The Weekend Edition is pulled from the daily Stansberry Digest.
As Bernie Sanders might say, let me be clear...
Lives and money are at risk within the ongoing coronavirus panic.
After the New York Stock Exchange's ("NYSE") first "circuit breaker" moment earlier this week, that message came through loud and clear.
And on Thursday, the NYSE experienced its second 15-minute break in four days... and the Federal Reserve announced its latest round of what is essentially "quantitative easing."
First, we assume you're taking the right steps to protect yourself from a virus that appears to be a particular threat to those older than age 60 and with pre-existing conditions...
If you're not, please heed the common-sense health advice of smart people like Health & Wealth Bulletin editor Dr. David "Doc" Eifrig. In a must-read issue on Thursday, he reminded readers that, unfortunately, most people are probably being stupid right now.
As an example, he told the story of a person who was admitted to a hospital twice before being diagnosed with COVID-19... and double pneumonia. The man was married to a flight attendant – a detail the doctors never thought to ask about the first time he was admitted.
It was possible the husband picked up the virus from his wife, who got it from a passenger, Doc said. And he doesn't think this is a one-off story...
I'm predicting that with this kind of stupidity, this virus will quickly infect 50% of Americans in the next four weeks.
And that's going to be the hardest part... this will happen quickly. The bad news is that we trusted the government to properly prepare. I've read that there is only a one-day supply of the N95 masks needed for health care workers.
The speed of this virus's spread will overwhelm hospitals and ICU resources. Folks will die because there isn't room in the hospitals.
That's an alarming message, I know. But despite that... I don't want you to panic.
I haven't seen Doc make this type of statement before, so we urge you to take it seriously. The piece he published is headlined, "Start Staying Indoors: Read and Send This to Everyone You Know."
In addition to the basics, such as washing your hands and covering your nose and mouth when you cough or sneeze to avoid spreading germs, Doc recommends changing your normal routines and taking responsibility to help slow down the spread of the virus...
I've tried for decades to empower people to take control of their wealth and their health...
Do what I do and plan to not travel anywhere for a few weeks. I've slowly stocked up on staples like soups, beans, nuts, root vegetables, and cheeses.
I will probably not go out to public places for the next few weeks either. Researchers now call this "social distancing," and it makes a lot of sense from a scientific point of view.
In the coming days, Doc will be publishing more updates and health resources in his Health & Wealth Bulletin. If you're not already receiving his updates, you can subscribe for free right here. Stay tuned.
Of course, we're also here to talk about the markets and do what we always aim to do...
We want to give you the best financial guidance and research that we can – especially now.
Never before have the major indexes dropped 20% from previous all-time highs so quickly... as measured in days.
We're not trying to start a political "third-rail" discussion thread, but over the last few weeks, the phrase, "Age of Acceleration" – an idea suggested by Pulitzer Prize-winning New York Times columnist Thomas Friedman in his 2016 book, Thank You For Being Late – has come to mind.
It's one of the few pieces of writing I've read from him, and it was passed on by a friend...
In it, Friedman described the fast, super-connected pace of our modern world... and what it was doing to businesses, countries, and individuals who did or did not adjust to the very real trends. (I think many of us know this dynamic innately from the screen-time app on our iPhones.)
The title came from a meeting in which Friedman's interview subject showed up late, which he didn't mind...
Because it gave him time to think.
It's critical to think as clearly as possible right now...
When you think about the bigger picture, a major sell-off due to a virus that's killing people and disrupting all sorts of economic activity – including travel and oil markets – seems entirely rational when taken on its own.
It would be weird if markets were rising during all this uncertainty. But it's the rapid pace of the fall that's hard for many to digest. Bloomberg columnist Matt Levine put it particularly well on Thursday...
In 20 years when you read the Wikipedia page for the crash of 2020 it'll be like "everyone got a virus so the market crashed."
Oh I mean it'll probably go on! "Once all the companies stopped making money due to everyone staying home," it might say, "they couldn't pay their debts, which was bad for them and also for the banks who loaned them money, and also for the non-bank lending operations that had grown in the previous decade's boom and never really been tested."
At its most basic level, this is what's happening.
It's reasonable to think that things will get back to "normal" at some point. We don't know when, but if you look at what's reportedly happening with China, it could be as soon as a few months.
