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Recorded Voice:         Broadcasting from Baltimore, Maryland and all around the world, you're listening to the Stansberry Investor Hour. [Music playing] Tune in each Thursday on iTunes for the latest episodes of the Stansberry Investor Hour. Sign up for the free show archive at investorhour.com. Here is your host, Dan Ferris.

 

Dan Ferris:   Hello, and welcome to the Stansberry Investor Hour podcast. I'm your host, Dan Ferris. I'm the editor of Extreme Value, published by Stansberry Research. It's 2020. Happy New Year.  OK. So we're going to do something a little different today. The first podcast of 2020 is kind of special. Most people like to look forward to the year and try to figure out what's going to happen. And so, what am I going to do? Well, not that, exactly. Right? Because we do things a little different here. So longtime listeners and readers of my newsletter know that I don't really like predictions. I think it's a bit foolish to engage in that. Because you don't get them right hardly ever. So, you know, most of the time, you're wrong. Why would you do something if you know most of the time you're wrong? So it's just too hard to predict the direction and timing of securities prices. So why bother?

But I do, as you know, like to entertain competing points of view. I like what previous guest of the podcast, Mark Yusko, says. He says strong ideas, loosely-held. You see? You do your homework, you develop a strong thesis. Maybe you put some money to work on it. And just always remember that you can be wrong. That's the loosely-held part. So instead of just doing the usual, you know, "My predictions for 2020," I'm going to do something a little different. I'm going to look at the financial markets today and sort of think about what's already priced in, where we are right now. And then, I'm going to entertain some thoughts about what would surprise investors in 2020 and beyond. And if you've ever read Byron Wien from Blackstone, he does this thing every year where he says, you know, 10 surprises for the coming year. But they're predictions, really. He's making predictions there. That's how I take it, anyway. These aren't predictions. I'm really trying to figure out what would surprise us. Because you don't want to be surprised. You want to be ready. You want your portfolio to be ready.

 OK. So we'll start, of course, with stocks. The big enchilada that we talk about more than anything else. Epic run in 2019 and really epic run the last 10 years... right? Goldman Sachs told us a short while ago – maybe last week – that the market hasn't had a 20% correction in 10.7, almost 11, years... the longest such stretch in 120 years. And we often quote the economist, John Hussman. He says stocks are even more expensive now than they were at the 1929 peak. So record bull run, all-time-peak equity valuations. Well, that suggests that investors are fairly optimistic and not expecting any bad news. So let's entertain the opposite point of view – which would, by definition, be a surprise, right? So let's just kind of define a market crash arbitrarily as a 30% drop from 52-week highs in a single year.  OK? Stock market crashes are rare events. So it's perfectly reasonable that you don't usually expect one to happen; that most of the time, you don't expect one to happen.

But it also means that a crash is always a surprise. Like, you could start out every – almost every year – and say, "Boy. It would really surprise everyone if the market crashed this year." And if the market crashed in 2020 – say, you know, 30% down pretty quick – it could lead to a spiral of panic-selling, which in turn could lead to a full-on, extended bear market that could take the S&P 500 way down over the next, say, one-and-a-half, two, maybe three years at the longest – I would guess – down 50, 60 percent or so. That would be extremely unexpected and would surprise the living heck out of absolutely everyone I think at this point.  OK. It would be nice if it were that simple – that that's the surprise, and then we can move on to the next asset class. But the thing is, looking around at some other data, a big drawdown like that – a big crash, big move down – would not surprise everybody. Data from a company called Refinitiv Lipper shows that investors pulled $156 billion from mutual funds and ETFs in 2019 – more than any year since records began in 1992.

So plenty of investors are not necessarily in love with stocks to the point where they're keeping money in. You know, they're taking money out even though stocks are hitting new all-time highs. So maybe this isn't a, you know, everyone-pouring-money-at-the-top moment. So investors pulling money out of stocks would likely be surprised by another few years, let's say, of big, double-digit annual gains. You know, like 20% a year or something like we saw in the late-1990s, for example. I bet nobody's expecting that. I'm not.  OK. One last thing related to stocks: The VIX index. The volatility index – otherwise known as the fear index. It tends to go own when stocks go up, and it goes up when stocks go down. It's well below – it's like around 12 or something lately. It's well below its long-term average of around 20. So, you know, the price action in stocks and the valuations and the VIX action... it all forms a constellation of data points that suggest a big drop would surprise a lot of people. The exodus from mutual funds and ETFs suggests the opposite.

