This ‘Law’ Is Setting the Stage for Outsized Returns

By Matt McCall, editor,  Early Stage Investor


Think of the extraordinary change someone born in 1900 could have seen over a long life.

As a child, they would have seen horses in city streets… and would have grown up to see those streets full of cars.

They would have seen the invention of the radio… the airplane… the fax machine… air conditioning… personal computers… and so much more.

I believe those of us who live the next 30 years will see a similar set of changes.

We’ll see the world change more rapidly than any other group of people in history.

The way we work, play, travel, bank, receive health care, and entertain ourselves will look completely different.

Large new industries will be created at a pace we’ve never seen before.

These new industries will demolish old industries at an unprecedented pace. And it’s all thanks to “The Law of Accelerating Returns.”

If you’re on the right side of this law, and you invest in the right stocks now, you could make multiple times your money… and set yourself up for a comfortable retirement.

Here’s how it works…


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This idea comes from Ray Kurzweil, an American inventor and futurist. About 20 years ago, he began writing about the idea that the rate of change tends to accelerate in systems that evolve over time… like technology.

This is called accelerating returns – or “exponential progress.” And it differs from conventional progress in a massive way.

You see, conventional progress – the kind of advancement ingrained in the minds of most people – is like going for a walk. You take one step, you advance one step. After taking 10 steps, you are 10 steps away from where you started. Pretty simple, right?

Well, exponential progress – the kind that’s taking place in technology labs and businesses right now – radically changes the equation… And it radically accelerates the pace of change we see in the world.

That’s because exponential progress multiplies in power and scope with each step.

It’s critical for investors to understand this if they want to position their 2020 portfolios for outsized returns.

Exponential progress “snowballs” and builds on itself. It ensures that each new step is larger than the one before. Specifically, the progress made in one step is double the amount of progress made in the step that came before it.

For example, if you make exponential progress while taking a walk, you take one step. Now double that… and your second step is the equivalent of two regular steps.

Now double that again… and your third step is the equivalent of four regular steps. Your fourth step is the equivalent of eight regular steps, and so on.

By the time you get to the 10th step, your step is the equivalent of 512 steps!

And by the time you get to the 20th step, your step is the equivalent of 524,288 steps!

Walking doesn’t work that way, of course. But knowing the difference between linear growth and exponential growth instantly sets you apart from your fellow investors and gives you a huge advantage over them. It can set you up for huge outperformance over the coming years.

When a small number grows at an exponential rate, the first stages of growth aren’t incredible. The extraordinary growth happens at an “inflection point” in time… when the exponential growth begins to snowball at stunning rates.

This rapid development has stunning business and investment ramifications. The world around us is changing at never-seen-before speeds… And it’s catching many people off-guard.

For example, over the last few decades, it took an average of roughly 20 years for the typical Fortune 500 company to reach a market capitalization of $1 billion.

Founded in 1998, the company known as Google – now Alphabet (GOOGL) – reached a $1 billion market cap after just eight years, which was considered incredible.

By 2004, Facebook (FB) arrived on the scene… and hit $1 billion in just five years.

By 2009, Uber (UBER) emerged… and did it in under three years.

In 2012, virtual-reality firm Oculus was formed… and did it in less than two years.

As you can see, it’s taking less and less time to generate incredible wealth. And investors are enjoying the benefits.

Incredible industry shifts used to take 20 years or more to play out. Now, they are playing out in less than five years.

The stage is set for carefully selected, high-quality stocks to go up 300%, 500%, and even 1,000% over the next couple of years.


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Former Hedge Fund Manager: “Get out of Cash on this day in Feb”

February 12th, 2020 could kick off the most profitable year we’ve seen in the last two decades in the stock market. But only if you put your money into a short list of stocks – immediately.

If think you’ve missed out on the biggest gains this bull market has to offer, click here to for everything you need to get ready for February 12th.


Editor’s note: This bull market is hitting its most “supercharged” phase yet… where select small, innovative stocks could help turn some investors into millionaires. That’s why Matt McCall is joining Stansberry Research tomorrow night at 8 p.m. Eastern time. He and Steve Sjuggerud will discuss what 2020 holds for the Melt Up – and which stock you MUST be positioned in today. You can watch it all online for free…

Click here for the details.

Coronavirus Won’t Stop the Melt Up

By Vic Lederman, analyst, True Wealth


Let’s get this out of the way…

I’m not a doctor. I don’t study the spread of pathogens. And for the most part, I work with the same data everyone else does.

I’m also human. And that means that my first reaction to the news of coronavirus was probably a lot like yours… emotional.

