Wealth Grows on Its Own… But You Must Plant the Seeds

If you don't do this, you will likely never, ever be wealthy.
You will work until your health collapses, and you'll be dependent on the whims of Washington bureaucrats. Quite possibly, you'll die broke.
It's a disturbing fate… But many Americans will experience it firsthand.
So for a moment, forget about valuing stocks, picking the fund with the lowest fees, or finding the ideal asset allocation.
All those are important. But your retirement – and wealth that you accumulate across your lifetime – depends almost entirely on just one factor…
I'm talking about your savings rate.
It doesn't matter whether you make $30,000 per year or $300,000. It's all about the percentage that you can save…
For example, if you save 10% and spend 90%, it's going to take a long time to become wealthy. But… and this is outrageous… you would actually be saving at double the 5% rate of the average American.
A 2015 report from the Government Accountability Office found that 41% of households age 55-64 have no retirement savings.
You must take personal control of your wealth… And you can start today.
Remember, saving is just spending a little less than you take in. Start small at first. But if you can save a higher-than-average amount… say, 20%, 30%, even 50%… I guarantee you will be wealthy in a modest number of years.
The best part is that it doesn't really matter how much you make. It only matters how much you save…
Assuming modest investment returns of 5%… the average American has to work for more than 65 years with a 5% savings rate before accumulating enough wealth to replace their income without touching the principal.
But you can bump that savings rate up…
If you can save 20%, you will be wealthy enough to retire after less than 40 years of work. If you save 30%, you can retire in less than 30 years. And if you can manage to save 50%, you can stop in less than 20 years.
The numbers are shocking, but clear.
No matter how skilled you are as an investor, upping your savings rate is more powerful to your wealth than either increasing your income or increasing your investment returns. That's because it's a one-two punch… you increase how much you have to invest, while decreasing how much you spend. You also learn how to live longer on less money.
Here are a few simple tricks to get you started saving more…
1.  Set up direct deposit for your paychecks.
A recent study shows that those who have a portion of their earnings directly deposited into a savings account automatically save about $450 a month, much more than the average. Try it. Start with $50, then go to $75 in a couple of months, then to $100, and so on.
2.  Boost your 401(k) contribution.
Often, your employer may match contributions that you make to your 401(k) up to a certain level. If there's one financial decision that absolutely every single person needs to make, it's this… Always contribute enough to your 401(k) to earn the maximum employer contribution.
Skipping out on that free money is the most senseless mistake in personal finance. And if you ever receive a raise, put the extra money into your 401(k) up to the maximum amount ($18,000 in 2017). At my company, I make an instant 50% on the first 6% I save because the company matches. It's the best investment I make every year.
3.  Open an Individual Retirement Account (IRA).
It's just as easy as opening any other brokerage account. When registering, you simply select IRA as the account type. When you file your taxes at the end of the year, the forms include a line to enter any IRA contributions. It's as simple as that. And it will save you tens of thousands of dollars over just a decade or two of retirement savings.
There's also another type of IRA called a "Roth IRA." This account lets you make after-tax contributions. Then when you withdraw the income in retirement, you don't pay any taxes on it. This account makes sense for people who believe that their tax rate is lower now than it will be when they retire. I recommend folks split the difference and put half into a Roth and half into a deductible so-called "Traditional IRA."
4.  Pry some cash back from the tax man.
If your income is under certain limits, you can get an even greater boost to your IRA. For 2017, a married couple earning between $40,001 and $62,000 is eligible for a tax credit equal to 10% of their IRA contribution. So if a couple puts $1,000 away, they not only lower their taxable income by $1,000, they also get another $100 of hard cash back from the IRS as a tax credit.
The tax credit gets bigger at lower income levels. For a married couple making less than $37,000, the credit is 50% of their contribution. Saving is difficult for low-income folks, but this helps. It's also a great boost to the savings of young people. This is one heck of a deal. Put $2,000 into your IRA and the government will give you $1,000 (the maximum) in cash back.
5.  Switch to a credit union.
Credit unions often pay the best rates on savings accounts – like money-market accounts and certificates of deposit. And they keep your money away from Wall Street. Credit unions are nonprofit companies that act as local community banks. If you're tired of being abused by your big bank, move to a credit union.
Remember that ultimately, how much you save could be the difference between a lifetime of poverty… or one of wealth.
With two 401(k)s and two IRAs, a married couple interested in saving aggressively can save $46,000 a year without paying income taxes. That's tens of thousands of dollars that you get to keep, and that you can spend on whatever you'd like later in life. And by investing that money, you can compound your earnings quickly.
Before you know it, you'll have wealth and riches to enjoy in your retirement days.
Here's to our health, wealth, and a great retirement,
Dr. David Eifrig
Editor's note: Changes are coming to Social Security… And some "loopholes" for increasing your payouts have already vanished. But Dave has uncovered a strategy to make your retirement payouts last longer. He recently published the details in a special report, available to subscribers of his Retirement Millionaire newsletter. To learn more about Retirement Millionaire, click here.

