Bull markets—markets with continuously rising evaluations—are nothing unusual in the world of investment. In fact, the US has been experiencing a bull stock market since 2009, and many economists feel the trend will continue for the foreseeable future.
A melt-up might look like a bull market, but it is another thing altogether. It is a dramatic rise in the valuation of an asset class that’s often fueled more by group-think than sound investment strategy. A recent article posted by Stansberry Research predicts that the US stock market is now heading for just such a melt-up, the first for US stocks since 1999 (DailyWealth). Read on for advice from the respected financial publisher on how to deal with that situation.
Steve Sjuggerud as a Stockbroker
The article, written by a Stansberry Research employee, Steve Sjuggerud, details his experience as a young stockbroker in 1993 who traded international stocks. As Sjuggerud describes, at that time there was a run-up in the valuation of the Chinese stock market and many investors in the US wanted a piece of the action. As a result, he fielded many calls for purchases of Chinese stocks. However, he also witnessed firsthand the loss of value as the Chinese stock market plummeted in 1994. This was his first experience with a melt-up and the subsequent meltdown.
Learning from that experience, Sjuggerud describes his ability to profit off of similar situations later in life. As such, the article makes the case that the US stock market is in for a similar melt-up. While advising caution on how to approach the situation, it also makes note that there is definitely money to be made in a melt-up if one pays attention to prudent investment practices.
Stansberry Research’s Publication
The publication posting the article, Stansberry Research, is well-placed to be sharing such investment practices. Founded by Porter Stansberry in 1999, Stansberry Research is a subscription-based publisher of financial information and software. The company serves millions of investors worldwide with a business that is guided by two main principles. First, the company’s editorial team strives to give subscribers the information they themselves would want if the roles were reversed. Second, the publisher pledges to only highlight analysts whose advice they’d want their own families to read and follow.
Following these guiding principles, Stansberry Research has built itself into a large, global service that serves thousands of readers. The company believes in offering a range of advice by publishing the opinions of a variety of experienced analysts. Stansberry Research also promotes a long-term approach for its own revenue, opting to build lasting relationships with customers by offering services that prompt a value-based life-time subscription. The company also relies heavily on a tradition of transparency and accountability. They do so by publicly evaluating their investment recommendations each year and including track records in each monthly issue of their various investment newsletters.
Melt-Up Predictions
Building on their reputation, the recent article featured by Stansberry Research on the topic of a predicted melt-up is informative, to say the least. After the aforementioned background of Steve Sjuggerud, the article goes on to discuss the public mentality that helps encourage such a phenomenon. As assets soar, investors become fearful of missing out on gains and so more money pours into the market. Even conservative financial advisors feel compelled to buy into the market as well for fear that their advice will underperform the skyrocketing value of the market. As a result, valuations push even higher.
So, with all that in mind, it prompts a question. What is an investor to do in such a climate? The article advises putting money into the opportunities that have the maximum potential during the melt-up. That strategy also includes not being scared off by large drops in market valuation. The article’s author is quick to point out that even the 1999 melt-up in the US stock market contained numerous drops of 10%. That means the market could drop a significant portion but then continue to increase in value, recovering the value lost during the drop and then some. So, the article promotes the idea that the melt-up can still be something from which profits can be gained.
Know When to Sell
Of course, the Stansberry Research article is also wary of the eventual meltdown that looms on the other side of skyrocketing valuation. Investors should plan for this meltdown by making sure they have systems in place that let them know when to sell. When these systems indicate that the time has come, investors should feel free to leave the market and sell off volatile assets in favor of more conservative positions. In this way, the savvy investor can hope to limit the downturn from the inevitable meltdown when it comes.
This type of forward-thinking investment advice is typical of Stansberry Research, a company that has built its reputation on predicting markets around the world. In fact, the publisher’s founder, Porter Stansberry, became well known for having the foresight to warn of the credit crisis before it happened. His predictions even caught the eye of the well-known financial newspaper, Barron’s, which, when discussing Stansberry’s prediction, said his work was “remarkably prescient… Nothing, as far as we can see, has happened to contradict his dire prophecy….”
The Recognition
It is through this type of recognition from others in the financial sector that Stansberry Research has built its name over the years. From its small beginning in 1999, the company now publishes a wide range of newsletters and other publications designed to provide the most complete and competent advice possible to their readers.
The recent article posted by Stansberry Research on the topic of a melt-up, and how to deal with a market in which valuations are soaring to greater levels, is a great example of the kind of investment advice for which Stansberry Research has become known (https://stansberryresearch.com/archive/stansberry-digest). The thoughtfully detailed account of a past melt-up, and how that account relates to the current investment climate, is key insight for anyone looking to maximize their investment opportunities. With a seemingly endless array of articles of similar quality, Stansberry Research continues to set a high standard for how publishers can arm their readers with the knowledge necessary to succeed in the modern world of investing.