In her press conference on Thursday, European Central Bank President Christine Lagarde also laid out the facts as clearly as we've heard any government official do so far...
The spread of COVID-19 has been a major shock to the growth prospects of the global economy and the euro area economy. And it has heightened market volatility.
Even if ultimately temporary by nature, it will have a significant impact on economic activity.
In particular, it will slow down production as a result of disrupted supply-chains and reduce domestic and foreign demand, especially through the adverse impact of the necessary containment measures.
In addition, the heightened uncertainty negatively effects expenditure plans and financing.
As Stansberry NewsWire editor C. Scott Garliss noted Thursday, Lagarde sounded like a "voice of reason amid a sea of turmoil."
But as we know, a lot of humans aren't rational, especially when it would help us the most...
And the broader markets don't necessarily care what we think, either. It's a complicated web of buyers and sellers.
In a swift move, the Fed stepped in and announced a new round of stimulus...
Around midday on Thursday, the central bank said it would inject more than $1.5 trillion of "temporary" liquidity into the U.S. economic system in an effort to keep the credit markets from freezing up.
We'll see if that pays off in the long term... But in the short term, it didn't. The Dow Jones Industrial Average – down about 9% at the time of the Fed's announcement – finished down 10% that day... its largest one-day rout since the 1987 "Black Monday" crash.
Then yesterday, the Fed bought almost $40 billion in U.S. Treasury bonds throughout the day.
This is showing the rest of the world just how sensitive our system is – and how highly leveraged so many companies are.
That's why Porter Stansberry and the Stansberry's Investment Advisory team have long put such an emphasis on companies with great cash flow... while placing strategic bets against many that are in bad shape.
But maybe the most challenging thing now is to confront all the associated emotions involved in the market's historic gyrations...
In the Age of Acceleration, investors have more opportunities than ever to succumb to emotion and hit the panic button... or alternatively, to grasp for a false sense of calm.
A headline here... A news alert there... A press conference over there... All day long.
As our editors continue to preach today: Don't. Get. Caught. Up. In. It...
While our editors understand the short-term risks, they're in it for the long term.
That means making hard decisions sometimes... like following your trailing stops – even when it's disappointing – to avoid steeper losses.
Our DailyWealth Trader editors Ben Morris and Drew McDonnell delivered a similar message recently...
In their Thursday issue, Ben and Drew reminded subscribers to stick to their stop losses in their positions. After all, you set them for a reason...
But be careful of the temptation to "sell everything," too, they wrote. Keep in mind that Ben and Drew recommend shorter-term trades than many of our offerings...
This is a spectacular sell-off...
Based on this morning's opening prices, the benchmark S&P 500 Index is now down 22.3% in three weeks.
During the entire October 2007 to March 2009 bear market, only three periods were comparable...
The S&P 500 fell 27.2% from September 30 to October 27, 2008. It fell 25.2% from November 4 to November 20, 2008. And it fell 21.4% from February 9 to March 6, 2009.
Chances are, you're seeing your portfolio drop each day, erasing gains from the past months, or maybe even years.
It's painful... And if you're human, you're probably thinking about selling some, if not all of your remaining stocks.
Don't do it.
After the three dramatic sell-offs they mentioned during the 2008 and 2009 bear market, the S&P 500 ripped higher every time...
After that first drop (-27.2%), the S&P 500 shot 18.5% higher in six trading days.
After the next drop (-25.2%), the S&P 500 rocketed 19% higher in one week and continued to rise to a 24.2% gain in six weeks.
After the final drop (-21.4%), the bear market ended. The S&P 500 jumped 23.1% in 13 trading days, 39.9% in three months, and 79.9% in 13 months.
As Ben and Drew wrote...
After massive drops, incredible rallies often follow... even when the world feels like it's falling apart, as it did in 2008 and early 2009.
We simply can't know how deep this decline will be. We can't know when, how, or why the market will turn higher. But at some point, it will.
Our Director of Research Austin Root echoed these comments in a special update to all subscribers on Monday, and reiterated it in a video on Wednesday that's available to anyone.
We don't know exactly what will happen next...
But our editors are working hard and analyzing their indicators. And in some cases, they're urging serious caution...
