Welcoming the Money With No Brain at All

Picking apart Steve Sjuggerud's best ideas... It's easy to be bullish today... Focusing on a single question... If you haven't noticed the euphoria, where are you looking?... Eccentric examples all around us... Welcoming the money with no brain at all... The updated playbook to get the most out of what's left...

Folks, I (Vic Lederman) am in a tricky spot today...

Longtime Digest readers know I spend my days working as an analyst with Dr. Steve Sjuggerud. And as I've explained in the past, I love picking some of his best ideas apart.

His latest bold call is no exception...

You see, Steve recently made a big prediction about the future of the "Melt Up" that is currently playing out. And frankly, I'm not sure that I'm on board with what he believes...

That's because Steve is calling for the end of the Melt Up. He has even started the clock on when he thinks it will officially end... And his clock points to sometime later this year.

In short, Steve is waving the warning flag... He's shifting his focus to make sure that his subscribers get the very most out of the end of this Melt Up. And at the same time, he's working to make sure as many folks as possible are able to survive what comes next.

I want to trust him... As regular readers know, Steve has put together a phenomenal long-term track record. He expertly navigated the dot-com bust, the housing crisis, and the ensuing "Bernanke Asset Bubble." (That last one grew into what we call the Melt Up today.)

Yet here I am... still finding bullish opportunities. I still see plenty of upside in stocks today.

So where does that leave me? Am I simply wrong? Am I ignoring the wisdom of a seasoned professional with a nearly impeccable record?

Let's get to the bottom of it...

My guess is that a fair number of you feel the same way I do...

After all, it's hard not to be bullish if you've looked at any charts lately... All three major indexes are at or near all-time highs again.

Plus, the latest round of earnings recently came in... And they all looked good, too.

This will have a "cooling effect" on some of the outrageous multiples we've seen lately...

For example, the benchmark S&P 500 Index's price-to-earnings (P/E) ratio recently peaked at 45. That's more than twice its historical average. But now that earnings are rising (they're the denominator in the P/E ratio), we expect to see that multiple come down.

All of this simply means that the market might not be as hot as it looks.

What's more, the world is awash in cash right now. Nearly every nation's reserve bank has taken a unified posture... And their message is, "Don't worry... We've got your back."

So I get it... It's darn easy to be bullish right now. And based on that evidence, it seems like the Melt Up has plenty of runway. It doesn't feel like the good times will end anytime soon.

The problem is... everyone else feels that way, too. And you've probably started to notice that the mainstream media is filled with stories pushing this bullish sentiment...

Just last week, in the April 27 Digest, my colleague and friend Chris Igou detailed a recent example of this euphoria... A 14-year-old kid made $78,000 off a single options contract.

Insanity.

That's great for the kid. But of course, it takes huge risk to make huge returns like that. And after hearing stories like this, millions of others want in on the action... risk be darned.

Steve's thoughts on this phenomenon are clear. It doesn't matter what the numbers look like... When the euphoria starts, you know that the end of the Melt Up is near.

So, for the rest of today's Digest, we're going to focus on a single question...

What would it take for you to see the building euphoria?

I really mean it... This isn't a rhetorical question.

If you don't think we're getting near the peak... if you think the "Melt Down" is so far off that it's not time to start positioning for it... then what would it take to change your mind?

I've already made it clear... If you set sentiment aside, I personally believe we could see another extended bull run in the market.

But the thing is, we can't ignore the signs of euphoria all around us today...

Football player Trevor Lawrence is a great example.

Last Thursday night, the Jacksonville Jaguars selected the 21-year-old quarterback with the top pick in the NFL draft. And just days before that, he signed a major endorsement deal with Blockfolio, a global cryptocurrency-focused company. He also said that he would invest his entire signing bonus – more than $20 million – in an account with Blockfolio.

You might have your own thoughts on cryptocurrencies... And frankly, it doesn't matter if they're positive or negative. What matters is that, presumably, millions of dollars are being spent for a 21-year-old football player to be the face of a burgeoning financial-services firm.

Really, stop and think about that for a second... When was the last time you wanted investment advice and thought about asking a football player?

