Stansberry Research

'Buy When There's Blood in the Streets'

Corey McLaughlinStansberry Digest

When it hurts so good... Mom-and-pop investors are sour on stocks... 'Buy when there's blood in the streets'... Stay patient and picky, though... Steve Sjuggerud is breaking his silence...


Sometimes things are so bad, they're good...

I (Corey McLaughlin) have been talking a bit this year about the "half and half" market. Roughly half of the stocks trading in the U.S. have been trading above their long-term price trend, and the other half have been trading below.

This is still the case this week. About 54% of the few thousand stocks listed on the New York Stock Exchange are trading above their 200-day moving average, a simple technical measure of a long-term trend. Roughly 46% are below...

In simple terms, some stocks have been going up over the past 10 months of trading while others are still in downtrends over that same span. Today, though, I want to talk about another feature of this half-and-half market we haven't specifically mentioned yet...

Sentiment around stocks is pretty sour in general. A 20% cut in the major U.S. stock indexes, the worst year for bonds since the 1700s, and gold trading largely sideways for a little more than a year will do that to people.

But, as we have seen so many times in market history, when things are bad for stocks and/or the economy, it can mark great long-term buying opportunities that folks rarely experience...

As we'll show today, courtesy of our colleague Brett Eversole, right now could be just such an opportunity...

It might not feel like the time to buy, but that's the point...

As Brett shared earlier this month in the free DailyWealth newsletter, at least one portion of everyday "mom-and-pop investors" have rarely been so down on the markets. Maybe you're one of them...

Brett cited a sentiment measure compiled by TD Ameritrade, one of the largest brokerages in the U.S. The company has more than 11 million individual accounts totaling $1 trillion-plus in assets, and the brokerage analyzes clients' accounts to create a powerful gauge...

It's called the Investor Movement Index ("IMX"). It includes data like account holdings, position changes, and trading activity. And each month, the index tells us if regular investors are bullish or bearish.

Like most sentiment indexes, though, this is a contrarian tool. When the IMX reading is low – and investors are scared – we want to consider buying. And that's exactly where we are right now. Take a look...

The IMX crashed throughout 2022. And it hit its lowest level of the year in November and December.

This was one of the lowest readings since the index began in 2010. The "crowd" – at least the crowd of TD Ameritrade's customers – is not enthusiastic about stocks nowadays.

And this is precisely the time when you want to think about getting bullish on stocks... and go against the fearful emotions your body might be signaling to you...

'Buy when there's blood in the streets'...

As Brett showed, in the past, similar lows in this reading from TD Ameritrade have proven to be solid buying opportunities over the long run...

To see this, I looked at each time the IMX hit a new low at today's level or lower. Here's how stocks performed after those setups...

These are downright impressive numbers. Stocks have jumped 11% in a typical year since this index's data began. But buying after setups like today's crushes that return.

These cases led to gains of 13.7% in three months, 23.5% in six months, and 24.7% over the following year. That's nearly five times better than the typical six-month gain and more than double the typical annual gain.

As Brett said...

"You want to buy when there's blood in the streets..."

The saying is a standby for investors. But it's tough to follow in practice. It means that the best opportunities appear when times are tough... and when no one else is interested in putting money to work.

It's not about being 'all in' or 'all out'...

I'm not suggesting there will be great buying opportunities for every single stock out there... As we've said lately, the days of the "bull market genius" – where you could pick any name and likely make money on it – are gone.

As I wrote in the January 3 Digest, the key words for successful investing this year might be patience and prudence. However, a "sea change" into a higher-interest-rate era and different investing climate can be a great thing for savvy investors...

Recognize the features of today's environment, and your portfolio can benefit. Conversely, ignore what's happening now at your own peril.

You'll never hear me declare in black and white terms a time when you must buy and a time to definitely sell. (If I do, please point it out.) There's always gray area, and you need to consider your own goals, risk tolerance, and investing time horizon when making portfolio decisions.

But based on the negative sentiment among everyday stock owners today, staying "all out" of this market might not be the wise thing to do if you're interested in seeing some gains in your portfolio this year. Let's remember, the past is the past.

We don't want to ignore the past (and the troubles of the present), but it can pay to look ahead, too...

Sometimes, it can hurt so good...