So what is this? It represents a wide range of outcomes. and we've discussed this before. That's the definition of risk. If you read your Howard Marks – which I recommend you do. I always recommend his book, The Most Important Thing – he'll tell you risk is a wide range of possible outcomes. Right? Small-cap stocks are riskier than Treasury bonds. Treasury bonds can either go up a little bit or go down a little bit. That's the expectations. You know, small-cap stocks either go up a lot, go down a lot. Bigger range of outcomes, bigger risk. And that's what this is suggesting about the stock market; that investors – actual actions taken by investors – represent the anticipation of a rather wide range of outcomes in 2020 and maybe 2021 or so. So you prepare for a wide range of possible outcomes by being adequately diversified among a few basic asset classes. You know my shtick here, right? Hold plenty of cash, hold a 5% to 10% position in physical precious metals and buy value stocks. Right? That's puts you in the stock market. It puts you in cash. It puts you in gold. That's a pretty good all-weather portfolio strategy. I see no need to change it now.

So next. Next, what do we have? The global bond bubble. That's a pretty big deal. I've been saying the global bond market wasn't a huge bubble for two years. It's still true today. And the weirdest part of it, of course, is all this sovereign debt that yields negative. So if you hold it to maturity, it guarantees you will lose money. It's insane. So in August of last year, there was $17 trillion of this stuff in the world. Most of it, the sovereign debt of japan and Europe – so today, there's less than $12 trillion of negative-yielding debt. You know, $5 trillion's a lot of money. You know, a trillion here, trillion there. Pretty soon, you're talking real money. But the remaining amount – $12 trillion...I think it's like between 11 and 12 trillion – it's still like the Mount Everest pile of debt that's priced for guaranteed losses. So the problem here is, we've never seen this before. WE have no historical precedent. If you read Sidney Homer's yielook –  it's called the yield book – but the real title is A History of Interest Rates – you won't find negative-yielding debt anywhere in there in 5,000 years of data. So it's hard to have a feel for this. There's no historical precedent. What do you do? For insight, I harken back to September.

And I told you about this back then, but I'll remind you. The European Central Bank posted on Twitter back in September – this is exactly what the tweet said. It said, "Draghi. Negative rates will not provoke the collapse of the financial system." In other words, then-President of the ECB Mario Draghi was telling the world, "negative rates will not provoke the collapse of the financial system." Well like I said back then, and I'll say the same thing now, who said anything about a collapse? Right? It's a classic tell. It's like when a country's finance minister says we will not devalue the currency. It's Shakespearian. The lie reveals more truth than honesty. So Draghi effectively telegraphed that negative rates come with huge risks, and because the whole thing is unprecedented, possibly the very big risks are totally unfathomable and totally unknowable. So maybe the surprise there would be kind of a soft landing in the sovereign debt market with no big collapsy kind of outcome in which, you know, the rates go positive without spiking up too high and without destroying the operating budgets of the countries issuing the debt.

At least one central bank in Europe is trying to undo this negative-rate business. Last year, Sweden's Reichsbank hiked rates for the first time since 2011 – though they still remained negative at that time. And in October of this year, the Reichsbank held rates steady but pledged to finally take them out of negative territory for the first time in five years. And they should be doing that sometime if they haven't already. It's kind of hard to find news about this stuff sometimes.  OK. So why do I care about Sweden, whose roughly, I think it's around $550 billion, GDP puts it somewhere around the U.S. states of Michigan and Virginia? Why do I care about Sweden? Because the Reichsbank was founded in 1668. It's the oldest central bank in the world and the fourth-oldest bank of any kind in operation that I can find. It has more experience and has survived longer than any other central bank and all but three other banks – of any kind – anywhere in the world.