Source: DailyWealth

What Does a Dying Bull Market Look Like?

Last week, thousands of readers tuned in to hear Porter Stansberry and me talk about the day the bull market ends.
My take is that this market still has upside – and stocks still have room to run.
Why do I think this? In short, the market isn't "acting" like a market that's at the top yet…
The last truly great boom in U.S. stocks was the dot-com bubble of 1999. I expect this great boom in stocks will end in a similar way.
So how does today's market compare to 1999?
Almost any way you size it up, today's bull market has a long way to go on the upside before it resembles 1999…
One interesting way to compare them is through the "health" of the markets…
In a strong bull market, more stocks should be going up than going down – right? Sounds basic.
Well, what if the overall market was going up… but more stocks were falling each day than rising?
That's what was happening at the end of 1999.
You can see this in the chart below. The blue "advance/decline" line is a simple indicator… You take the number of stocks that went up in a day, and you subtract the number that went down. If more went up, this line goes up. If more went down, this line goes down. Take look…
In a typical bull market, as the market goes up, the advance/decline line goes up too.
So what happened in 1998-1999 is interesting… The overall stock indexes were going up. However, more stocks were falling than rising.
That was not a healthy market. On the contrary – that's what a dying bull market looks like.
How does this compare to today?
Today's advance/decline line looks nothing like the late 1990s. Take a look…
Today's market is still "healthy."
The number of advancing stocks is still higher than the number of declining stocks each day. Based on this indicator, the market is not looking "weak" yet.
This isn't the only indicator I look at, of course. It's just one of many, showing a similar conclusion. This one isn't foolproof either – it didn't give any advance warning at all in some market downturns.
Again, it's just one indicator… one piece of evidence among many that tells me we still have more upside ahead.
Yes, this is the second-longest bull market in history. No, it doesn't feel like a top – yet.
Invest accordingly.
Good investing,
P.S. I want to give credit where credit is due… Ben Carlson of Bloomberg.com and Ritholtz Wealth Management wrote a great story on this. You can read it by clicking here.
Editor's note: Last week, thousands of folks tuned in for our live event with Steve, Porter Stansberry, and TradeStops founder Dr. Richard Smith. They revealed how to safely capture the gains of a "Melt Up"… when to sell some of the market's most popular stocks… and how TradeStops' specialized tools can boost your profits – with less risk. If you missed the event, you can view a full replay right here.

Source: DailyWealth

This Decision Will Dominate the News in the Coming Weeks

The Weekend Edition is pulled from the daily Stansberry Digest. The Digest comes free with a subscription to any of our premium products.
 Regular readers know Steve Sjuggerud's "Melt Up" thesis isn't his only big contrarian call of late. He's also incredibly bullish on China.
Now, it appears others are beginning to wake up to this opportunity, too… This week, news service Reuters reported Chinese stocks had their best day in months. From the article…
China stocks rose sharply on Thursday, as the blue-chip CSI300 index posted its best day in more than nine months despite the surprise decision by Moody's to downgrade the country's sovereign credit rating a day earlier…
The blue-chip CSI300 index rose 1.8%, its biggest gain since Aug. 15, and ended at 3,485.66, its highest close in more than a month. The Shanghai Composite Index advanced 1.4% to 3,107.83…

The strongest performers in China's markets on Thursday were banking and real estate stocks, whose indexes jumped 3.3% and 4%, respectively.

