Today, we’re turning things over to our friend Steve Sjuggerud at Stansberry Research…
Steve holds a doctorate in finance and has worked as a stockbroker, vice president of a $50 million global mutual fund, and hedge-fund manager. He has made appearances in the financial media, including Bloomberg, Fox Business News, the Wall Street Journal, and Forbes.
Right now, Steve has a critical message for investors for what to do in what he’s calling a “Melt Up” in the markets…
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“I’m not going to sugarcoat it,” the former hedge-fund manager recently said. “We are entering a period of great risk AND great reward… and where you end up financially a decade from now could depend entirely on the actions you take in the coming days.” Steve is going live on April 29 with his most important prediction in years.
Table of Contents
- 1 The Most Important Advice I Can Give on Today’s ‘Melt Up’
- 1.1 Our conversation made me realize one thing, though…
- 1.2 Today, I hope to share a bit of perspective, so you will be able to navigate the final stages of the Melt Up and the following Melt Down with a cool head…
- 1.3 ‘One billion dollars? You call that a position?’ legendary fund manager George Soros once asked his trading partner Stanley Druckenmiller…
- 1.4 Another Soros quote has stuck with me for all of these years…
- 1.5 Animal spirits have kicked in among investors…
- 1.6 This means that the market now presents the biggest risk – and opportunity – of your lifetime…
The Most Important Advice I Can Give on Today’s ‘Melt Up’
By Steve Sjuggerud
2021 marks 28 years as an investment professional for me…
That’s a lot of years.
I experienced my first “Melt Up” back in late 1993. And I experienced my first “Melt Down” soon after in early 1994.
The way up in 1993 was euphoric. The market rose 123% that year. But the way down was devastating, with stocks falling around 30% in under three months.
That particular Melt Up was in Hong Kong. I was a broker specializing in foreign stocks and bonds back then. And I decided at that moment that I never wanted to go through an up-and-down ride the same way again.
In 1996, my childhood friend Porter Stansberry and I started writing investment letters together. And I traveled to China for work for the first time that year – a quarter century ago.
I thought about all of these experiences recently, after I had a long talk with a brilliant young man in his early 20s. Despite his young age, he’s already teaching master’s level classes at a university. I love talking with him… He will succeed at whatever he chooses – without a doubt.
Our conversation made me realize one thing, though…
It made me realize how little perspective he has in investing.
It’s not a knock on him – it is what it is. The flip side of that is, it reminded me just how much perspective I have after all these years. The young man is brilliant – but he doesn’t know what he doesn’t know.
It made me feel a bit like NFL quarterback Tom Brady in the playoffs… My arm strength and running speed might not be what they used to be. But I have strengths that are far more important: Experience. Cool under pressure. And maybe most important… perspective.
I have seen it all. There is no situation on the field that can rattle me today. For better or worse, no situation is stressful… Whatever “it” is, I’ve seen it before (or something like it), and I can deal with it.
If you have only been reading my work for a few years or less, then you haven’t really needed a cool head – yet. With the exception of the start of the pandemic last year, we haven’t had too much fuss.
We’ve been bullish and right on U.S. stocks for many years. We’ve been bullish and right on China-related stocks, as well as the great boom in U.S. house prices. I hope you have participated in all these massive moneymaking ideas.
We have simply been winning – for years now. That’s why we haven’t needed much of a cool head in our investments.
But here’s the thing: We are likely to need one later in 2021.
It will be far harder to do than you can imagine. But if you prepare yourself now, in advance, you can get through it, keeping as big a portion of your gains as possible.
When the hard times come, your instinct will be to make the wrong decisions. (It’s not you – everyone does this.) But if you can keep your cool… keep your perspective… and know what to do ahead of time, then you can succeed under pressure.
Let’s get to it…
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The clock is ticking on the biggest financial event in 20 years.
And if you want to take advantage, you must position yourself now.
‘One billion dollars? You call that a position?’ legendary fund manager George Soros once asked his trading partner Stanley Druckenmiller…
Soros continued, “It takes courage to be a pig.”
His point was, when your trades are working, you have to go for the jugular. At Soros’ urging, Druckenmiller doubled his position to $2 billion. The trade went dramatically in their favor, and they made far more money.
George Soros may be better known today as a billionaire who funds a lot of political causes. But in the 1970s, he was the best investor on the planet… far better than even Warren Buffett.
His Quantum Fund returned 4,200% in the 1970s – when the S&P 500 returned just 47%.