So when the guys who have survived the longest say they're done experimenting with this ultra-loose monetary policy inanity, maybe just maybe Japan and the rest of Europe and investors ought to give a listen. Again. No idea how this plays out. Cross your fingers that Draghi screwed up and accidentally told the truth in the Twitter post, and it really won't lead to any big collapse or any bad outcome. Now certainly, negative interest rates have made it hard for European banks to perform well. Maybe they're a value play. Philip Grant from Grant's Interest Rate Observer reported recently about this. And he looked at the Euro stocks banks index. And he said it's got a 6.3% return on equity in the third quarter this year, trades at 0.6 times book value, almost a 6% dividend yield. And if you compare that with the U.S. KBW index, you know... U.S. banks are like 12% ROE, 1.3 times book and 2.6% dividend yield. So in other words, the European banks have struggled with all of this negative interest rate stuff. It's hard to make money when stuff yields nothing or negative.

And so, they're cheap. And their dividend yield is high, you know, especially compared to the U.S. banks. Right? And if you look at the European bank ETFs, they're – you know, there's a couple of them out there. And they're up like 18, 20...26%, one of them. Since they bottomed out in August when the total amount of negative yielding debt peaked at $17 trillion. You see the correlation there? Right? So when there's $17 trillion in negative yielding debt, everybody's like, "Whoa. Get out of European banks. They're scared to death to hold the stuff." And then, you know, when those interest rates start creeping back towards positive and the amount of negative-yielding debt starts falling, then people are, "Oh,  OK. Well maybe that's the bottom in the European banks, and they've been buying them." And given what Philip Grant from Grant's Interest Rate Observer observed, it looks like there's substantial room for the valuations to rise. So maybe there's a little tailwind behind them. And maybe the ECB will take the Reichsbank's cue and try to put an end to this madness, and banks will start earning better returns on equity as the yields on securities and loans rise.

So a year of stellar performance by European bank stocks looked like it would surprise the market. But it doesn’t seem entirely out of the question, given, you know, what we just looked at. So that's like – I'll have that and one more in a minute. I'll have one more kind of solid, concrete idea to put money to work in. But, you know, that doesn’t sound like a bad idea to me. When negative yields rain and banks suffer, of course investors often turn to gold as a safe haven. So over the past year or so – maybe a little more – gold quickly rose. You know, it's like 25% from maybe below $1,250 an ounce to – peaked around $1,550 an ounce in 2019. Then fell back below $1,500 and spent most of the last quarter of 2019 at around that level. So I doubt that a move back up above $1,500 an ounce would surprise anybody, since it was just there not long ago. Nor would a move, you know, a little further down, closer to $1,400. Right? A move down to something like $1,200 would strike me as a pretty good surprise. It would surprise me – and so would a move to, like, anywhere near the all-time highs like $1,900 an ounce that was hit back in 2011. That would be a surprise to me. You know, if that happened in 2020. I certainly think it's going to happen over the next few years.

So investors know gold can be volatile. So, you know, it makes sense that it would take a really big move to surprise them. Right? So that's just gold. Gold stocks are even more volatile. And some of them are actually, I think, providing a good opportunity. This is the other concrete opportunity that I just mentioned. So with gold stocks, the VanEck Vectors Gold Miners ETF – the big gold-miner ETF that everybody watches. The ticker symbol's GDX, right? The GDX was up about 35% in 2019. That is a really good, rare performance. Hasn't done that since, what, late-2015, early-2016? And it's just, you know – it's rare. So really great. Better than the S&P 500. And we all know gold mining is a highly cyclical business. Gold stocks are really volatile. It'd be logical to expect a big move down after a big move up. Right? Similar to the yellow metal itself, but with more volatility – bigger moves up and down than gold. And the real surprise would be, I think, an extended bull run in gold stocks stretching out several years without a lot of big drawdowns along the way. That would surprise a lot of people.

So for 2020 maybe and next year, that would look like maybe a modest 10% rise for the year, or 10 or 15% rise, uninterrupted, by a big drawdown. That, I think, would surprise some folks. You know? If gold stocks suddenly weren't that volatile and delivered really nice returns. And I can't help pointing out a pocket of opportunity in gold stocks. And, you know, this is not in my surprise theme, but I got to tell you about it. Small gold mining companies that own maybe one or a couple of mines, they have cost structures that can be like multiples of the larger miners – like a lot higher. So it pays for them to get acquired by larger mining companies who can lower costs by spreading them over a larger asset base. So maybe today, you buy some of these smaller mining companies – actual producing mines.  OK? Not flyers on exploration, actual producing mines. You buy the small ones today, and there's a decent chance, I think, you'd be able to sell out at a premium once the larger miners start bidding on them. Actually, once they continue bidding on them. It started in 2019. I think it'll keep going.