 Steve has, of course, recommended some of the same stocks and sectors. But we didn't bring this up to simply make that note…
This report is also among the first from any mainstream outlets to cite several of the bullish factors Steve has been telling readers about for months. In particular, the report highlighted a major event coming up in just a few weeks…
Expectations were building that MSCI will announce China's inclusion in its Emerging Markets Index when it issues its annual classification review on June 20.
Snubbing China last year, MSCI cited concerns over share suspension rules and monthly limits on repatriating capital.

China Securities Co., a brokerage, said in a report on Wednesday: "The chance of an A-share inclusion into MSCI has risen drastically for 2017"… JP Morgan, China International Capital Corp, and BlackRock have also expressed optimism over prospects that A shares could be included by MSCI this year.

This should sound familiar to Steve's subscribers. It's exactly what he has predicted… And it's one of the biggest reasons he's bullish on China today.
Inclusion would mean hundreds of billions – or even trillions – of dollars moving into Chinese stocks over the next several years… And this week's news is a sign that Steve's thesis is catching on.
Expect to hear even more about Chinese stocks as next month's decision approaches.
 Meanwhile… what did you think about our live event Wednesday night?
Thousands of folks joined us for our roundtable discussion, "The Day the Bull Market Will End," with Porter, Steve, and TradeStops founder Dr. Richard Smith.
If you were among them, we hope you'll agree it was one of the best events we've held to date.
Porter and Steve kicked things off by sharing their latest thoughts on the market. They also addressed the "conflict" between Porter's bearish views and Steve's bullish views.
The fact is, Porter and Steve's views aren't as different as they might appear. But this week's event provided even more clarity. For example, Porter noted that despite his warnings, his investment recommendations have remained relatively bullish…
Look at The Total Portfolio that I manage. We're 90% long… Look at my Stansberry's Investment Advisory portfolio… It's probably more than 90% long.
What I'm telling you is you should be prepared for problems. You should be ready to sell. And you should hedge.
I'm not saying – and I have never said in any newsletter anywhere, not even in June 2008 when I sold half the portfolio – sell everything… I've never said anything like that…
But if you knew in June 2008 that Fannie and Freddie were going to fail… that investment banks were going to roll over and have big problems… that there was going to be a crisis, you were better prepared as an investor. No doubt about it.
So, what's wrong about telling you about the risks that I see… and then giving you sensible, conservative advice about how to allocate? That's all I'm saying…

I am very cautiously long the market. Steve is less cautiously long the market and expecting more out of it. There's no great divergence in those views.

If you've accused us of "playing both sides," this discussion was not to be missed.
 But it only got better from there…
Richard explained how his proprietary TradeStops service can help you maximize your gains and minimize your losses… whether you side with Porter, Steve, or anywhere in between. Among the things touched on were…
•   How to safely play a potential Melt Up in stocks…
•   How to know with a high degree of certainty when the long bull market is finally over…
•   Exactly when to sell some of the most popular and best-performing stocks in the market, including Apple (AAPL), Microsoft (MSFT), Facebook (FB), Berkshire Hathaway (BRK-B), Johnson and Johnson (JNJ), Hershey (HSY), among others…
•   How to know when it's safe to get back into stocks you've stopped out of…
•   The single most important consideration when making a new investment (which has nothing to do with which stocks you buy or even when you buy them) and…
•   An unbelievably simple way to make much more money on the stocks you already own.
Richard also revealed two brand-new TradeStops tools for the first time…
These new tools will allow virtually anyone to invest alongside some of the best and brightest investors in the world… or better yet, to create your own "perfect" portfolio from the best recommendations from the entire universe of research you read.
 Of course, we know not everyone was able to attend… So if you missed this week's event, don't worry. For a limited time, you can view a full replay right here.
Richard has also agreed to extend a generous, limited-time offer to all Stansberry Research readers… In short, for the next few days, he'll let you "test drive" his TradeStops service for yourself, absolutely risk-free for two full months.
You can use his exclusive TradeStops tools to check the risk in your current portfolio… find out if there are any stocks, exchange-traded funds (ETFs), or even options you should sell immediately… and quickly and easily "risk rebalance" your entire portfolio. And again, there's absolutely no obligation.
If you aren't completely satisfied, Richard will give you a full refund. And if you choose to subscribe, you can lock in one of the biggest discounts he has ever offered on this service. Click here to start your no-risk trial today. (Please note: This offer expires soon.)
Justin Brill
Editor's note: Porter and Steve agree… There's ONE thing you should do right now, no matter whose research you choose to follow, no matter the size of your portfolio, and no matter if you're a "bull" or a "bear." It's the one way to be as certain as possible that you're making the most profit – and taking the least risk – in virtually any stock, ETF, or option you own.
That one thing is giving an honest look at Richard's TradeStops service… And for the next few days, you can try TradeStops for yourself – absolutely risk-free – for a full 60 days. Click here for the details.