Recently, we shared with you the 2023 outlook of our Ten Stock Trader editor Greg Diamond. Hopefully you caught his video event and why this year could be a tricky one for investors who aren't prepared for the shifts happening in the markets right now.

I'm pleased to report that what should be another familiar name to longtime subscribers, True Wealth editor Steve Sjuggerud, is getting ready to share a similar message... and his advice for investing in this new year...

For the first time in nearly two years, Steve is breaking his silence...

That's right, he is stepping forward in a major way to give his fresh take on the markets... Steve will tell all in a free, brand-new video event debuting next week at 8 p.m. Eastern time on January 31.

You can sign up for the event here... and just for doing so, you'll get the names and tickers of two stock picks, including one that could be headed for total disaster. It's the kind of warning Steve – with his bullish reputation – doesn't make very often...

But as we've been saying, what we see now is a shifting market. Without giving too much away, I can tell you Steve believes stocks may be on the brink of "resetting" into a historic new phase... one that he believes few people will see coming...

To hear all the details and get some more guidance on this half-and-half market, be sure to check out Steve's upcoming event. Again, it's totally free. We just ask that you sign up in advance so you don't miss a minute. Click here to reserve your spot.

And a quick note for Stansberry Alliance members... You already have access to Steve's work and will have access to any new research he and his team publish, but you are more than welcome to check out his video event as well.

Gold $3,000?

J.C. Parets, technical analyst and founder of AllStarCharts.com, has turned bullish on gold and has eyes on a price target of around $3,000 per ounce. "Gold is outperforming," he tells our editor-at-large Daniela Cambone, and "we may only be in the second inning" of a long trend.

Click here to watch this episode right now. And to catch all of the podcasts and videos from the Stansberry Research team, be sure to visit our Stansberry Investor platform anytime.

New 52-week highs (as of 1/23/23): Aehr Test Systems (AEHR), CTS (CTS), iShares MSCI Mexico Fund (EWW), Fluence Energy (FLNC), Hologic (HOLX), Flutter Entertainment (PDYPY), and Revance Therapeutics (RVNC).

In today's mailbag, feedback on yesterday's Digest about the U.S. government's "debt ceiling"... Do you have a comment or question? As always, e-mail us at [email protected].

"EXCELLENT summation of the Debt Ceiling sham, sir! WHAT a COMPLETE Farce. OUR government IS SO Sad... but VERY REAL. 'For the people,' has NO meaning." – Paid-up subscriber Bill S.

"Dear Corey, Congrats, your articles are timely and poignant. But I still maintain they could be half their word size without losing your well-focused, intellectual points!" – Paid-up subscriber Herman V.

Corey McLaughlin comment: In the interest of brevity... noted.

"We might as well face it, if our government has to borrow $1.2 trillion each year to make ends meet, there is no way we can legally pay back our national debt with U.S. dollars until our dollar becomes equivalent to monopoly money. That doesn't mean there won't be a payback by other means for our extravagance and lack of stewardship.

"As much as we may complain that we are suffering due to our government's excessive spending, let's not forget that the other countries around the world are suffering more severely because they are paying for our extravagance by lending us money that will be paid back with worthless dollars. They know this, and it's only a matter of time before they rid themselves of dependance on the U.S. dollar. When they finally rid themselves of it, the payback of our federal debt will become effective.

"We, well maybe not all of us, but certainly our children, grandchildren, their children, and their children's children will experience what it's like to live in poverty – the kind of poverty currently being experienced by the starving poor in the underdeveloped countries. Printing more U.S. dollars will be as useless as Argentina printing more pesos. No country will lend us. The Federal Reserve will cease to be our lender of last recourse. They will move on to better pastures.

"Let's not be naïve thinking that the U.S. government will sit quietly allowing the above scenario to take place. With our mighty military you mentioned, our government will escalate conflicts in order to save the mighty dollar. If we would be willing to open our eyes, we would see this process has already been in motion for several years. It can only escalate because even if we were to recognize that we have not been faithful to the responsibility of managing the world's reserve currency, it is not in our human nature to turn the baton over to another even if we think they may do a better job.

"The king of the hill doesn't go down without a fight. The debt will be paid back in blood, sweat, and tears." – Paid-up subscriber Luis A.

All the best,

Corey McLaughlin
Baltimore, Maryland
January 24, 2023