The Four Worst Words in Investing

Catching COVID-19... Omicron cases are rising fast... What does it mean for the economy?... 'You are here'... The four worst words in investing... Steve Sjuggerud's New Year's resolution...

Sometime in the past few weeks, I (Corey McLaughlin) caught COVID-19...

I'm not entirely sure how or where, but I have a pretty good idea it was from my older, unvaccinated child via her preschool, where they pass around snot as if it were a toy. She had been a little sick with a runny nose a few weeks ago.

I'll spare you most of the other details, other than to say that since I last wrote to you on December 21, 2021, I'm still getting over the worst sore throat I've ever experienced... and on Christmas Eve, our newborn spiked a fever for a day, which was scary.

We're all doing OK now... and it appears we're on the back end of our experience – thankfully.

But I know I'm not the only one in this situation...

I read that COVID-19 is infecting a new person in Los Angeles every six seconds – primarily through the easily transmissible Omicron variant.

Maryland, where we live, is a particular hot spot with a "positive rate" of at least 25% of the population... and many people with children I know have "COVID positive" households.

The better news is that while hospitalizations are on the rise again in the U.S., deaths all over the world are "decoupled" from cases...

In other words, daily infections worldwide are rising ‒ to nearly 2 million on December 30, a roughly fourfold gain since early November ‒ while deaths per day from the Omicron variant aren't keeping pace... In fact, deaths are lower than they were in previous COVID-19 waves, like last winter.

We don't bring up our personal story simply to start a debate over COVID-19 numbers and vaccines (I'm sure we'll get messages), but because we thought it was the best way to illustrate a point about the world as it is...

When it comes to pertinent information for the economy and your portfolio, just know that a lot of people are getting COVID-19... and that means more people are staying home again, families are dealing with child care and school-related issues, and on and on it goes...

But will this disruption last or lead to the next market crash? And if so, when? Let's explore these questions in today's Digest...

You might be wondering what Omicron means for your portfolio...

If you're a long-term investor holding stocks beyond a few months, not a heck of a lot... or at least, not enough that you need to take action.

The highest-quality companies with gobs of free cash flow that consistently reward shareholders will be fine.

It's easy to forget the benchmark S&P 500 Index just closed out a 27% gain in 2021 despite other COVID-19 Greek alphabet-named variants sprouting up over the course of the year.

This Omicron variant, which was first detected in South Africa around Thanksgiving, looks like it has already peaked there and is fizzling out... And it appears to have been less deadly and to have sent fewer people to the hospital.

As Stansberry NewsWire analyst Dalton White wrote today...

Last Thursday, South Africa's Minister in the Presidency Mondli Gungubele said the nation's fourth wave has potentially peaked on a national scale. The country has reported a decreasing number of COVID-19 cases and hospitalizations. Two weeks ago, South Africa's Gauteng province said it was seeing declining numbers of infections. Gauteng was where the first Omicron cases appeared.

Due to improving COVID-19 numbers, the government lifted its curfew before the New Year's celebrations. The nation is still enforcing mask requirements and gathering limits. This is a little more than a month after the first Omicron cases were reported in South Africa. The country's sharp rise and rapid drop in Omicron cases suggests that other nations could experience a similar peak in infections.

If you're confident using the information from South Africa as a relevant guide for other parts of the world – particularly, here in the U.S. – call it six weeks from start to finish for the country's Omicron experience... with fewer deaths (though not zero) and shorter hospital stays, generally speaking.

According to a study published last week from one South African hospital, 4.5% of patients admitted with Omicron died, compared with 21.3% from previous waves. The average length of stay for Omicron patients was four days, less than half the average for other strains.

This pandemic has upended life for so many people. But today, if you have money in the markets and have positions tied to time horizons past the first quarter of 2022, you should probably be removing Omicron as a factor in your investment decisions.

As NewsWire analyst Nick Koziol reported today, for instance, the OPEC oil cartel sees the Omicron variant having "a mild and short-lived impact on crude demand."

But also in the immediate term, this variant is spreading faster than any previous variant...

It's catching a lot of people off guard, like previous waves have done, and forcing schools, employers, and the health care system to deal with rising cases, testing, and vaccination status... which does mean something for the long term.

This scenario raises real concerns for many people about the muddling of daily life... which means, unfortunately, more fuel for inflation...

For example, two weeks ago – actually, the day before I last wrote to you – I was feeling body aches and a headache.

It felt similar to how I felt after I got my first vaccine, so I thought these were signs of COVID-19. However, I tested negative on a rapid antigen test, leading me to wonder if the at-home test kits on the market were working with the new variant.