Source: DailyWealth

This Economic Indicator Says the 'Melt Up' Will Continue

Editor's note: The stock market and our offices will be closed on Monday in observance of Memorial Day. We'll pick back up with our normal publishing schedule on Tuesday. Enjoy the holiday.
Bull markets don't die of old age.
Yes, we are in the late innings of the second-longest bull market in history. And yes, it will eventually come to an end. But that doesn't mean we will wake up tomorrow to a massive crash on our hands.
I believe the opposite is true… that we're in the middle of a massive "Melt Up" in U.S. stocks. It's the final push higher in this bull market. And it can lead to quick but enormous gains.
Today, I'll share another reason why I believe the Melt Up is here. You see, a leading economic indicator just hit a new all-time high. And history tells us this is another strong reason to own U.S. stocks now.
Here are the details…
Stocks and the economy don't work like most folks believe. Investors make the largest gains by buying stocks when the economy is doing terribly… like in 2009.
However, bull markets tend not to end until the economy begins to lag. And this indicator says that hasn't started yet.
The Conference Board Leading Economic Index for the U.S. looks at 10 different economic indicators… everything from employment, to housing, to interest rates.
Historically, recessions tend to happen after these leading indicators start a downtrend. This index began to fall before every major recession since 1970.
It has given only one false signal – when it started to fall in 1966, and no recession materialized. That's an incredible track record with over 50 years of data.
We looked at what this indicator is saying today… And the answer might surprise you. It's giving the "all clear" sign.
The index recently broke out to its highest level in history. Take a look…
The index just reached its highest level since the 2008 bust.
You might think that seems like a warning sign. You might think it can't be a good thing for stocks…
That's the easy thing to believe. But history says we have no need to worry.
Since 1959, U.S. stocks have returned 8.4% a year when this indicator is in an uptrend, like it is today. This is when we want to own stocks.
The opposite is also true… When this indicator falls into a downtrend, U.S. stocks return just 2.4% a year.
In short, this index of leading indicators is in an uptrend today. And that means we want to own U.S. stocks.
I believe we're in the final stages of this bull market. I know that makes many investors nervous… But missing this final Melt-Up stage could cost you dearly.
This is where the biggest gains are made. I urge you not to miss out.
The U.S. economy is still in good shape. And until that changes, my recommendation is to continue owning U.S. stocks.
Good investing,
Editor's note: After the Melt Up, we'll see the Melt Down… So while you want to be invested today to earn big gains, you need to be ready to protect those gains tomorrow. Steve recently sat down with Porter Stansberry and Dr. Richard Smith to discuss when this historic bull market will end – and the safe way to profit from its final innings. You can watch their presentation for free by clicking here.

