The Weekend Edition is pulled from the daily Stansberry Digest.
Did you miss it?
As our friend, colleague, and regular Friday Stansberry Digest author Dan Ferris said last Thursday, the day of his brand-new presentation...
I waited my entire career for a market event like this, a once-in-a-lifetime shift that's about to impact nearly every asset you own. Your stocks, bonds, real estate – and most especially, your cash – are all at serious risk right now.
Now, that might sound frightening, but once you see what Dan's talking about, I think you'll understand better.
You see, what's on his mind right now is as much a big investing opportunity as it is a warning.
Just taking a few minutes to listen could help you navigate today's shifting markets in which stocks are still expensive... bond yields aren't doing enough to protect folks from inflation... and fears of continued higher prices are constant and not going away anytime soon.
Most people I know will overlook this story, or worse...
But the last time a "market event" like this happened, Dan says, you could have made more than 400% on the lowest-risk investment in the space he's talking about... and as much as 1,000 times your money on others.
Without giving too much away, I can tell you these are targeted opportunities that you're unlikely to hear in the mainstream media anytime soon, if ever... But serious, long-term investors can make serious money from them.
Most folks with money in the markets won't hear about these ideas, if at all, until the biggest gains have already been made from them.
But we were fortunate to hear this information not only from Dan, but also from another of the smartest investment minds we know. If you missed this must-see presentation, click here to watch the replay right now.
On a somewhat related note...
The following is not in Dan's new presentation... But it is related to what he says is on the horizon, as you'll see.
In the February 28 Digest, we wrote about how U.S. Treasury bills, meaning short-term government bonds, are now offering yields last seen in 2007. This week, a three-month bill had a 5% annualized yield, and a six-month bill was offering nearly 5.3%.
This is half of the reason the yield curve remains "inverted," with shorter-duration Treasurys yielding more than longer-term bonds. A 30-year bond has a 3.9% yield today, and the 10-year/2-year yield spread is hitting new lows at negative 1% this week.
This should be old news to you, though. The new news is that all this yield for the taking might actually inspire more investors to change their behaviors. As we wrote in the February 28 Digest...
Stocks and other risk assets definitely have some big competition, which couldn't be said for the past decade-plus. While stocks' possible price appreciation can trounce a T-bill's returns, the S&P 500 Index is yielding only about 1.7% today.
Our colleague and DailyWealth Trader editor Chris Igou went into some additional detail last week...
In the March 2 edition of DailyWealth Trader, Chris wrote...
Historically, stocks have a much higher yield than government bonds and Treasury notes. That's because stocks are riskier than short-term bonds. So investors want more money for taking on the extra risk.
Lately, though, the difference in yield between stocks and those nearly risk-free U.S. Treasury notes has leveled out.
Chris explained that the yield on Treasury notes is straightforward. For example, as we said, a three-month bill is yielding 4.8% right now. For stocks, it's a little more complicated, as he noted...
The best way to get the yield is to flip the price-to-earnings (P/E) ratio for stocks on its head...
Let's take a company that trades at a P/E of 20. When you buy a share of its stock, you're paying for 20 years of its earnings per share. So, each year of earnings per share is 5% of your purchase price (1/20 = 5%). That's the yield of your equity stake in terms of earnings.
You can do this for the entire S&P 500, as Chris continued...
The chart below tracks the difference between stocks' earnings yield and that of three-month Treasury notes. A positive value means the earnings yield of stocks is higher than the yield of these Treasury notes. A negative number means Treasury notes have the higher yield of the two.
As you can see, that difference has fallen close to zero. Take a look...
Today, these notes are paying out just as much as the average stock in the S&P 500. And it's the first time we've seen this yield parity in more than 20 years.
The story isn't finished yet...
As we've been suggesting, the Federal Reserve could be near the end of its rate-hike campaign, or it might not be...
As such, the bond rout of 2022 could continue further into 2023. Remember, prices trade inversely to yields.
But whenever the Fed stops hiking interest rates, it will be a tailwind for the entire bond market.
Chris compared today's setup with what happened in the 1980s. At that time, interest rates climbed to a peak, pushing bond yields up until there was virtually no difference from stock yields. The interest-rate peak in the 1980s marked the beginning of a 40-year bond rally.
Now, here's a really important point...
Today, yields could keep going higher – which means bond prices could keep heading lower, as they trade inversely. But eventually, Chris said, "As more bond yields start to compete with stocks, more money will flow into those bonds."
If you have some cash doing nothing right now, it's already as good a time as any to dabble in some Treasurys. A 5.3% six-month T-bill in a world of 5% (or more) inflation is better than many alternatives.
Still, if you ask Dan, there are even better options.
All the best,
Corey McLaughlin
Editor's note: A specific group of investments is poised to soar, regardless of what the stock market does next. It's all thanks to a rare, specific economic setup... one that only comes around every couple of decades. But you must be selective to profit from it. That's why Dan recently teamed up with an industry legend to unveil a new playbook designed to help you take advantage of this precise moment in time... Get the details here.