Ten Stock Trader editor Greg Diamond told subscribers on Thursday morning that he is not entering any long positions. "Trade what you are given," Greg wrote, "not what you want."
And he wrote about why he's concerned about the bond market in particular, as the Fed is...
A rush into this market has created the potential for a bubble to burst. Interest rates are near zero everywhere... The problem is that the banks are now pulling back on lending, credit is freezing up, and repo rates are rising.
This means that the Fed could lose control and rates start rising naturally. This would be a nightmare situation where bonds AND stocks fall together. Not there yet, but something to keep in mind.
On a related note, Greg recently closed out a 257% winning short trade on Monday.
Back to the panic at hand today, though...
I talked to my cousin, who is teaching school in Florence, Italy. The country has more than 12,400 infected people, and large portions of the country are on lockdown.
He told us that life is different. He was teaching via Google Meet video technology... And grocery stores are only letting in 10 people at a time.
He also told us that about 50 inmates, after they were told they weren't allowed to receive visitors anymore, decided to flee and managed to escape a local prison... That's not good.
At the same time, one of our Stansberry Research proofreaders made it back from Italy on Wednesday.
He flew out of Rome and said nothing was out of the ordinary during his time in the Roman suburbs and while driving to the airport Wednesday morning.
There were crowds in the airport and on the highways, with much more traffic on the highway to Rome than on the New Jersey Turnpike at 5 p.m. that day.
Meanwhile, Stansberry's Credit Opportunities editor Mike DiBiase is actually on a cruise right now. He's planning to file this month's issue – due out next week – from the boat, which he told us is operating as normal...
Everyone on board is doing the usual... eating and drinking and partying. The crew is taking extra precautions, sanitizing everything throughout the day. And there are hand sanitizer stations everywhere.
The crew likes to say "washy-washy." That's the line you hear over and over. It's a running joke. And they started not letting people take food from the buffet a few days ago.
Crew is handing out all food. But so far, there are no reported cases of COVID-19.
Mike said he's most concerned with not being let off the boat in Miami upon return.
We haven't seen many "this is fine" reports on the news. At the same time, this is purely anecdotal evidence, and it goes both ways...
In New York, a friend of mine who sells life insurance says four people canceled in-person meetings with him this week.
The point is, it looks more likely that U.S. and global economy growth will be slow over the next few months...
That should be clear by now. And it could get worse – if we've learned anything from the past two weeks.
This is why we've preached to make sure your "financial house" was in order... that your portfolio allocations and position sizing are aligned with your investing goals, your needs, and your timeline. Because everyone is different.
Doc gave his portfolio guidance again in Wednesday's Health & Wealth Bulletin...
My advice is simple, and it's been the same for months now...
Hold plenty of cash. Own quality businesses. Own gold as a chaos hedge. Be conservative with your money... but stay in the game.
Now is the time to keep your money safe and only act if you have a favorable risk and reward setup.
If you do want in on the action and want to trade in this market, I urge you to be careful. You should use small position sizes. And diversification is key.
Yet through all of this, what if we said you could also make money in times like these?
We mentioned Greg's triple-digit win earlier as one example. Another of our editors, Bill McGilton, has closed three triple-digit winners in just eight trading days recently...
Now, Bill doesn't make recommendations that you would want to throw your entire portfolio into... far from it. His portfolio is more speculative in nature and, as we always say... don't speculate with more than you can afford to lose.
But his recommended investments are more like portfolio "insurance." And they're sure proving to be that right now. In short, they tend to go up when most every other asset is going down.
Given what we've been seeing over the past several weeks, Bill sat down with our video-production folks recently to share the details about his strategy. It's part of an emergency briefing we've put together on what could be in store for the market next... and how to make big profits if you see it coming.
The event goes live on Thursday at 8 p.m. Eastern time. It's completely free, but we do ask that you sign up in advance to make sure you don't miss anything. Click here to do that right now.
All the best,
Corey McLaughlin
Editor's note: It's important to think clearly in today's panicked market. That's why we're holding a briefing to prepare you for the market's next big move... You can view it online Thursday, March 19 at 8 p.m. Eastern time. We're also revealing a once-in-a-decade opportunity that could help you make triple-digit gains as this situation unfolds. Sign up here – if you hold stocks, you don't want to miss this.