Aside from wondering how to protect myself and my family, some of those thoughts were related to the markets.

“Could this be what finally pushes us into recession?” I questioned. “Will this cause the end of the Melt Up?”

These are normal concerns. And when news of the virus first broke… nobody had informed answers to these questions.

China, and the rest of the world, were just trying to figure out the basics. But today, our position is different.

We know a lot more about what we’re dealing with. We even have data to help us answer those questions.

But let me spoil today’s essay up front… Coronavirus isn’t going to stop the Melt Up.


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If think you’ve missed out on the biggest gains this bull market has to offer, click here to for everything you need to get ready for February 12th.


Now as I already mentioned, I’m not a doctor. So, when it comes to protecting yourself or your family, listen to the experts, not me.

That said, when it comes to protecting your finances, I think I can help. And that’s why I’m writing to you today.

The problem is, headlines are persuasive. They encourage you to act on emotion rather than data.

I’m sure that some investors panicked out of the market as soon as the news broke. I hope that wasn’t you – because it would have been quite the mistake. Take a look…

Coronavirus first popped up in early December. And in fairness, it didn’t enter the global spotlight until mid-January.

At that point, fear did cause a few bad days in the markets. But look what has happened since… We’ve already stormed back to new highs.

Yes, we’re likely nearing the end of one of the greatest bull markets America has experienced. And fear – at least fear of coronavirus – hasn’t put a stop to it yet.

This is exactly the kind of behavior you expect to see in a Melt Up scenario. The Nasdaq is making new highs. Even in the midst of an epidemic, investors are eagerly buying innovative tech stocks – the kind that tend to soar in the final months of a great bull market.

So, is the coronavirus the end of the Melt Up? Right now, the data says no. The market has digested the news on coronavirus… And it’s still moving higher.

It’s not just tech stocks, either. The S&P 500 is making new highs too.

Is it possible this could take a dramatic turn for the worse? Sure. In finance-speak, we call that “tail risk”… a surprise event that could cause major losses in the markets. But unless you have the gift of foresight, planning your life around those events is a losing strategy.

For those of us not hiding out in bunkers, the answer is clear.

Stocks are still headed up. And we want to ride as much of the Melt Up as we can.

You don’t want to be on the sidelines as the market pushes to new heights. So, don’t let your emotional reactions to headlines dictate your investing.

As investors, we should strive to make the best decisions using the best data available. And right now, the best data we have is telling us the Melt Up isn’t over. Stay long.

For the first time, we’re starting to see it… It’s the final stage of the Melt Up. Sit this one out, and you’ll likely miss out on the biggest gains of this 11-year bull market.


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That’s why on February 12, we’re getting you ready for the next phase of the rally – with a must-see online event. My boss Steve Sjuggerud will sit down with legendary stock-picker Matt McCall to reveal just how much higher this market could go… and a new way to take advantage of it.

You can watch it all for free – plus, you’ll learn which stock Steve believes will soar 500% before the end of the Melt Up. Get the details right here.

Dr. Steve Sjuggerud: Don’t Miss the Best Days of the Melt Up

By Dr. Steve Sjuggerud


I worry you are making a huge mistake with your money…

What are you waiting for?

If you’re not taking advantage of this bull market yet, that’s my big question for you…

If you are nervous about the stock market, then you’re not alone. Several investors I’ve talked to over the course of the rally were “waiting for a dip to get in at a better price.”

Then, when we got a dip, those same folks would get even more scared of the markets.

Now, we’ve been hitting new highs again. So let me ask you… are you nervous? Are you back to waiting for the next big crash before you put money to work?

This is a huge mistake.

Let me explain…


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You probably know by now that I think a stock market Melt Up is just around the corner – where stocks make one final, dramatic push higher before a furious peak.

But the folks I have talked to are either trying to time it… or planning to sit on the sidelines.

My friend, trying to time when the Melt Up takes off could cause you to miss out on triple-digit gains.

You don’t want to wait until stocks start soaring… and THEN decide to get in.

Melt Ups are big and fast… The tech-heavy Nasdaq index alone delivered triple-digit gains in the final 12 months of the last great Melt Up.

Sitting on the sidelines and missing out on even a few big days during that time could’ve been deadly to your returns.

I’m telling you, don’t try to outsmart the Melt Up!

If you’re waiting on the sidelines for a buying opportunity, chances are, you’ll miss the good days. And as you probably know, you REALLY don’t want to miss out on the good days in the markets…

For example, if you had $10,000 in the S&P 500 Index over the past 20 years… but you happened to miss the best 40 days of market gains… you’d only be left with around $7,600.