How could Soros outperform so dramatically? Early on in my career, I wanted to figure that out…
I graduated from the University of Florida in 1992. That same year, Druckenmiller recounted some of the lessons he learned from working with Soros in an interview (shared in Jack Schwager’s book The New Market Wizards).
When asked what the most important thing he learned from Soros was, Druckenmiller replied:
It’s not whether you’re right or wrong that’s important, but how much money you make when you’re right and how much you lose when you’re wrong. The few times that Soros has ever criticized me was when I was really right on a market and didn’t maximize the opportunity.
It’s hard to believe these words of wisdom are nearly 30 years old… because the lessons of Soros and Druckenmiller apply perfectly today.
I hope you can see the influence of this idea in my writing. Even though the stock market keeps pushing higher and higher, I have continued to push you to take advantage of the Melt Up.
“But Steve,” you might say, “this trend is built on false foundations. I can’t invest in that!”
You are right about the trend… But, yes, you can!
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First, it was MicroStrategy. Then Tesla. Soon, every company in the world will own some bitcoin. And now, the most trusted currency expert in America says, “I predicted $100k bitcoin… but I was WRONG… because honestly, I think it could realistically hit $250,000!” He’s agreed to come forward and share details on the unique crypto strategy that led to 27 winning positions last year with average gains of 360%.
Another Soros quote has stuck with me for all of these years…
“Economic history is a never-ending series of episodes based on falsehoods and lies, not truths. It represents the path to big money,” he said in the early 1990s. “The object is to recognize the trend whose premise is false, ride that trend, and step off before it is discredited.”
Recognize the trend whose premise is false… Ride that trend… And step off before it is discredited. That’s what we’re trying to do here in the Melt Up.
Twentysomethings are trading tech stocks on their phones. They’re buying cryptocurrencies. They’re speculating – in a way I haven’t seen since, well, the last U.S. Melt Up in 1999.
Is it some fundamental change to our economy that’s driving them to buy already-expensive stocks? No. It’s far simpler than that.
Animal spirits have kicked in among investors…
“FOMO” is here – the fear of missing out. That’s it.
That’s what I took from the conversation with my brilliant twentysomething friend. He was interested in investing – not because he had a great idea, but because of the FOMO happening in the market today. I had to explain to him how contrarian investing works… and why it’s not the best idea to buy just because everyone’s excited.
He’s a smart guy, so he understood what I was saying. But his reaction isn’t typical for someone in his shoes right now.
Instead, we are reaching the point where the Greater Fool Theory kicks in… when the only reason someone buys a stock is because they think a greater fool will come along and pay them a higher price for their stock. It’s not about the fundamentals of the economy or the business – it’s sheer excitement.
Thinking of it this way makes it much easier to step off the Melt Up trend before it’s discredited.
It’s hard to hang your hat on something lasting today. The reality is that the economy is being propped up by low interest rates and government stimulus…
Interest rates are extremely low, forcing savers out of zero-interest investments and into the stock market. Low interest rates are also encouraging speculation in real estate.
The U.S. economy is being propped up by government spending as well. The latest example came from Treasury Secretary Janet Yellen… As a recent Reuters headline put it: “‘Act big’ now to save economy, worry about debt later, Yellen says in Treasury testimony.”
If a sane person said, “Act big now, worry about debt later,” you might worry about their sanity. But the article says, “Wall Street stocks rose on Tuesday in reaction to Yellen’s call for a hefty stimulus package.”
Should the stock market be excited that our economy is headed into the debt abyss?
We are not living in a magical new time. This is a trend whose premise is false. We will ride it and then step aside before it’s discredited.
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Former 12-term Congressman, Air Force surgeon, and Presidential candidate says both political parties are wrong about how the rich REALLY get richer. Take a few minutes to hear him explain what’s going on… what’s coming next… and most importantly, what YOU can do about it, starting right now.
This means that the market now presents the biggest risk – and opportunity – of your lifetime…
In the past five months alone, more money has flooded into the stock market than the entire past 12 years combined.
But if you think what we’re seeing right now is crazy, it’s nothing compared to what I predict the next six months will bring.
These will likely be the most important months of your financial life to date. The decisions you make now, ahead of time, could affect your wealth for the next decade.
On April 29, at 8 p.m. Eastern time, I’m going on camera to explain exactly what I believe you should do to protect your money right now. This event is free to attend… but you must save your spot in advance.
You can do so right here.