Source: DailyWealth

This Precious Metal Could Be a Better Buy Than Gold…

I made a lot of enemies at the end of July last year…
In a room full of hundreds of "gold bugs," I told the crowd that I had personally sold all my gold and gold stocks the day before.
I was the first speaker at the 2016 Sprott Natural Resource Symposium in Vancouver. The attendees thought I was crazy… But in hindsight, it was exactly the right thing to do at the time.
I showed the crowd slide after slide proving that gold had gone from one of its most hated levels in history – in late 2015 – to its most loved level in history in mid-2016. It was the opposite of what I want to see in an investment… I look to buy when assets are hated – when no one else is interested.
Five months after I gave that speech, gold stocks had fallen about 40%.
I thought I wouldn't be invited back to Vancouver to speak. But to my surprise, Rick Rule – a legend in natural resource investing, and the man behind the conference – just asked me to speak again this year.
"What am I going to say this time?" I thought…
I started looking more closely at commodities that the attendees might be interested in… And I may have found a better precious metal than gold today…
I'm talking about platinum…
Platinum just hit its cheapest level EVER relative to gold.
Both metals started 2017 up double digits… Platinum was up nearly 14% at one point. But while gold is still up 9% year to date, platinum is now up less than 5%.
This fall pushed platinum to its cheapest discount ever compared with gold earlier this month… And that likely makes it a better value play than gold right now.
Specifically, platinum trades for a massive 25% discount. This is rare, as you can see in this chart…
I don't have any particular insight or expertise in platinum.
I just know three things:
1.  The downtrend in prices is still in place. So…
2.  I am not a buyer yet. However…
3.  History says big platinum discounts usually don't last long.
For instance, the platinum-to-gold ratio bottomed in December 1996. After that, platinum went from trading at a razor-thin discount to a premium of 35% in less than two years.
More recently, the ratio bottomed in July 2012 with platinum at a 12% discount to gold. Again, the metal went on to surge higher, hitting a 16% premium to gold by May 2014.
So history says that this discount will unwind. But it can actually happen in two different ways…
1.  The gold price could fall, or…
2.  Platinum could soar to catch up with the gold price today.
Either way, platinum is now at its cheapest discount ever compared with gold.
This is potentially a major opportunity… And history says it likely won't last long.
I'm not a buyer yet, because we don't have the uptrend. But I am now watching platinum closely…
Good investing,
P.S. If you want to learn more about gold and other resources, please join me at the Sprott Natural Resource Symposium in Vancouver this July. Vancouver is one of the most beautiful places on earth. And we always have a great time with our host, Rick Rule, and his top-notch list of speakers. We'll hear from mining CEOs, expert analysts, and former U.S. Secretary of Energy Spencer Abraham.
I'll be speaking, too. If you're interested, please don't wait to register. This event always draws a crowd. You can learn more about the event and register right here.

Source: DailyWealth

How One Bad Trade Got Trump Elected

I have known for a long time now that poor investment decisions have real and serious consequences for individuals and families.
But I never dreamed that a classic investing disaster could have been instrumental in getting a president elected.
It's an astonishing tale. And we can learn from it today…
Steve Bannon is widely credited with helping to get Trump elected president. He's now President Trump's chief strategist.
His father, Marty Bannon, spent 50 years working for AT&T. Over his career, he accumulated a significant position in the company's stock. For Marty, that investment was an insurance policy for his family. If financial disaster ever struck, he believed at least AT&T would keep going strong.
Then, on October 7, 2008, Marty was watching the news. The whole financial system seemed to be unravelling – and his nest egg at AT&T was going down with it. Marty didn't even bother to call his investment-banker son, Steve, to ask for advice. He just panicked, and sold…. his entire position.
In the end, Steve Bannon watched nearly all his investment-banker friends get bailed out by the easy money policies of the federal government, while his father suffered.
The Wall Street Journal recently detailed how this experience cemented Steve's convictions – and his future. From the article…
Steve says the moment crystallized his own antiestablishment outlook and helped trigger a decadelong political hardening that has landed him inside the West Wing… His decision to embrace "economic nationalism" and vehemently oppose the forces and institutions of globalization, he says, stems from his upbringing, his relationship with his father and the meaning those AT&T shares held for the family.
"Everything since then has come from there," he says.

It was a devastating loss. And it shows how the greed of the establishment created a bubble that put the investments of working-class Americans at risk.
But what, as investors, can we learn from it?
A lot…
1.  Investment decisions are serious… and consequential.
Not all of them are as consequential as this one, obviously, but it's an important reminder that painful losses can happen in the markets. Investing is not always fun… And the stakes can be high – many investors, like Marty Bannon, set about building a nest egg with retirement and family in mind.
Marty ultimately lost more than $100,000 because he sold his shares for less than he paid for them. This may never happen to you… But it is possible.
If you're going to invest, you must be mentally prepared to ride out market downturns. You can't sell everything anytime the market pulls back.
2.   It's easy to let emotions take over when your position sizes are too large.
Marty's position in AT&T was too big for him to manage without emotion getting the better of him. It's critical to have the right position sizes. This is never more obvious than in the throes of a market crash.
No matter how sure you are of a company's success… no matter how reliable it has been in the past… nothing is certain in the markets. A diversified portfolio spread out over numerous uncorrelated assets will lower your risk. It will keep your individual losses smaller. And it will give you more peace of mind, even during a crisis.
3.  Watching too much TV is terrible for your investing.
The media are in the business of capturing your attention… And the best way to do that is through your emotions. The media love when you get emotional. It means you're paying attention. The more emotional, the better. If you're going let TV influence your investing, just keep that in mind.
According to the Journal, just days before Marty sold, an analyst on the Today Show told viewers to pull money from the market if they needed any cash for the next five years. That kind of warning sure gets people's attention – but it doesn't help investors make good decisions.
It pains me greatly when I hear stories like Marty Bannon's… or like what happened to the employees of Enron, who had been encouraged to invest their life savings into the company's stock.
Unfortunately, this kind of thing happens in the stock market way more often than it should… And the little guys often draw the short straw.
Stories like Marty's get me out of bed in the morning, determined to make TradeStops the investor's best friend… and to help give you confidence and conviction when the going gets tough.
Richard Smith
Editor's note: Richard's research is signaling that we may be headed for a "super panic" in the markets, which could create a window of opportunity unlike any we've seen in the last seven decades. This evening, he's sitting down with Steve and Porter Stansberry to share his findings. Tune in for free TONIGHT at 8 p.m. Eastern time to learn how to protect yourself as this situation unfolds. Click here to reserve your spot.