If you kept your money invested the entire time, however, you’d have close to $30,000.

That’s right… Just 40 days meant the difference between losing $2,000 and making $20,000!

These results come from the investment-management company Index Fund Advisors. And you can see clearly what this means for your money today.

The table below shows what missing the best days of the market would have done to your returns over the 20-year period from the start of 1999 to the end of 2018…

The lesson is simple. Missing out on just a few big moves higher could mean not only missing triple-digit gains, but actually losing money.

And remember, this doesn’t include last year’s outstanding results. The S&P 500 Index as a whole soared 30% in 2019. You really didn’t want to miss the best days of that rally.

So if you’re still waiting for a chance to buy… or if you’re afraid to buy stocks at all… I don’t want you to miss out on what’s next.

This will likely be the last Melt Up opportunity for many people in their lifetimes. And certain stocks could return triple digits as the market moves higher.

People are always looking for a reason NOT to buy. Trust me, you can always find something.

There will be a time to be cautious. But that time is after the Melt Up.

We are not there yet. So again, I urge you – “make hay while the sun is shining”…


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Let me tell you something else… I’m about to host a major online event on February 12, where I’ll share a HUGE change to my Melt Up prediction. You’ll find out how to take advantage of what’s happening in a totally new way… with much greater upside than I’ve ever shared before.

I’m even giving away the name of a stock that I believe will soar up to 500% in the months ahead. But to hear it, you must tune in on February 12 at 8 p.m., Eastern time.

I hope you’ll join me… because you need to take full advantage of this moment. Sign up for free right here.

This Method Beats the Market

By Grant Wasylik, analyst, Palm Beach Daily

There’s a simple strategy you can use to beat the market by nearly 4% per year – year in and year out.

You’ll need a strong stomach for it…

But if you’re willing to be a contrarian, I’ll show you how to take advantage of it to boost your portfolio’s returns.

Remember, in yesterday’s essayI showed you a simple way to beat the market with the “bridesmaid” strategy.

Today, I have another one for you. It also comes courtesy of The Leuthold Group.

If you haven’t heard of The Leuthold Group, it’s one of the top financial institutional research firms in the world. (You can learn more about Leuthold here.)

Now, with the bridesmaid strategy, you buy the second-best performing asset class of the previous year. It’s a momentum approach that’s returned an annualized 14.8% over the last 47 years. In comparison, the S&P 500 only returned an annualized 10.5%.

The bridesmaid strategy can also work by sector. But today’s strict value approach can work even better. It’s just as easy – and profitable. And it all has to do with sector rotation…


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Go Low or Go Home

With this strategy, you buy the S&P 500 sector with the lowest price-to-earnings (P/E) ratio of the previous year. Basically, it’s bargain-hunting for profits.

Now, it might be difficult for some investors to buy the cheapest sector in the market. It’s usually the most-hated one as well.

But if you can stomach going against the crowd, the returns are worth it…

Leuthold studied 10 of the S&P 500’s sectors back to 1991. The lowest-performing sector returned an annualized 14.1% over those 29 years. In contrast, the S&P 500 returned an annualized 10.4% during the same period…

As you can see in the chart above, the sector with the lowest P/E ratio outperformed by the greatest margin.

So if you’d followed this approach, you would’ve outperformed the market by an average of 3.7% per year.


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Although it’s not foolproof, it sports a solid win rate. This “cheapest sector” strategy has bested the S&P 500’s returns in 18 of the last 29 years – 62% of the time.

It’s that simple.

Now, as Leuthold points out:

The strategy rewards only those bold enough to buy the absolute lowest P/E ratio. Sectors with the seventh-, eighth-, or ninth-ranked P/E ratios have all been long-term underperformers. Go low or go home!

So you must be willing to be a contrarian all the way.

With that in mind, let’s take a look at which sector had the lowest P/E ratio in 2019. It’ll be our best bet in 2020…


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From the Bottom to the Top

The table below ranks 10 of the S&P 500’s sectors by their December 2019 P/E ratios from highest to lowest. As you can see, financials ranked at the bottom…

Sector

December 2019 P/E Ratio

Health Care

28.9

Information Technology

27.9

Utilities

22.5

Materials

22.3

Industrials

22.1

Consumer Discretionary

20.5

Consumer Staples

20.5

Communication Services

17.5

Energy

16.2

Financials

14.0

(Note: Leuthold uses median trailing P/E ratios. And it excludes “real estate,” since it treats real estate investment trusts [REITs] as a separate asset class.)