And I have more confidence about this than maybe in some other sector, because mining has no pricing power. Right? So whatever they pull out of the ground... you know, whatever the price of gold or copper, silver – whatever they're pulling out of the ground – whatever the price is at that moment, that's what they can charge and no more. So it's a low-return, capital-intensive, highly cyclical business. Since they can't control the price they sell at, the lever that they have to pull is cutting costs. So they focus intently on that if they're trying to generate a consistent cash profit. And the smaller miners have limits on how far they can cut costs. Because, you know, a big mining machine costs what it costs. And relative to a big mining company, it's not that much. Relative to a small mining company, it is. You get the picture. So bigger miners have more scale and can operate with lower costs. So it's logical to expect the big gold miners to keep buying up the smaller ones and spreading their costs over a bigger and bigger bunch of assets. So it would actually surprise me if gold stocks didn't correct somewhat in 2020 down, I don't know, 15% or something, would not be a huge move. Or, you know, 15% or 20% even would be kind of a noisy, typical or volatile gold stock move.

But it would also surprise me if this M&A trend didn't continue. And that kind of keeps a bid under the smaller gold miners. So, you know, just remember: Gold stocks are riskier than other stocks. They're more likely to deliver surprises than many others. So, you know, just keep that in mind. But I think that's a decent little speculation that we have there. So we've got two of them. Hey, don't we? That's pretty good. European bank stocks, small gold stocks. We're getting somewhere here. All right. Let's talk about private equity, because I think this – it's an important topic now, because it's been such a frenzy. Right? Not too long ago, a couple episodes ago, we interviewed Dan Rasmussen. And he talked about this. And the bottom line is, private equity – to me, it looks like it's set to go on one big, last buying binge. And I say that for two reasons. First of all, investors have fallen stone-cold in love with private equity. It's like the must-have asset class among wealthy and institutional investors. Right? All the pension funds and big institutions and so forth.

And like I said, we had Dan Rasmussen on the program not long ago. And he used to work for Bane Capital, PE firm. And he said today – here's what he told us when he was on the program. This is a direct quote. He said, "Private equity is the hottest, sexiest asset class. Everybody wants in. Everybody is increasing their allocation. 94% of institutional allocators believe private equity will outperform public markets." That's a direct quote from him. and you can see it. All you have to do is pick up any financial periodical. I bet you didn't know this, though. Stakes in PE funds are bought and sold like stocks and bonds. They normally trade at modest discounts to their net asset value. According to a firm called Triago – not Trivago, Triago – a company that facilitates the private equity fund trades, they're not trading at discounts anymore today. And the stakes in the biggest PE funds by the big firms, they're selling at premiums of 5% to 7%. And not only are they trading in higher prices, but it's a more frenzied, more liquid market. Like you can get a quote in minutes these days where normally, it would take overnight or so or days even.

So roughly $9 billion in private equity stakes traded so far this year – I'm sorry, last year. Right? You know, up until the end of last year... like 10 times more than 10 years ago. So that market is really grown. It's whipped itself into a frenzy, and the frenzy looks set to continue. And the second reason I say that this is going to continue is because the PE firms are sitting on more unspent cash than ever. As of June – that's the latest number I've got – $2.44 trillion of cash. With the leverage typical of most PE deals, that could translate into double that or more in total buying power. So I don't know, $5 trillion in buying power? That'll push the stock market up, I bet. Or, you know, keep it up at least. And look. PE investors are only human. I've said this before, right? They're only human. They buy at the top and sell at the bottom just like everybody else. Cash burns holes in their pockets just like everybody else. And, you know, the PE deal valuations are high and rising. It's been normal for them to pay like mid-single-digit multiples of enterprise value to EBITDA. Today they're paying like 11, 12 more.

