed the point. Bruce W is not denigrating those who have to work hard to take care of themselves and their family. He is lamenting the fact that there are so many out there that think that because he has succeeded in doing so that somehow it is fair (or even obligatory) that he be punished for that success by taking away some or all of the fruits of his labors. Such attitudes are not only inherently unfair to those who have enjoyed some modicum of success but to those who have not as it often results in negative consequences for those who have not when they lose their ambition, work ethic, and desire for
Regards,
Justin Brill
Baltimore, Maryland
June 28, 2018