Why We’re Looking Forward to the Next Downturn
Andy Snyder|May 1, 2019
Founder’s Note: We wrote the piece below almost a year ago. But here’s the thing… It’s more important you read these words today than ever before. That’s because the stock market is hitting fresh highs, volatility is ultra-low and investors are throwing their money at anything that moves.
Times are good.
But there’s a good reason to cheer for the bears. If you want to make real money – the kinds of profits that will get you rich quickly – the market needs some pain.
Read on to see why…
For several years, an unusual box has sat in a drawer of the desk in our home office.
We peeked into it yesterday… and got quite a reminder of why we do what we do.
You see, a friend emailed to ask for a copy of something we’d written long ago.
The piece he wanted was published a decade ago… back when we spent our days running a busy options trading service.
We’ve burned the processor out of quite a few computers since that time. But we knew what sat in the box could help.
We opened the drawer, brushed aside a stack of crinkled, white papers and used both hands to plop the box onto the desk. Lifting the top off, we saw what we hadn’t seen in years… the hard drive that we stored all our old files on.
We dug around for the appropriate cords, plugged the drive into our machine and whistled to an old George Strait song while we waited for the file we needed to come alive on our screen.
Except for the fresh wrinkles on the tops of our hands, it was like we were suddenly 10 years younger.
The document was incredible.
We know why our friend wanted it.br>
Expecting Big Things
You see, for going on two decades now, we’ve taken time at the end of each year to predict what the 12 months ahead would hold.
To our humble surprise, our prognostications have become quite well-known. A keen marketer might call our skill clairvoyance. We’d probably call it dumb luck. And the truth would probably say it’s that oh-so-uncommon entity known as common sense.
Either way, our friend wanted our predictions for 2009.
If he recalled correctly, he said, they were supremely accurate.
We’ll let the dusty files trapped in that box for the last decade reveal the truth.
Right at the top of the first document we opened…
The healthcare industry will be burdened by increasing costs and regulations. But this news has been discounted for several months. Instead of trying to pick the winners and the losers in the industry, play sector-wide ETFs like VHT and XLV.
It was a good call. Shares of the Vanguard Health Care ETF (VHT) traded for $44 at the start of 2009. Today, they’re selling for $158 each.
Same story for the Health Care SPDR ETF (XLV).
But if your memory is strong, you likely know our big prediction wasn’t quite big enough.
With Obama eager to make his legacy, healthcare reform became the nation’s topic du jour over the next 18 months.
With that in mind, we found our predictions from 2010.
That’s when, as we quickly remembered, we took to the stage in Las Vegas and told readers to buy shares of Aetna and UnitedHealth.
It was another good call.
Shares of both companies have surged more than 500%.
We’ll call it a win… a very profitable win.
Let’s move on to prediction No. 2 for 2009…
Unemployment extends toward double-digit territory (at least 8%). Wages drop and Washington creates massive infrastructure spending initiatives and corporate incentives to bring manufacturing back within American borders. CAT starts building. UTX does well as capital is injected into the manufacturing sector.
We’ll call this one a win… well, at least three of the four points.
We hit the jobless figures right on the head. Unemployment peaked in October of 2009 at 10%.
And who could forget the American Recovery and Reinvestment Act of 2009? It dumped $831 billion worth of taxpayer cash into the economy.
As predicted, that cash helped companies like Caterpillar (CAT). Since we made our call, shares of the company have surged more than 425%.
But the news wasn’t as good for United Technologies (UTX).
Its shares slightly underperformed the market. That’s because, at the same time as we said domestic spending would boost the company’s profits, the folks in the company’s corner offices were eyeing up a huge plan to boost international sales.
They took their hand away from Washington’s cash spigot just as Obama was turning up the pressure.
And, finally, our third big prediction for 2009…
During the third quarter, once the economy appears stronger, Obama shuts off Iran’s gasoline supplies. Tensions in the Mideast soar and oil prices rise $60 in time for the Thanksgiving travel season. Pakistan takes the opportunity to show its strength by retaliating for American strikes within its borders. The Taliban uses the country to increase its power. Buy oil-sector plays by mid-May at their cheapest levels.
We’ll dub this yet another win. And what’s crazy is many of the effects of the idea are still being felt today.
When we made the call, crude was trading for $45 and the economy was threatening to sputter to a halt. But by November 27 of that year, a barrel went for $76.05 – proving again that our bold call could have been even bolder.
As for Obama and his rift with Iran, despite lots of talk about blocking gasoline shipments into Iran (an oil-rich but refinery-poor country), the furthest Obama went was to create a set of sanctions that cut Iran’s imports in half.
The lackluster response to a major problem explains why Iran remains a dangerous nuclear threat and why we’re still fighting with the country about many of the same things we argued about a decade ago… but that’s a prediction for another day.
Readers accustomed to our tradition of never tooting our own horn may be wondering what gives.
Why are we bragging about successful predictions we made a decade ago?
Our goal is to remind folks of the trite – but sometimes useful – cliché that without pain, we have no gain.
There’s no doubt 2008 and 2009 were quite painful.
Digging through our archives of daily missives to our clients from those times, we were reminded just how volatile, politically sensitive and flat-out crazy the Great Recession was.
But looking at the stocks we recommended and the profit predictions we made, we were reminded just how much money was on the table – how much Liberty-generating wealth was free to be had.
As we scrolled through the tickers we discussed and the strategies we outlined nearly a decade ago, we found a slew of gains that stretched well beyond 1,000%… and enough triple-digit winners to keep even the greediest of yacht salesmen satiated.
Dare we say it, but… we miss those days.
It made us look forward to the next bear market.
Andy Snyder is the founder of Manward Press, the nation’s premier source of unfiltered, unorthodox views on money and what it means for a free society. An American author, investor and serial entrepreneur, Andy cut his teeth at an esteemed financial firm with nearly $100 billion in assets under management. Andy and his ideas have been featured on Fox News, on countless radio stations, and in numerous print and online outlets. He’s been a keynote speaker and panelist at events all over the world, from four-star ballrooms to Senate hearing rooms. Today, Andy’s dissident thoughts on life, liberty and investing can be found in his popular daily newsletter, Manward Financial Digest.