And he isn't the first football player to dive into the crypto space either... As you might recall, my colleague and Digest editor Corey McLaughlin explained last Wednesday that Kansas City Chiefs tight end Sean Culkin will convert his 2021 salary into bitcoin.

Nothing personal against football players, but they're generally the embodiment of the "earn it and burn it" windfall cycle... It's a plague on the sport. And veteran players are just starting to form groups to help the younger generation avoid the pitfalls of fast money.

Now, maybe you think these are just eccentric examples from the crypto space...

But these days, everywhere you look in the markets, you can find "eccentric examples" of the building euphoria... Seriously, how many would I need to write about for you to see it?

Was the GameStop (GME) bubble a one-off situation? What about Tesla (TSLA) founder Elon Musk's bizarre ability to move the price of specific assets with his Twitter account?

In our free DailyWealth e-letter, I've also previously detailed how investors piled into near-bankrupt companies – like rental-car operator Hertz Global (HTZGQ) and clothing retailer JC Penney. And yet, when those trades went sideways like they were destined to from the outset, the investors begged the bankruptcy judges for bailouts.

Chris recently sent me another interesting story, too... It was a link to a video of a shirtless "surfer bro" talking about his day-trading strategy.

My point is... everywhere you look these days, you can find stories about unusual suspects trading in their day jobs for a shot at striking it rich in the markets. Surfer bros, 14-year-old kids, stay-at-home moms, you name it...

But please, don't be fooled into thinking this is a 'new normal'...

The general public – including all those surfer bros and teenagers – is bullish the market right now. But in normal times, the general public couldn't care less about the market.

That's the most important takeaway here.

Regular Digest readers know we often talk about the "dumb money" as a sentiment indicator... These are the people who are more generously described as "retail traders." They're the speculators out in the world, just looking to make a quick buck.

It's normal for these retail traders to pile into the markets in euphoric times and create sentiment extremes.

On the other side, you'll find institutional traders – the so-called "smart money." They're the folks who've been living in the trenches and know what to expect. They're usually better at timing the markets.

But folks, we're not even talking about the dumb money here... We're talking about the money with no brain at all.

The financial-services industry is using football players, rappers, and 14-year-old kids who struck risk-taking gold as its faces. The point is to appeal to the non-investing public...

And it's working... Today, the general public seems to really believe the misconception that the market is nothing more than a way to make a quick buck. That is not normal.

It's the telltale sign that the party is on limited time... And you'd be foolish to ignore it.

So, do I still want to believe more time remains in the current Melt Up than Steve thinks? Sure, of course I do. But in reality, we're talking a matter of months... maybe a year or so.

The simple truth is that I asked myself the question we started with at the top... "What would it take for you to see the building euphoria?"

And in the end, I just can't ignore the preponderance of evidence all around us right now. You might not like the conclusion that forces... because it tells us that the end is near.

But you're living in an alternate reality if you choose to ignore it.

Fortunately, Steve just updated his Melt Up playbook to help us get the most out of the limited time left...

You might be like me... Maybe you want to hold out hope that Steve's countdown clock is too conservative. Maybe you believe we still have more time to maximize our gains.

But there's no getting around the most powerful indicator we have... The "money with no brain at all" is in the market today. And that means it's time to start preparing for the end.

The good news is... As always, Steve is already one step ahead of the game.

He just put together a presentation that focuses on how to get the most out of the "final surge" of the Melt Up. And regardless of how you feel about the market, I recommend you check it out...

Whether we have three months, six months, or 12 months left, you'll want these strategies in your pocket. After all, Steve is a professional investor with a world-class track record... Plus, as you'll see, he worked with two other investing experts to craft the perfect approach.

Personally, I'm holding out hope for more time. But no matter what, I'll be following Steve's advice. And I suggest you do the same... Listen to Steve's latest message right here.

