The Weekend Edition is pulled from the daily Stansberry Digest.

Consumer confidence just hit a four-year low...

On Tuesday morning, the Conference Board's Consumer Confidence Index showed that folks' outlook on the U.S. economy declined for the fourth straight month. The index now sits at its lowest level since January 2021. It's down seven points since last month to around 93.

Nearly every component of the index fell.

Those surveyed now see inflation hitting 6.2% over the next 12 months, up from 5.8% in February. And their outlook on business conditions and the labor market over the next six months fell, with 16.7% of folks expecting more jobs to be available, down from 18.8% in February.

This is the continuation of a trend...

In recent months, consumer surveys from both the Conference Board and University of Michigan have shown that Americans are less confident in the economy. Tariffs are adding uncertainty to the environment. Meanwhile, the job market is lukewarm, and inflation is still a big concern.

As Brett Eversole wrote earlier this week, pending U.S. home sales also just hit a new all-time low. The U.S. housing market is frozen with high prices and mortgage rates above 6%.

Stansberry Research Director of Research Matt Weinschenk described today's consumer outlook in a recent issue of This Week on Wall Street...

Consumer sentiment has turned abysmal. Folks are worried about business conditions and losing their jobs at a level we haven't seen in decades.

Not everyone is seeing the signs, though.

The Federal Reserve, for example, isn't worried...

During his press conference on March 19, Fed Chair Jerome Powell downplayed the importance of these trends. Instead, the Fed is focused on data that shows consumer spending is still going strong.

Powell also highlighted that three-year and five-year inflation rates haven't moved much, as measured by the New York Fed's survey of consumer expectations.

That may be true, but these longer-term rates both remain elevated at 3%, well above the Fed's target of 2% annual inflation. And while the Fed might not see consumer surveys as an issue yet, sour sentiment about the economy could become a self-fulfilling prophecy.

Higher inflation expectations might signal that folks are more willing to pull back on spending because of economic uncertainty – hurting overall growth. Continued higher-than-average inflation could also drive wages higher.

We're willing to put more credibility in consumer surveys than the Fed, especially when the sentiment is backed up by corporate earnings expectations.

A disconnect with Main Street...

Footwear giant Nike (NKE) recently said it expects sales to take a huge hit – by a percentage in the mid-teens – in the current quarter. Elsewhere, American Airlines (AAL), Delta Air Lines (DAL), and Southwest Airlines (LUV) all lowered their sales forecasts on weaker demand to start 2025.

We're also seeing softer expectations and results from companies that typically thrive when folks are more cautious with their spending...

In an earnings call earlier this month, Dollar General (DG) CEO Todd Vasos said that customers "only have enough money for basic essentials." And he doesn't expect that trend to change anytime soon.

Big-box retailer Walmart (WMT) has seen an increase in shopping trips from higher-income customers and noted that folks are pulling back on discretionary purchases in favor of must-haves.

Even convenience stores are seeing a drop-off in spending on things like chips and cigarettes, according to the Wall Street Journal and Fortune. If folks are pulling back on spending on "addictive" products like junk food and tobacco, it's a bad sign for the economy.

All of this aligns with what the consumer-confidence surveys are seeing, rather than the data the Fed is using to make decisions.

If inflation remains sticky and folks continue to pull back on spending, "stagflation" could be a word you hear much more often... And the Fed will have a problem on its hands. The central bank is already forecasting lower growth and higher inflation for 2025. A drop-off in consumer spending will only make the dynamic worse.

If that happens, the Fed's likely next move – lowering interest rates this year – might stoke more inflation. Or if the central bank continues with its cut "pause," the economy could keep taking a turn for the worse. Neither outcome is ideal.

So stocks may have bounced back from their correction earlier this month (with the S&P 500 Index falling 10%), but the market and economy aren't out of the woods just yet.

Mom-and-pop investors are still buying the dip...

The recent stock market correction hasn't scared away the herd of everyday retail investors. According to trading-activity firm VandaTrack, individual investors have plowed $67 billion into stocks so far in 2025.

That's only slightly below the $71 billion in inflows from the fourth quarter of 2024 – when the S&P 500 gained about 2% and the Nasdaq Composite Index rose about 5%.

And during the 10% pullback in the S&P 500, which lasted 15 trading days between February 19 and March 13, mom-and-pop investors were net sellers on only five of those days... while their big "buy the dip" mentality showed on six days straight.

Meanwhile, the "smart money" is doing the exact opposite...

The most recent Bank of America Global Fund Manager Survey for the month showed the biggest rush to cash since the March 2020 bear market. And the survey has never seen such a large exit from U.S. stocks. Here's how we described it in the March 18 Digest...

This month also saw the largest outflows from U.S. stocks in the history of the survey. Fund managers reduced their U.S. equity exposure by 40 percentage points, making their total allocation to U.S. stocks 23% underweight.

So professional money managers are limiting their exposure to stocks and holding the most cash they have in five years. Yet at the same time, retail investors are more than happy to take on the risk, especially in the Magnificent Seven stocks. Take note.

You don't want to be the "average" investor...

Individual investors tend to underperform the market by a wide margin. Over the past 10 years, retail has only outperformed the S&P 500 in one year (2020), according to data from JPMorgan and Bloomberg.

That trend continued last year, with individual investors posting a 9.8% gain. That would've been a great return in the average year, with the S&P 500's annual return being about 9%. But the U.S. benchmark gained more than 20%.

And during market downturns, that underperformance can get even worse. As Marc Chaikin, founder of our corporate affiliate Chaikin Analytics, wrote earlier this week...

When the 2022 bear market was at its worst, the average investor wasn't down 24%... but 44%. That's a huge difference.

It took the S&P 500 nearly two years to get back to all-time highs after the 2022 bear market. For folks who saw their portfolios underperform the broader index during that downturn, they likely needed even longer to get back to those late-2021 levels.

It's just one example of why you should avoid the investing herd... And right now, the herd is all-in on stocks, with a buy-the-dip mentality still going strong even amid heavy volatility. Perhaps this correction isn't quite done yet.

While we're still watching for signs of a bottom, if some popular favorites are in your portfolio, now might be a good time to assess those positions and be prepared to see one more leg lower in them. Buying the dip in the Magnificent Seven likely won't end well.

(By the way, don't forget about Marc's free presentation that went live earlier this week. He revealed his latest outlook, detailed a strategy designed to help you navigate today's volatility, and even shared a pair of free recommendations. You can watch the replay for free here.)

Good investing,

Corey McLaughlin

Editor's note: According to Marc, regular folks could take double the losses of the S&P 500 once the next crash hits. But thanks to a brand-new strategy designed with that day in mind... it doesn't have to be that way for you. This same strategy could have made you money during recent downturns – and right now, you have the potential to double your portfolio in the coming weeks. Click here to get all the details.