I asked our Stansberry Venture Technology editor Dave Lashmet, who has been following the COVID-19 story closely from the start, if there was any research being done on existing COVID-19 tests and their effectiveness at detecting Omicron.

He told me the tests were working (a few brands in Europe – Meridian Bioscience and Applied DNA Sciences – don't work, according to the U.S. Food and Drug Administration). As Dave told me in a private note...

Overwhelmingly, the U.S. test system is intact – including the tens of millions of rapid at-home antigen tests that are being made and distributed every month.

Turns out – and this is only clear in hindsight – I didn't test positive initially because I just wasn't contagious yet...

The general guidance from the Centers for Disease (Not Under) Control and Prevention ("CDC") is that people are most infectious one to two days before symptoms develop and two to three days after...

I tested positive several days after my first test... once I developed a runny nose and congestion. I was not surprised, but by then, everyone in our house was on their way to being sick too, which doesn't do anyone any good.

Dr. Omai Garner, the director of clinical microbiology at UCLA Health, where he runs a testing lab, told NBC News...

These tests don't seem to work really well in the early parts of these infections because it doesn't look like Omicron has as high a viral load in the first couple of days, as opposed to Delta, which had a screaming-high viral load on Day One.

What is shifting now is, when did you get tested? Because there now appears to be a lower amount of virus early on, that might explain why the antigen tests are not showing up positive until Day Three, when there's lots of positivity.

Got all that?

The point is, the tests may still work, but I can't imagine I was or will be the only person in the world who loses some time (from work or other things they'd rather be doing) due to the confusion over COVID-19 testing...

It's still a mess...

We're almost two years into this pandemic, and the federal government is still incompetent when it comes to helping us with the basics. President Joe Biden recently admitted the White House flubbed...

Back in September, Biden said the federal government would spend $2 billion to buy nearly 300 million rapid tests so that Americans had access to free and convenient testing in their communities.

But that rollout is nowhere to be seen, nor has the logistics of getting at-home tests reimbursed under health insurance coverage... Instead, we see handwritten signs on pharmacies that say, "We're out of tests"... and people hoarding Abbott Laboratories (ABT) BinaxNOW boxes instead.

Gigi Gronvall, a senior researcher at the Johns Hopkins Center for Health Security, told NBC...

Demand has just completely outstripped supply.

In the meantime, thousands of flights were canceled around the holidays, as Omicron's spread caused pilots and airport personnel to stay home from work.

That's a big reason why the CDC just so happened to cut the recommended COVID-19 isolation period from 10 to five days... The move followed successful lobbying by the airline industry.

Concerns like these could contribute to a few roadblocks for the economy, like more pandemic-induced supply-chain problems and inflation, as well as the uneasiness of people returning to pre-pandemic jobs...

How will it play out in the economy in the coming months? Nobody can really say for sure, but it's not hard to imagine a worrying scenario rolling out sometime soon...

With the Federal Reserve and central banks easing up on their breakneck "easy money" policies of the last 18-plus months, that could spell trouble if, say, the Fed hikes interest rates, while parts of the country are still grappling with COVID-19 issues...

I can't imagine that will go over well... Alternatively, if the Fed holds rates at zero for longer, that will stoke inflation fears – and possibly grow real, longer-lasting inflation. That's not good either.

This could just be a coincidence, but our Ten Stock Trader editor Greg Diamond's theme for 2022 is simple – volatility...

Greg penned an excellent Weekly Market Outlook to his subscribers this morning, featuring a look back at his 2021 trading results and a look into what's on his radar in 2022. Here's an excerpt...

The market hasn't been very volatile for quite some time... really since the crash in 2020, and the rally since has seen modest corrections and stocks keep grinding higher.

So what or why would I think stocks are going to shift course and become more volatile this year?

Is it a policy error by the Federal Reserve? Inflation? Politics? War? A black swan?

I have no idea of the "what" or the "why."

As I say often, the only thing I care about is the "when."

And Greg, a technical trader, has some compelling evidence that the when could be coming this year... as he tracks the similarities between today's market and that of the dot-com bubble in the late 1990s...

He told Ten Stock Trader subscribers today...

Back in early November, I made a bold prediction that we could see the end of the bull market in February or March of 2022.

Read that update if you haven't already. I compared the price action of Caterpillar (CAT) with Microsoft (MSFT) in 2000 and now. Both time cycles are repeating and warning of trouble ahead.

I have specific dates for the month of February that I will highlight in the next few weeks...

But there is more...

For much of last year, I noted how the Nasdaq 100 is replicating the exact same price action as it did back in 1998 to 2000.

