The Weekend Edition is pulled from the daily Stansberry Digest.
I had to attend two funerals this past fall...
First, there was the one for my mother-in-law. I know a lot of people make tongue-in-cheek comments about their spouse's mother... or literally run the other way when she shows up.
But that wasn't the case for me at all – not even close.
Despite battling progressive multiple sclerosis for 40 years and being bedridden for the past five years or so, my wife's mom was the strongest and most positive woman I've ever known. I could write a book about everything I learned from her since we met.
"Don't waste the day away," was one of the first lessons I remember her teaching me... so simple, yet so true. She also had a magnet with a quote from Winston Churchill on the mini-fridge in her room at the assisted-living facility. It read, "Never, never, never give up."
Her mind was still sharp until the end, but her body finally got too tired from fighting the disease. She was 68.
Two weeks later, my grandfather passed away...
My grandfather – or "Nanu," as I called him – was 91 and lived a long, full life before passing due to complications from cancer.
He spent an incredible 67 years with the fire department near the town in New York where I grew up. He was the fire chief in the 1960s and a commissioner after that.
He grew up working on my great-grandfather's farm, never graduated high school, and married my grandmother when he was just 17 years old. I could write a book about him, too.
But this related ode will have to do for now (and I promise the investing tie-ins are coming shortly)...
After my grandfather's passing, my older brother and I drove together to New York for the services...
We spent the first hour or so of the trip catching up on life, talking about things like how both of us have been working at home for months... what our children have been doing... and how pathetically bad the New York Jets still are at football.
Eventually, though, the conversation turned to investing...
"You think things are going to crash?" my brother asked.
Now, we had something – besides our grandfather, families, and sports – to talk about for the rest of the ride...
"I'm just worried all this fake money will catch up with us," my brother said.
I nearly drove off the New Jersey Turnpike right then and there. Before I go any further, there's something you should know about my brother...
He doesn't follow the economy or markets closely at all. But like everyone, he's interested in money at some level... And he's not oblivious to what's going on in the financial world.
So to hear my brother say the words "fake money" – which I've written a lot this year – definitely caught my attention.
As I responded to him, I knew I could eventually share this same message with you...
This was as pure of an example of our founder Porter Stansberry's guiding ethos of sharing "what I would want if our roles were reversed" as I could imagine.
Some of what I shared might be old hat to experienced investors, but my brother is a casual investor... He picks stocks he likes – often ones that his day-trading friend tells him to go ahead and take a chance on – but he is frequently as confounded when the price of a stock goes up as when it goes down.
And like a lot of smart, curious, well-meaning folks, he wonders... Why?
Now, that might be the best question ever asked because – from novices to self-professed experts – the wisest investing minds that I've ever heard say that things often happen in the market that don't make sense.
Maybe it's just the crazy circumstances we're living in today, but my brother kept asking questions...
We'd never had a conversation like this. He kept inquiring on topics that our editors often write about and share every day... They're the types of questions that I think are on a lot of freethinking people's minds today.
"I've made more money in the last six months than ever before," he said. "I just don't get it."
He was talking about how stocks have kept going up while our economy is in the worst recession, statistically speaking, since the Great Depression.
Of course, this is a frequently asked question today... And in response, I shared a concept that Steve often talks about with his readers...
Stocks are forward-looking. Economic data are backward-looking.
Back in mid-May, as stocks continued their recovery from March's bottom while the economy still slumped along, Steve wrote...
There's an important truth you need to understand. It's simple and perfectly explains what's happened in recent weeks...
The U.S. stock market operates on a different time cycle than the U.S. economy.
Stocks tend to move much faster than the economic environment. They anticipate what's coming. That means stocks are the first to fall during tough times... And they often rally before the economy even begins to recover.
But my brother was hungry for more...
At this point, I didn't really know how concerned he was about making the most of his 401(k) and his stock-trading "play account." But it became clear pretty quick.
Even as a semi-casual market observer and participant, he senses something is inherently messed up with today's economy and the market... that "sound money" has long gone off the rails.
And he doesn't really know what he can or should do about it.
So I shared what I could...