New 52-week highs (as of 5/3/21): AbbVie (ABBV), American Express (AXP), Axis Capital (AXS), Brunswick (BC), Berkshire Hathaway (BRK-B), CBOE Global Markets (CBOE), CBRE Group (CBRE), Corteva (CTVA), CVS Health (CVS), Expeditors International of Washington (EXPD), Comfort Systems USA (FIX), W.W. Grainger (GWW), Home Depot (HD), Huntington Ingalls Industries (HII), Hershey (HSY), iShares U.S. Home Construction Fund (ITB), Nuveen Preferred Securities Income Fund (JPS), Lennar (LEN), LGI Homes (LGIH), Cheniere Energy (LNG), MasTec (MTZ), Annaly Capital (NLY), Northrop Grumman (NOC), NVR (NVR), Invesco S&P 500 BuyWrite Fund (PBP), Invesco High Yield Equity Dividend Achievers Fund (PEY), S&P Global (SPGI), Constellation Brands (STZ), TFI International (TFII), United States Commodity Index Fund (USCI), Vanguard Short-Term Inflation-Protected Securities Index Fund (VTIP), and Waste Management (WM).

In today's mailbag, thoughts on yesterday's Digest and more feedback on Dan Ferris' Friday essay about electric-car maker Tesla (TSLA). As always, you can e-mail your thoughts, comments, and observations to feedback@stansberryresearch.com.

"Regarding the quote from Charlie Munger in Monday's Digest: Everything he said perfectly described Federal Reserve Notes! Especially the part about them being 'disgusting and contrary to the interests of civilization'!" – Paid-up subscriber James W.

"In response to today's Digest section about cryptos, I do agree that (as with most things in life) it's not an all or nothing decision. It's whether an asset class is right for you as an investor/speculator. Cryptos are so new to the investment landscape that even the professionals with decades of experience don't agree on how to classify them, whether that's Buffett, Munger, Giustra or Saylor.

"I thoroughly [enjoyed] the latest Crypto Capital update because Stephen's perspective/opinion that crypto's still in the early stages really struck a chord. To ignore or (worse in my opinion) dismiss the technology behind all the numerous blockchain projects happening right now is a foolish outlook toward the future.

"I have about 1% of my net worth spread among a half dozen cryptos. I'm not losing sleep about any of them dropping to zero, but I might wake up one day to one of them being the technology that molds the future." – Paid-up subscriber Beau E.

"That was a great article you wrote on Tesla, Dan... well done!!! That's why they probably pay you the big bucks eh!!!" – Paid-up subscriber John G.

"Dan, thanks so much for your Friday letters. I very much enjoy your writing and wit.

"I snorted coffee out of my nose this morning reading your hypothetical conversation between Musk and his CFO. My question is, was Spicoli driving the van?" – Paid-up subscriber John C.

"More kudos to Dan for your spine! I respect your analysis that recognizes the simple fact that, despite lip service about being 'neutral' and acting without an emotional component, the reality is that economic and financial decisions are made in political landscapes that don't pay attention to our personal likes and dislikes. Keep it up." – Paid-up subscriber E.L.

"Good afternoon Mr. Ferris, your comment on May 3rd from Alliance member Jim S. is nothing short of just outstanding!

"Please, please continue with everything you are doing. My great-great grandfather once told me, "Sticks and stones may break my bones... but names will never hurt me." – Stansberry Alliance member Carlos S.

"Dan, I loved your response to Jim S. on how you are not now or ever about to roll over and keep your mouth shut while a bunch of nincompoops try to turn this USA of yours and mine into a garbage dump. Thank you and keep at it." – Paid-up subscriber Dave W.

"Give up! It's embarrassing. Tesla is not a car company. It's a software company. Your ego is so crushed by being wrong about Tesla, you can't see the forest for the trees." – Paid-up subscriber Rock P.

Dan Ferris comment: I was never long or short Tesla... And I openly acknowledged being wrong based solely on share-price performance. Maybe you didn't read that part. None of what I said about Tesla last Friday is controversial... It's all right there in black and white.

As for it being a software company, Tesla included photos of its Texas and Berlin Model Y Gigafactories in its latest quarterly earnings-call announcement (which you can see below).

If Tesla were a software company, these massive buildings would not exist.

Tesla makes and sells a low-margin product in a highly capital-intensive industry. That describes no software companies and all car companies.

Good investing,

Vic Lederman
Jacksonville, Florida
May 4, 2021