Source: DailyWealth

This Simple Investing Tool Can Help You Beat the Market

Today, individual investors can access more information than ever, more quickly than ever.
Yet they continue to dramatically underperform the markets.
According to CNBC, individual investors underperformed the S&P 500 again in 2016. Were you one of them? What went wrong?
The underperformance was huge…
The S&P 500 gained almost 12% in 2016… yet individual investors gained less than half of that.
I hate to say it, but I'm not surprised.
Investors are never going to beat the market until they learn the right way to think about investing… and realize that they routinely think about investing the wrong way.
It comes down to cognitive biases that investors hold in their minds.
For instance, I recently began a presentation at an investment conference by talking about basic 25% trailing stops… and how even a simple trailing-stop strategy can limit losses. Very quickly into the presentation, an attendee asked if I use a 20% gain to lock in my profits.
I explained that there is something even more essential than limiting losses… You must learn to un-limit your gains.
Many investors zero in on a specific percentage that they believe is reasonable for their profits and sell when the stock hits that target. In other words, they unconsciously act against their own best interests by limiting their potential gains.
That's a terrible mistake. To show you why, let me give you an example…
In mid-2011, Stansberry Research analyst Dan Ferris recommended beer and wine maker Constellation Brands (STZ) to his Extreme Value subscribers when the stock was trading at $21.24.
Dan held the position through a startling drop in early August, and then through a strong climb back up. By the end of March 2012, he was sitting on gains of around 15%.
But after that, things took a turn for the worse… Just one month later, those gains were completely erased. And by the beginning of June, the position was down more than 10%.
I see this kind of situation all the time. An investor gets some decent paper gains… and then hits a rough patch. All too often, he panics and bails.
But Dan didn't blink. His focus is on steady businesses trading at good values. He didn't lose that focus, and as you'll see, he was rewarded.
My point today is that you can use an even simpler method to limit your losses – and un-limit your gains.
Here's a look at Dan's STZ position by the beginning of June 2012…
You can see STZ never fell 25% from its April high, or even from Dan's original recommendation. It came close. But if you had used a 25% trailing stop loss – that is, if you decided to sell only when the stock fell 25% from its highest recent price – you would still be in the position. You wouldn't have had to think twice.
Not everyone realizes this – or understands how to use a simple stop loss.
Dan could have recommended selling at any point that year. Instead, he un-limited his profits… and held on to the position. A little less than a month later, it was up 35%.
But it didn't stop there. Dan held STZ for years… He didn't sell at 35%. He didn't even sell in July 2015 at a return of 446%. Instead, he held STZ until last November, when he finally sold the position – for a huge 631% gain.
The good news is, you don't need this kind of iron conviction to avoid selling too soon. All you need is a simple stop loss.
We never know when a stock will become a huge winner. But if you sell a stock every time you hit a certain threshold, you're limiting your gains. You'll never know the joy of sitting on a 631% winner, like Dan's Extreme Value subscribers did. And you'll remain part of the group of "average" investors who chronically underperform the market averages.
Using trailing stops is the easiest way to un-limit your thinking and un-limit your gains in the market.
Richard Smith
Editor's note: Richard's work is designed to help individual investors un-limit their gains – and limit their risk. Tune in as he joins us for a live interview tomorrow, May 24, at 8 p.m. Eastern time. We'll discuss exactly when this historic bull market will end… and how to safely capture the last of the big gains ahead. Click here to learn more.