Let's take a look and see if that still holds water. Here is the Nasdaq 100 right now...

The chart above shows the Nasdaq's 100% rally after the COVID-19 crash, a "consolidation" earlier this year and breakout, and another consolidation followed by another rally... with the Nasdaq likely to make new highs soon, Greg says.

And he continued...

Now here is the chart from 1998 to 2000...

The red arrow marks where we are along the timeline.

So yes, the two time cycles still hold water and further add to my conviction that all won't continue in a nice smooth uptrend for 2022.

I've said it before, and I'll say it again – prove me wrong, Mr. Market.

If this market is not replicating what happened back in 2000, it is going to have to prove it to me. Prove to me that the four worst words in investing ("This time is different") won't take this bull down.

So far, Greg says, today's market is on the same track that the dot-com bubble followed, which means he (and we) can't ignore the idea that the bull market is running out of time...

In the short term, based on these charts and others, Greg is still bullish. But he has strong conviction that the clock is running out. Which brings us to a way to handle the volatility in the stock market we might see in 2022...

We're not suggesting you sell all of your stocks today... Let's be clear about that. But we do want you to think about and be prepared for what you'll do come the next market crash.

With that, here's a New Year's resolution to try...

This is one that won't take a whole lot of effort, meaning you can stick to it easier... but it's one that can pay off big-time for you over the long term.

It comes via our colleague and True Wealth editor Dr. Steve Sjuggerud, who says he often struggles with New Year's resolutions, but not this year...

His 2022 resolution is to make sure everyone has an "exit plan" for their stocks. As longtime readers know, in 2021, Steve hit pause on his "Melt Down" warning. But it is back on his radar heading into the new year...

Steve recently shared an important alert – and some of you may have seen it over our holiday break. As he wrote...

No matter where you think stocks could go next, I'm urging you to prepare for a Melt Down...

And Steve continued his message by using some of the same precise language that Greg used today in his update about the four worst words in investing: This time is different.

As regular readers might know, when more than one of our editors is saying the same thing in different ways, I like to make sure we pass it on here in the Digest. As Steve continued...

If you follow my work, that's great.

But I don't care what stocks you own or whose investment recommendations you follow...

If you read this message today and get no other value from it, let it be this: don't fool yourself into thinking things will be different this time. [Our emphasis added.]

The Melt Down will arrive at the exact moment you least expect.

This is why Steve put together his own plan for when he will personally exit stocks. And this same plan can work on any portfolio of stocks... his, yours, or anyone else's.

As we've written before, most individual investors with money in stocks never get around to doing this, but it is a critically important next step to protect and grow your wealth.

As Steve says...

If you just do one thing in 2022 to improve your financial health, this should be it.

Frankly, even if you don't believe anything else we said today, Steve's suggestion for having an exit plan for your stocks is one piece of advice everyone should follow.

It's pretty easy to buy a stock. It's harder to know when to sell it. But once you sit down and come up with a plan, it might become easier than you expect.

Click here to listen to Steve's message now – and don't delay. In the message, he explains how to get one free year of the tool he's using to time his exit. But the offer goes offline at midnight tonight.

New 52-week highs (as of 12/31/21): American Homes 4 Rent (AMH), Brown & Brown (BRO), Crown Castle (CCI), Quest Diagnostics (DGX), Digital Realty Trust (DLR), Flowers Foods (FLO), Hershey (HSY), Invitation Homes (INVH), Ingersoll Rand (IR), Kimberly-Clark (KMB), Knowles (KN), Coca-Cola (KO), McCormick (MKC), PerkinElmer (PKI), Constellation Brands (STZ), Thermo Fisher Scientific (TMO), Waste Management (WM), Consumer Staples Select Sector SPDR Fund (XLP), and Utilities Select Sector SPDR Fund (XLU).

In today's mailbag, feedback on our holiday series essay about inflation... What's on your mind as we begin 2022? As always, e-mail your comments, questions, praise, or rage to feedback@stansberryresearch.com.

"I used to pride myself on a $10 ribeye once a week. Now that same steak is $15 to $20. As a person who worked for over 40 years to retire on a fixed income, I can only hope to enjoy a decent steak once a week in the future.

"The Consumer Price Index does not include food or fuel, and certainly the latter has taken off as well. If the clowns in D.C. think the world doesn't need fossil fuel, wait until gas is $7 or $8 a gallon, like it is in Europe. Everything these bozos do is killing the U.S.!" ‒ Paid-up subscriber M.L.

All the best,

Corey McLaughlin
Baltimore, Maryland
January 3, 2022