And Rasmussen told us – he said, "PE valuations are higher than public market valuations today." So, you know, nearly $2.5 trillion of dry powder. This train isn't slowing down or reversing direction in 2020, I don't think. Anyway. That would be a huge surprise if it did. My colleague, Steve Sjuggerud, stands very... has been predicting a big "Melt Up," which looks like it might've started here – I don't know – in U.S. stocks. It sure looks like PE firms are set to contribute to that effect by pouring trillions of dollars into the market in these lever buyouts. So PE firms and their target companies finance with high-yield debt. Junk bonds, right? So let's look at junk bonds. Equities making new all-time highs. Epic run last year. Investors are in risk-on mode. It's normal for that rising tide of optimism to spill over into the high-yield bond market. When equity values rise, that provides a larger capital cushion for debt investors.

So the debt investors, they become emboldened, and they're more willing to buy the riskier debt instruments when they feel that cushion is large and growing. And you can see the optimism in the spreads over Treasurys. If you go to the Fred website – the Federal Reserve Economic Data website maintained by the Saint Louis Fed – lot of data there. One of them is the – oh, the name of this thing is just absurd – the ICE Bank of America Merrill Lynch US High Yield Master II Option-Adjusted Spread.  OK? That's one way of looking at junk bond spreads. And this thing with the ridiculous name was recently – the spread recently ran 3.5%. So that means the high-yield bonds yield 3.5% more than comparable Treasurys. You know, Treasurys of same maturity. Spread data goes back to 1996. Spread bottomed in 2007 at 2.5%. They peaked in 2008 at almost 20% – just shy of 20%. Except for that big all-time low and the ensuing huge spike in the financial crisis up to almost 20%, the range has roughly been between 4 and 10%junk bond spreads over Treasurys. Right?

So 4 being expensive and 10 being cheap. Right? You want to buy them when they're yielding a lot. You want to not own them when they're yielding not much. And 3.5% is squarely on the low side. Right? Junk bonds are expensive. They're part of that global bond bubble that we're talking about. So it would surprise the heck out of this market for junk bond spreads to really widen really quickly for this junk bond prices to crash and yields to go way up. There are cracks maybe appearing in the junk bond market. Like oil companies are big, high-yield issuers. If oil's in the $50s per barrel, right, and we're finding more of this stuff all the time – you know, there's no physical shortage of fossil fuels despite what your average poor fool thinks. You know, that can be rough on the levered members of the oil patch. So, you know, maybe that junk debt runs into a problem. And it's done it before, right? Back in 2014 when oil started crashing, led to a wave of distress in oil-related junk debt.

And ratings agency Moody's Investor Service, they've been warning about a wave of junk bond defaults for more than a year. Over the last decade, they were saying the number of junk-rated nonfinancial companies was up like almost 60% – highest level on record. Whenever the next era of financial stress arrives, Moody's says the stage is set for a particularly large wave of defaults. And that makes sense, right? Things get expensive. People rush into a lot of debt they shouldn't rush into, and companies borrow too much. And then, the financial stress arrives, and more defaults happen than normal. Overall, though, the junk bond prices aren't expecting this big wave of defaults. They're priced for something close to perfection. And, you know, they're not called junk for no reason. So perfection is not a realistic expectation at all. And that, you know, speaks for itself. Now one market finally got surprised last year. And it's hard to see this going any differently in 2020. And that's venture capital, right? The bubble keeps bursting.

So talked about this before. You know, venture capital's like a trillion dollars in assets under management. It doubled over the last five years. There's more than 400 of these unicorns in the world; private, VC-backed companies that are valued at a billion or more... 400. I think 420-some. Wow. And the bubble started deflating this year, right? Once the WeWork IPO kind of blew up and didn't happen – and, you know, big IPOs like Uber and Lyft, for example, they performed poorly. And remember. That's the exit for the VC – the venture capital investors. They come in early, and they fund these startup companies early and shepherded them through an early growth period. And then, they go public, and that's their big moment where they get rich. And some of these things are actually going public at valuations below the last round of venture capital. So, you know, the VC bubble is bursting. The bigger surprise to me, frankly, would be a resurgence of interest and higher valuations than we saw at the peak. Right? Like another WeWork happening or something. That would be the bigger surprise, really, to me.