Even two hours didn't give us enough time to cover every point worth talking about today, but we did hit a few big topics, like...
1) Why every investor should at least be aware of technical analysis.
This might be a surprising first piece of advice to some people, but experienced investors know what I'm talking about.
We can get into the weeds of technical analysis another day... But in short, it helps many folks make sense of any market. It's a great way to understand the key supply and demand levels of a particular sector or stock.
This brand of analysis is particularly essential knowledge for short-term traders. Without it, trading is simply not a fair fight.
2) To "always make money," you need to make more interest than you're paying – or make more than inflation is eating out of your net worth.
With rock-bottom interest rates all over the world and "safe" investments yielding next to nothing, how do you beat inflation or make a decent yield on your capital?
It's hard. Bonds are like cash today. The value of a dollar keeps weakening as it has for decades... This is the macro picture right now.
You need to get creative. Not a lot of folks know about it, but you can earn 8% interest or more on certain cryptocurrencies (not without risk, of course). It's something to think about.
3) Why we love high-quality, capital-efficient businesses so much.
I did my best to pass along Porter's advice of why buying shares of high-quality, capital-efficient companies is "the only sure way to get rich in stocks." But I can just quote Porter himself here today...
When a company can maintain its prices and profit margins because of the value placed on its product by the purchaser rather than its production cost... that business can produce excess returns – returns that aren't explainable by rational economics.
Those, my friend, are exactly the kind of companies you want to own.
And... you especially want to own these stocks during inflationary periods. As things get more and more expensive in the coming years, capital-efficient companies will have to buy less than other companies, on average.
The result will be that inflation tends to lift their profits, rather than reduce them. In the inflationary crisis I see ahead, this is the single best way for stock investors to grow wealth rather than lose it.
Buying shares of the companies Porter talks about feels like the last bastion of investing sanity to me. There's nothing better than receiving a significant dividend for your decision to be a shareholder of a good company.
"Yeah," my brother said, "but"...
"It seems like you shouldn't even invest in fundamentals anymore," he said...
Why does the price of a "good," high-quality company like Starbucks (SBUX) – which I mentioned in our chat – go down, while the price of a "bad" company like Nikola (NKLA), for example, takes off?
In other words, he asked... what's the point of investing in the good company if I can make more in the bad?
Well, on the surface, that's a fair question. But then, I stopped him and asked if he had made money in Nikola.
"No," he said. "And it sounds like it was a scam anyway."
I laughed. Eventually, I summoned what I've learned from my relatively short time in the financial-newsletter industry and an incredible year here at Stansberry Research.
And then, I told my brother to think about his question in a different way...
Why are you investing your money in the first place?
He was surprised at first... This really isn't a technical question about stocks, but a more general question that could apply to anything. These are often the best kinds of questions.
And addressing this idea – finding your "why" – gets to the heart of one of the most important lessons all experienced investors are fortunate enough to learn sooner rather than later...
In short, it's a hard world out there for any number of reasons. But I've found a sense of calm wash over me when I think about why my investments even exist in the first place... instead of primarily, "How do I beat the market today?"
These are not mutually exclusive ideas, anyway.
In fact, I'd argue that knowing why you are investing in the first place gives you more confidence to take smart chances that limit your losses and maximize your gains... which I know a lot of longtime readers are interested in doing.
I've heard it through the grapevine from legendary investor Paul Tudor Jones. It's simple, short, and powerful...
The best investors and traders have a time horizon that matches their idea horizon.
Thinking of this idea offers a solution to pretty much every investor's dilemma...
Pick a question.
What do I do with my cash?
Well, how much do you need... and what do you think cash is going to be worth when you need it? Maybe you want to put that cash in something else.
Should I be investing in bitcoin or blockchain-related stocks?
Well, are you in those ideas for the long term or not? If so, you can bear some volatility in the short term... even steep drops.
This actually reminds me of something else Steve said recently. He shared a piece of guidance that Tudor Jones once called "the most important rule of trading"...
Every day I assume every position I have is wrong, and I know where my stop risk points are going to be.
Said another way, have a plan for getting out of a trade before you get in, be it a predetermined hard stop loss or a trailing stop, or some other measure that you feel comfortable with.