Source: DailyWealth

What Happens to Stocks After Panics Like Wednesday's

You probably heard that stocks had their worst one-day fall this year last Wednesday.
Is a big, bad, one-day move something to worry about?
I wanted to find out…
So I asked our True Wealth Systems computers a simple question…
"What has happened to stocks in the past after one-day falls as big as Wednesday's (or bigger)?"
I didn't know what we'd find…
Would a big one-day fall be the start of bad times in the market? Or would it be a buying opportunity? Or neither?
Here's what I found out…
After a one-day fall of 1.8% or more, like we saw on Wednesday, the stock market outperformed over the next year. Take a look:
Since 1950
After a 1.8%-plus one-day fall
All periods
1 month later
3 months later
6 months later
12 months later
This was based on data going back to 1950. But looking closer, I noticed that most of the recent occurrences were clustered around turning points in the market.
So I ran the numbers again, using 1980 as the start date. (Also, 1982 or so was the start of the "great bull market" that lasted until the year 2000, so the returns for "all periods" starting from 1980 will be better than they were in the table above.) Take a look:
Since 1980
After a 1.8%-plus one-day fall
All periods
1 month later
3 months later
6 months later
12 months later
When you change the start date to 1980, the picture changes a little…
The story stays the same for the one-month and three-month periods… Stocks outperform over the next one to three months after a big one-day fall.
But then the outperformance disappears over the longer run.
So should you be worried? Not at all. The financial media might make noise about one-day falls like this… But as you can see, the results from similar events in the past 30-plus years are far from frightening.
It seems that a one-day occurrence by itself is nothing to worry about… Stocks have typically outperformed in the months following a big, bad, one-day move.
Wednesday's move scared a lot of people… Don't let it scare you…
Good investing,

Source: DailyWealth

You Shouldn't Be 'Super Excited' About This Record

The Weekend Edition is pulled from the daily Stansberry Digest. The Digest comes free with a subscription to any of our premium products.
 It took nearly 10 years, but it finally happened…
According to a new report from the Federal Reserve Bank of New York, Americans have now borrowed more money than at any time in history.
The report showed that total household debt rose $149 billion in the first quarter of 2017 to $12.73 trillion. As you can see below, this has officially surpassed the previous all-time record of $12.68 trillion, set just before the financial crisis in 2008…
You're probably not surprised to see auto- and student-loan debt leading the way to new highs.
Auto loans rose to a record $1.17 trillion, while student-loan debt now sits at a mind-boggling $1.34 trillion. Meanwhile, credit-card debt is quietly closing in on a new record, too.
 While the new record doesn't mean another crisis is imminent, it is a troubling sign…
As Heather Boushey, executive director and chief economist at the Washington Center for Equitable Growth, told the New York Times
This is not a marker we should be super excited to get back to… In the abstract, more debt signals optimism. But in reality, families are using debt as a mechanism to pay for things their incomes don't support.
To be fair, total household debt represents a smaller percentage of the U.S. economy today. It was just 67% of gross domestic product ("GDP") at the end of the first quarter, compared to nearly 85% of GDP in the third quarter of 2008.
But this is largely because mortgage debt remains well below its previous bubble peak. Set aside mortgages, and consumer debt has risen to an all-time record of nearly 22% of GDP.
 Of course, the next crisis won't be driven by mortgage defaults…
Rather, it's likely to be skyrocketing defaults in these other types of debt where subprime lending has soared this time around (to say nothing about trillions of dollars in potential losses in corporate debt).
In the meantime, the New York Fed noted delinquency rates for most consumer debt continued to tick higher. Last quarter, credit cards took the lead… The report showed 7.5% of credit-card debt is now "seriously delinquent" – at least 90 days late – up from 7.1% at the end of last year.
We believe this trend is just getting started.
 Elsewhere, another of Steve Sjuggerud's predictions appears to be playing out…
Longtime DailyWealth readers know Steve was one of the first analysts anywhere to turn bullish on housing nearly eight years ago. And he has remained bullish as prices have rebounded to new highs.
Early last month, Steve updated his thoughts on the housing market. Steve told his subscribers we were in the "sixth inning" of the housing boom. The final – and potentially most explosive – innings were still ahead.
In particular, Steve noted that despite the big increase in recent years, prices still had room to go much higher. This is because housing inventories – the supply of homes available to buy – have plunged to almost the lowest levels on record.
And as he told readers, as long as more people were searching for homes than there were homes to buy, prices would keep rising.
 "It's freaking us out…"
According to Glenn Kelman, CEO of real estate data firm Redfin, that's exactly what's happening. As financial-news site CNBC reported this week…
"The inventory is reaching historic lows. It's never declined faster than it did last month. It's freaking us out — it's affecting our business; it's limiting our sales," said [Kelman]. "We're going to be fine in terms of market share, but I think the overall industry for the first time is seeing sales volume really limited by the inventory crunch."
Homes in April sold the fastest since Redfin began tracking the market in 2010. The typical home went under contract in just 40 days, 10 days faster than April 2016. As a result, one in four homes sold above their list price, which is the highest percentage Redfin has recorded…
Inventory of homes for sale fell about 7% nationally in March, compared with a year ago, according to the National Association of Realtors. Like most, Kelman blames the problem on a lack of new construction. On the single-family side, homebuilders are still putting up 18% fewer homes than the 25-year average.