Because once a bubble starts to burst, it's probably not going to stop until it wipes out a lot of the misallocated capital and scares investors out of the space for a while. So this is one case where the surprise doesn’t really seem like it's worth entertaining. You know? The surprise would be a resurgence of interest. I don't think that's worth entertaining. I don't think it's going to happen. So for most investors, you know, the upshot here is like fewer opportunities to throw crazy money at IPOs thinking you're going to make 50% the first day of trading. And I hate to even think about the next one, but you can't spend your whole year reading financial periodicals every day without having this thing shoved in your face 100 times. And I'm talking about the Federal Reserve. Right? I'm not a Fed-watcher. Not really. But like I said. It's shoved in my face every day. It's hard to avoid it. And I wish I could remember who said, "The Fed is the smoking gun behind every market who done it." Right?

Nassim Taleb said something interesting too. He said, "You know, it's easy to be a top-down bullshitter. But it's hard to be a bottom-up bullshitter." And top-down, you know, what's more top-down than saying the Fed controls everything? Right? So I think it's delusional to think that they control every tick up and down in the stock and bond markets. And for example. If the Fed has so much control over interest rates, why is the yield curve so flat? You'd think they'd want to see people rewarded for holding like 30-year Treasurys. But the 30-year Treasury bond, you know, it doesn't even pay 100 basis points more than the three months. Right? So, you know, you got like, what, 29 years and 9 months more of risk, and you get paid like – what? Lately like 80 additional basis points. You know? It's nuts. And if the Fed really controlled things, they would favor a more normal yield curve. But they don't control. So there's the illusion of control and the real control.

And I think the Fed possesses an illusion of control. But this Fed and its army of – I don't know, I think it's like 400 PhD economists – they show up for work every day feeling like, you know, they're doing God's work protecting our way of life. And they're controlling inflation and unemployment, mostly by like buying and selling securities in order to keep interest rates at a particular target level. But really, you know, they're more like a team of demented chefs. They burn everything they cook. And, you know, every now and then they burn the whole restaurant to the ground. So the surprise would really be if the Fed has as much control as many people believe and can keep the stock market propped up as many people believe, and can keep the economy humming and the financial markets humming without interruption and with low inflation as many people believe. Which, you know, this would be tantamount to the Fed telling the truth about itself, because that's what they say they do. But I'm not holding my breath for these particular surprises to come true. I don't know if that helps you. The Fed is a weird topic. But like I said. I can't avoid it. I feel like I need to put some opinion about it out there. And that is my opinion about it.

So we already looked at U.S. stocks. But there's like a particular development – and this is the last kind of look ahead. There is one particular development that is near and dear to my heart that – I think it'll make the savvy investors who get into it and stick with it a lot of money over the next several years. And it's the long, dark winter of value investing, which I believe is over. So for the last decade, buying the smallest, cheapest stocks in the market just didn't work as well as it has over the long term. Buying the biggest, fastest-growing – and frankly, most expensive stocks in the market – that's what worked. So you could look at any pair of indexes. Just look at Russell 1000 growth and value. Russell 1000 value rose 200%since the March 2009 bottom. Russell 1000 growth rose 350%. Significant outperformance, right? And, you know, regular listeners and regular readers of my stuff, newsletter, Stansberry Digest readers know that back in September I started saying, "Hey, I think this is a new golden age of value investing."

And I wrote in the Stansberry Digest. Here's what I wrote. I said, a brand-new golden age of value began on Monday, September 9. Our friend Jason Goepfert reported at sentimentrader.com that that day saw the biggest one-day shift in momentum since 2009 between the best-performing stocks year-to-date and the worst performers. Simply put, the worst performers year-to-date performed best that day, and the best performed worst. And those best and worst are the categories I'm talking about – the value and growth. And then, I continued of course, the best performers year-to-date have been the best performers of the past decade. That these are the big, fast-growing businesses that traded high valuations. The worst ones are the opposites; slower-growing, cyclical, cheap valuations. Now I'm confident that value has taken the market's reins and will outperform growth stocks even in a bear market. Extreme Value's chief research officer, Mike Barrett, and I are shifting our efforts towards the high art of picking real, traditional value stocks ... the likes of which we haven't really been looking for over the past several years. It's time to look for them again. That's what I said in September.