And know how much you can risk on a given trade or investment.
Let's be clear... I don't want to make it sound like I'm a market wizard at any level. I'm not, but I'm practicing the ideas I preach here...
As I told my brother, I didn't buy shares of Starbucks in March (disclosure) thinking I'd sell them in June. No, I wanted to buy shares near the stock's relative lows and compound the heck out of that stock so long as the idea of people being addicted to coffee is true. (I'm betting it will be true my entire life, so this is a long-term play.)
This makes any single "down" day that inevitably happens easier to reason with... and the human emotion we all deal with a little easier to handle.
"I've never thought about it that way," my brother said. "But that makes sense."
A little while later, we arrived at our destination.
The next day, I was reminded of a few related, but more meaningful lessons...
At both my grandfather's and my mother-in-law's funerals, I didn't hear anyone give a eulogy about money, investments, or stocks. All I heard were stories about the lives they both lived.
They were both fantastic people – the type I will talk to my children about. But of course, I'm going to tie this observation back to investing now, too...
In a way, these two funerals and the two great people they were for represented a different interpretation of Jones' advice: What do we want to do with our time here while we have it?
More than 1,000 people watched my mother-in-law's funeral online.
It's hard to describe the impact she had on people, even from her bed, and what she did for so many... But I'll simply say that she was strong, and her joy was infectious.
Similarly, my grandfather lived a life worthy of honor...
My grandfather had once said he'd like to be laid out for services at the firehouse where he served. It took some debate among the fire chiefs council of a few surrounding towns (with COVID-19 restrictions and this needing to be indoors), but the plans were made.
My grandfather's wake drew hundreds of firefighters.
The next day, part of two towns basically shut down for his procession... It went for five miles from the firehouse to the church for his service. A restored fire engine that my grandfather actually drove to fires decades ago carried his casket.
Here's what the scene looked like as we left the firehouse...
As we drove behind the old truck, I felt proud. I saw people wonder what was going on from the sidewalk. If only they knew...
Maybe that's the point of all this, really, and what I've been writing about today...
We can get caught up in work, the daily noise of politics, stock performance, and other distracting news... or keeping up with our families at weddings and funerals... or any number of other events in our daily lives.
But at some point, it's useful to stop ourselves, take a breath, and ask "Why?" – no matter what subject follows. And we need to never quit doing it...
When it comes to your investments, why are you making them at all? How long do you plan to be in the trade or investment? What do you hope to accomplish? How much are you willing to risk? And does your timeline for a particular investment align with the answers to these questions?
You may not have the answers just yet, and that's OK... Or maybe you do. That's great. Either way, just asking the right questions should lead you down a successful path.
For instance, on the practical topics that my brother and I discussed somewhere in New Jersey, here's a few ideas about how we can help you at Stansberry Research...
What do the technicals say about the trade you are about to make? Check out all the newsletters and updates from Greg Diamond, Ben Morris, and Drew McConnell to see what I mean.
If you're seeking income, are your investments going to keep up – or hopefully beat – inflation and do you any good in a world of negative "real" yield? If you're concerned, I suggest you give Dr. David Eifrig's services a try.
And if you're investing money for the long term, do you have high-quality, capital-efficient stocks in your portfolio? For some great ones, I encourage you to try our flagship Stansberry's Investment Advisory newsletter.
Longtime readers may already have all this covered. If you do, that's fantastic... That means we've done our job.
But if you've never thought about these questions and you're still reading, that's fantastic, too... That means more folks than just my brother are listening this time – and most important, you're ready to take the next step on your own investing journey.
Welcome... We'll do everything we can to help you along the way.
All the best,
Editor's note: For a few days next week, we're offering a special chance to join us as an Alliance "Partner"... where you'll get access to just about everything we currently publish – plus everything we publish in the future – for life.
On Wednesday morning at 9 a.m., Steve, Porter Stansberry, and Dr. David Eifrig are broadcasting a message from Porter's farm to explain the details. Normally, this opportunity is only available to the top 1% of our subscribers... So if you're interested, make sure you attend. You can save your spot right here.