Dear Reader,
Moving things around this weekend I found some old notebooks…
And what I found in one from 2007, I want to share with you today:
I don’t know if you know this, but before now I’ve only ever made one bearish call in my life…
I said the market was crazy overvalued. It was 2007.
So, as I looked back at my notes on the rate-cutting cycle from 2007, what I found was interesting…
The 2007 rate cut cycle actually began on the same date as this recent one in September.
We were also at the same exact Fed funds rate as we are now.
And the first cut of that cycle was also for 50 basis points.
I remember the result at the time was huge…
The Dow Jones Industrial Average had its largest gain in four years – it jumped 336 points after the Fed started cutting, which is the equivalent of about 1,000 points today.
Even Lehman Brothers shares surged back then.
As we know now, looking back, the stock market was just about 3 weeks away from its bull market peak.
And we know that Lehman Brothers sadly collapsed less than a year later.
And by the time Lehman Brothers collapsed, the Fed had cut rates six more times and that didn’t stop it.
At the end of the day, what drives the stock market is earnings, and what drives earnings is the strength of the economy.
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4 Steps to Profit from this Market Crash
“We face a widespread collapse unlike anything we’ve seen in our lifetimes.
By taking 4 simple steps today you can stay safe from the coming catastrophe.
Which is why I want to rush you my new book ‘Midnight in America’ FOR FREE.”
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I was at a dinner party last night with friends and we were talking about that – asking ourselves, can the Fed save the economy? And the jury’s still out on that.
What I do know, and what I’ve been sharing with you here most every day, is that by any measure of value, stock and housing prices are historically high.
In fact, right now, housing prices are higher in relation to income than they’ve been since records have been kept (1980).
I even remember, and saw in my 2007 notes, a Wall Street Journal article titled: “Don’t Panic about the Credit Market.”
This was written by the chief economist at Bear Stearns at the time – he wrote it in August, 2007.
Ouch – Bear Stearns of course went bankrupt, Lehman went bankrupt and the credit markets were destroyed.
I share all this with you because the market’s been going higher and Lord knows I think stocks and real estate are just incredibly overvalued…
I’ve obviously been warning everybody to be careful and really trying to brace ourselves for some turbulence ahead and for the possibility of a severe bear market.
[I wrote a book on this and gave out my step-by-step bear market playbook on exactly what to do. If you didn’t get your copy, go here for one.]
And what I’ve been trying to do here, in my Diary videos, is something I’d never done before, which is to really bring you inside my mind…
So you can see the risks that I see going on, and the potential for opportunities.
I’m trying to share with you my split-screen thinking.
Most people in my shoes will tell you go bullish or go bearish. But only a fool is permanently bullish or bearish.
One of the things I’ve learned as an investor is to look at the facts on both sides and make decisions based on those.
I want to caution you to be careful and not get caught up in this euphoria.
I believe this is a dangerous time for the markets.
Now, where it goes from here, only God knows the answer to that…
But this is a time when the risk factors have risen and it makes sense to take a risk-off stance with some of the more aggressive plays, and feel free to take profits…
Because again – you can have 100 experts on TV saying, “oh, the party’s back on – this is great – the market’s going to 50,000!”
I’ve been there before. I’ve watched this play out. And I can tell you, I’ve known many of these types of people.
In-person, they are not impressive. They’re part of the whole entire Wall Street machine designed to keep you interested…
The Wall Street machine is like a slot machine – everybody talking is like a bunch of flashing lights that keep you fascinated on the game.
And it’s really important not to fall for those lights – important to focus on the things that matter most, like:
What is a company worth?
What do I have to pay for it?
Where is this market in relation to history?
When you ignore the talking heads and ask yourself these types of questions, what you find is, again, by any measure the market is historically high.
Having said all that, you gotta play the ball where it is – not where you think it should be.
So, we’re playing the ball where it is.
That means we’re finding new opportunities – specifically, in energy and some AI infrastructure, certainly in biotech, and we’ll keep telling you about them.
Just remember, when you listen to the media, talking heads, newsletter writers – take everything you hear and read with a grain of salt.
Don’t risk your savings. I just can’t emphasize enough – the name of the game is to protect our nest egg. That is the most important thing.
That’s all I have for you today. Have a wonderful day.
“The Buck Stops Here”
P.S. I believe we are facing a collapse like nothing we’ve seen in our lifetimes.
By taking 4 simple steps today you can stay safe from the coming catastrophe.
That’s why I want to rush you my new book ‘Midnight in America’ FOR FREE.
Download your free copy here.