And other people have noticed this shift. I'm not the only person who's written about it. But I'm pounding the table, I think, harder than anybody I've read about so far. Of course, I'll be surprised if I'm wrong about the golden age of value beginning right about, you know, last quarter. But we're not talking about me. We're talking about what would surprise the market. And as it turns out, you know – since September 9, you know, from September 9 through the end of the year, just about, Russell 1000 value is up 5%. Russell 100 growth was up about 9%. So from October 9 to November, value was in charge for that month. But overall, growth is still in charge. So you could say, "Well, this hasn't started yet." Well, yeah. I mean, we're talking about, what, three-and-a-half, maybe four months of data. You can't conclude one way or the other whether I'm right or wrong. You could say it hasn't really begun in earnest yet. Yeah,  OK. Sure. I'll give you that. But it just means that we can still...you know, the relative bargains to growth – you know, the relative value bargains relative to growth – are still there today.

So I think investors are going to look back on moments like this, you know, five or so years from now – maybe three, five years from now – and they'll wish they'd at least allocated some money to value funds in their 401(k)s or something. Or if not having been more aggressive and bought more of these value plays like we're adding in the Extreme Value newsletter today. So, you know, I don't like predictions, but that sure sounds like a prediction. Doesn't it? And if it was and you want to give me some guff about it, I'm not going to push back. You're right. But let's face it, too. It's impossible to be an investor and not constantly be thinking about the future. The future is where your returns are going to happen.  OK? You're a little bit crazy if you don't spend some time thinking about how it turns out. And I think the best way to think about it is what we just did – to look at these markets, look at stuff you own or stuff that you might like to own, and ask where we stand today. Right? I'm always saying that, aren't I? "Where do we stand today, and what do we do about it?"

So, you know, you do that. And part of that is, "What do we do about it?" Should involve some participation of, "Hey. I could be wrong. I could be really surprised by this." Right? You need to contemplate a range of outcomes. Because if you don't contemplate a range of outcomes, you're basically saying there's no risk. And what did we say earlier? Risk is the range of outcomes. The wider the range, the bigger the risk. and you got to know that going into whatever asset class. If it's Treasurys,  OK, well probably not a wide range. Short-term Treasurys, probably not a wide range. Longer-term Treasurys at the yields today, yeah, wider range. The S&P 500, wider still. Small-cap stocks, wider still. Gold stocks, wider. Exploration mining stocks, wider. You see where I'm headed, right? You got to think about risk that way. And that's where all these surprises come in. Think about the kind of surprises you can get.

 OK. So that, folks, is it. And there really was like nothing in the mailbag lately. I guess everybody's taking the end and the beginning – you know, they took the holidays and New Year's off and stuff and didn't feel like writing in. But I think this exercise we just did... I think this is useful. And I hope that you listen to the podcast with a view not towards grabbing a stock pick and running out and buying something you just heard a tip about. But I hope you listen to it with a view towards improving your thinking and improving your investing. That's our mission, and that's what we're going to try to do – that's what we tried to do in 2019. That's what we're going to try to do for you in 2020. We all want to think better about this, and we all want to become better investors. So, you know, that's it for this week's episode. I hope you enjoyed it as much as I did. And look. You can go to www.investorhour.com. You can put your e-mail in there, and we'll send you all the updates for all future episodes.

And you can also go to that same website and see every episode we've ever done. You can listen to it or you can read a transcript. Yes, we do have transcripts for every single episode. What you really ought to do is go to iTunes. Apple iTunes. Right? Subscribe the Stansberry Investor Hour podcast and give us a Like that'll push us up in the rankings. It'll make us more popular. It will attract more like-minded folks like yourself to our conversation that we have. It'll give us more feedback, so I won't have any more weeks like this. And it'll improve the quality of the program. Right? iTunes. Subscribe. Like. Do it. And I will be eternally grateful. And let's face it. It'll make the whole universe a better place to live in, won't it? Yeah. All right. That's it, folks. It's my privilege to come to you this week as it is every week. I look forward to talking with you next time. Until then, bye-bye for now.

Recorded voice:          Thank you for listening to the Stansberry Investor Hour. To access today's notes and receive notice of upcoming episodes, go to investorhour.com and enter your e-mail. Have a question for Dan? Send him an e-mail at [email protected]. This broadcast is provided for entertainment purposes only and should not be considered personalized investment advice. Trading stocks and all other financial instruments involves risk. You should not make any investment decision based solely on what you hear. Stansberry Investor Hour is produced by Stansberry Research and is copyrighted by the Stansberry Radio Network.

 

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