So if you want exposure to financials, consider an exchange-traded fund (ETF).

You can use the Financial Select Sector SPDR Fund (XLF) or the Vanguard Financials ETF (VFH) for 2020. They’re the top two ETFs based on assets in the sector. And they have super-low expense ratios of 0.13% and 0.10%, respectively.

Be sure to remember this “cheapest sector” strategy when you’re rebalancing your portfolio at the beginning of each year.

And keep a contrarian mindset to buy the cheapest sector.

Why You Want to Own the “Bridesmaids” of Asset Classes

By Grant Wasylik, analyst, Palm Beach Daily

Legendary NASCAR driver Dale Earnhardt Sr. once said, “Second place is just the first-place loser.”

But what if probability showed that finishing in second place… would make him the statistical favorite to win the next race?

He might’ve changed his tune.

Well, in the stock market, second place is the odds-on favorite for next year’s first place when it comes to asset classes.

In fact, asset allocators would’ve been handsomely rewarded by following one simple strategy over the last 47 years.

It really couldn’t be much easier to follow… So in today’s issue, I’ll tell you what it is – and more importantly, why you should implement it in the coming days.


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The Bridesmaid Strategy

It’s called the “bridesmaid” strategy. My colleagues at The Leuthold Group developed the method.

If you haven’t heard of The Leuthold Group, it’s one of the top financial institutional research firms in the world. (You can learn more about Leuthold here.)

Now, it’s crunched the numbers by measuring the performance of seven asset classes since 1973:

  • Large-cap stocks (S&P 500)
  • Small-cap stocks (Russell 2000)
  • Foreign stocks (MSCI EAFE Index)
  • Real estate (FTSE Nareit Composite REIT Index)
  • Commodities (S&P GSCI)
  • Gold
  • U.S. Treasuries (U.S. 10-year Treasury Bonds)

And according to its research, the previous year’s runner-up generally outperforms the other six the next year.


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February 12th, 2020 could kick off the most profitable year we’ve seen in the last two decades in the stock market. But only if you put your money into a short list of stocks – immediately.

If think you’ve missed out on the biggest gains this bull market has to offer, click here to for everything you need to get ready for February 12th.


Here’s how the approach works…

You start with these seven major asset classes. And you observe each one’s returns from the prior year. Then, you buy the second-best performer (the “bridesmaid”) and hold it over the next 12 months.

And as you can see in the chart below, picking the “bridesmaid” hands you the highest return over the long haul…

This bridesmaid strategy has returned an annualized 14.8% over the last 47 years. In comparison, the S&P 500 has only returned an annualized 10.5% during the same timeframe.

Now, this momentum approach isn’t foolproof…

For example, gold finished second in 2018, making it the 2019 bridesmaid. Yet gold finished in sixth place last year. But on the bright side, gold was still up nearly 19% in 2019 – its best performance since 2010.

Remember, the long-term results matter most. And it’s hard to find active fund managers who beat their benchmarks in the long term.

In fact, S&P Dow Jones Indices reports that only 12% of all domestic funds beat the U.S. stock market over the last 15 years.

But the bridesmaid strategy has eclipsed the S&P 500’s returns in 31 of the last 47 years – for an impressive 66% win rate.

So let’s take a look at what history says is the best bet for 2020…


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If you haven’t seen her interview… which details a sector of the market that could soar 37x in the months ahead, click this link to watch it now.

Click here to watch it


The Top Choice for 2020

According to 2019’s returns, this year’s bridesmaid is REITs (real estate investment trusts)…

Asset Class

2019 Return

Large Caps

31.5%

REITs

28.1%

Small Caps

25.5%

Foreign Stocks

22.7%

Commodities

17.6%

Gold

18.8%

10-Year U.S. T-Bonds

8.5%

Since REITs were the silver medalist in 2019, they’re the top choice for 2020. It’s that simple.

If you’d like to get some exposure to REITs, consider an exchange-traded fund (ETF).

You can use the Vanguard Real Estate ETF (VNQ) or the Schwab U.S. REIT ETF (SCHH) for 2020. They’re the top two ETFs based on assets in the sector. And they have ultra-low expense ratios of 0.12% and 0.07%, respectively.

If you want to really benefit from this strategy, you need to act now. This is an annual rebalancing strategy. And we’re already in the second month of the year.

So if you want to implement the bridesmaid strategy, take a small position today and let it ride over the next 11 months. And be sure to keep this bridesmaid strategy in mind when you’re rebalancing your portfolio at the beginning of each year.