 Finally, an answer to a question you've probably been asking…
We know many readers are confused and upset by the apparent contradiction: How can we warn about the growing risks in the consumer- and corporate-debt markets… and still continue to recommend stocks?
If you're among them, we invite you to join us for a special online event next Wednesday night, May 24, where we'll clear everything up. Folks who attend this free event will learn the answer to this question and more, including…
When this historic bull market will finally end… how to get back in the market today if you've been afraid to do so… how to know exactly when to sell some of our best-performing recommendations… the one thing you must do, whether you agree with Porter, Steve, or Dr. David "Doc" Eifrig… and much more. Click here for all the details.
Justin Brill
Editor's note: The benchmark S&P 500 Index is up almost 250% since March 2009… But the good times won't last forever. On Wednesday, Porter will host a free event where he'll point to the day this historic bull market will end… show you how to find and eliminate the hidden risk in your portfolio… and much, much more. Reserve your spot now.

Source: DailyWealth

All-Time Record Bets on Silver… Here's What's Next

Traders are making "extreme bullish bets on higher silver prices. And history says lower silver prices are likely, starting now."
I wrote that exactly one month ago in a Review of Market Extremes update (which is a part of my True Wealth Systems newsletter).
In hindsight, the timing was nearly perfect…
Silver peaked at around $18.50 just a few days before that. And it bottomed out at less than $16.50 over a week ago.
Let me show you what I saw a month ago to signal silver might fall…
The story was simple. Bullish bets on silver had reached an all-time high. Take a look:
Specifically, silver traders in the futures markets had bought more silver contracts than at any time in history. That told me traders were extremely optimistic on silver.
This data comes from the Commitment of Traders ("COT") report. The COT report tells us exactly what futures traders are doing with their money.
I only use this report to spot extremes. I use it as a contrarian tool… When futures traders are all making the same bet, it signals a crowded trade to me – and the opposite often occurs.
My colleague Brett Eversole shared what happened the last time silver hit this kind of extreme in an April DailyWealth. Looking back at history, the only other time futures traders were close to this optimistic on silver was August 2016. The metal fell 24% over the four months that followed.
Based on that history, we believed a double-digit fall was likely this time… And we were right. Optimism was at an extreme. And a mini-crash followed.
The price of silver peaked for 2017 within days of the peak in optimism from silver traders…
I shared last month's peak in sentiment with my True Wealth Systems subscribers. And silver promptly fell double digits, percentage-wise, from that peak.
As you might guess, the optimism among silver traders has worn off from a month ago. We are no longer near the peak in optimism.
So is now a good time to buy? Not yet…
I am not rushing in to buy… I would rather wait for a moment of greater pessimism before I dive into silver.
We're not there… yet.
Good investing,
Editor's note: Steve's latest True Wealth Systems recommendation is the perfect setup… When this sector gets going, hundreds-of-percent gains are possible. During its last major boom, this group of stocks soared by 776% in five years. Now, signs point to another big rally… But no one is buying yet. To learn more about True Wealth Systems – and how to access this recommendation – click here.

Source: DailyWealth