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A Rare Opportunity in Today's Beaten-Down Market

By Justin Brill
Saturday, October 3, 2015

The Weekend Edition is pulled from the daily Stansberry Digest. The Digest comes free with a subscription to any of our premium products.
 A legendary investor agrees with Stansberry Research founder Porter Stansberry...
Regular readers know revered newsletter publisher Jim Grant is one of Porter's professional role models. And in a recent interview with Swiss newspaper Finanz und Wirtschaft, he warned of many of the same problems Porter has written about. Grant called the government's presence in the stock market "larger than life," referring to increased regulations and "the management and the production and the manipulation of money."
Grant, who hosts a popular semiannual conference in New York City, blamed irresponsible central banks around the world for pushing interest rates to zero (or worse) and stock markets artificially higher...
Central bankers have taken it upon themselves to sponsor great bull markets in the hopes of making people spend more because they will feel richer. That was the theory. But they neglected to think through the full consequences of these policies.

 China is particularly troubling, Grant noted. The country is following in the footsteps of the Bernanke Asset Bubble by "manipulating interest rates, administering asset prices through [quantitative easing] and inducing people through broad winks and nudges to take risks and thereby seeding bull markets," he said.
But as Grant explained, China is doing things differently...
The macroeconomic data [in China] are largely made up and their methods are almost predestined to fail as the methods of command and control and suppression of the price mechanism are always predestined to fail.
And then, on top of that, what's scary is the reaction of the West: Instead of questioning those principles, we [say] that the Chinese are just not as proficient in these techniques.

 Like Porter, Grant is also growing worried about the high-yield (or "junk") bond market...
The junk-bond market has been characterized by very loose protections to the creditors. Those protections have been mainly eviscerated or weakened during this cycle of very aggressive lending and borrowing. That's why I think the recovery rates on junk bonds in default will be lower and the final permanent losses to capital will be higher this cycle.

But Grant also agrees this isn't the "end of the world"... and investors who are prepared could have an incredible buying opportunity. More from Grant...
This should not be confused with the apocalypse. This is how finance works. This is the cycle of psychology of bull markets and bear markets, of boom and bust: There is euphoria and that mellows to complacency and at length it ripens to apprehension and then to fear and finally to abject terror – and that's when you buy!
If that sounds familiar to regular Digest readers, it should. We've told you over and over to hold plenty of cash for a potential market crash, giving you plenty of "dry powder" to buy high-quality stocks that go on sale.
 Asked about opportunities in the market today, Grant highlighted one asset that should also sound familiar if you've been with us for long: gold. As he explained (emphasis added)...
This is a monetary moment. I think we are looking at the beginning of the world's reappraisal of the words and deeds of central bankers like Janet Yellen and Mario Draghi. What we're waiting for is a sufficient recognition of the monetary disorder.
You see monetary disorder manifested in super-low interest rates, in the mispricing of credit broadly, and you see it in the escalation of radical monetary nostrums that are floating out of the various central banks and established temples of thought: Negative real rates, negative nominal rates, and the idea of helicopter money.
So you need some hedge against things not going according to the script and that makes gold and gold-mining equities terrifically interesting now.

We agree. You can learn more about why we like gold as a way to preserve your wealth in this free interview from the Stansberry Research Education Center.
 That said, our colleague Dan Ferris also believes a rare buying opportunity could be approaching...
If you're not familiar with Dan, he is the editor of Extreme Value, a service dedicated exclusively to finding little-known stocks trading for far less than their intrinsic values. In other words, Dan only recommends stocks that are incredibly cheap and safe... literally the market's most "extreme values"...
 As the market surged higher over the past several years, more and more stocks became expensive. So you won't be surprised to hear that Dan has found fewer and fewer stocks that meet his strict requirements.
Even after the recent market declines, only a handful of stocks is cheap and safe enough for him to recommend. But if Porter's warnings are correct, that could soon change.
 Dan explained why he would be "thrilled" to see the market head even lower in the September issue of Extreme Value...
I'm praying for another couple of months like August in the stock market. The S&P 500 fell 6% from August 17 to August 31 – dropping as much as 11% at the bottom. August 24 was the best day for rational investors, with all the big stock indexes down 4% in a single trading session...

Like Porter, Dan reminded readers that big stock market declines – even crashes – aren't something to be feared. They're incredible opportunities for investors who are prepared. From Dan...
Falling markets are good because they make stocks cheap enough to recommend buying.
If the S&P 500 falls 20% from its May 20 high (2,132), the words "bear market" and "volatility" will be published online dozens of times per hour and repeated 100 times a day by every talking head on CNBC and Fox Business News. This will make many great businesses trade for cheaper prices – which, as regular readers know, is the strategy we use in Extreme Value.
Bottom line: Don't be afraid of the stock market. Be ready to exploit it when everyone else is acting irrationally.

 While most stocks are still too expensive to recommend in Extreme Value, Dan says there's one stock in particular you can safely buy today...
He says it's the single best opportunity he has found in his entire career of recommending stocks. In fact, he says if he had to pick just one stock to put all his money into, this would be it.
Dan says it's safe, cheap, and exceptionally well-managed... a legitimate, low-risk opportunity with 1,000% upside.
If you know Dan like we do, you know he's incredibly conservative and doesn't make statements like that often. He has prepared a presentation explaining more about this rare opportunity. Click here to watch it.
Justin Brill

This Week's Winners
S&P 500 Symbol Change
Western Digital WDC +9.9%
SanDisk SNDK +9.6%
Nike NKE +7.9%

Countries Symbol Change
South Korea EWY +3.4%
Taiwan EWT +3.1%
Spain EWP +2.2%

Sectors Symbol Change
Semiconductors PSI +2.0%
Utilities XLU +1.1%
Real Estate IYR +0.8%

Commodities Change
Sugar +18.5%
Wheat +4.2%
Palladium +3.6%
Date Range:9/24/2015 to 10/1/2015
From The Crux
This Week's Losers
S&P 500 Symbol Change
Consol Energy CNX -16.0%
Tenet Health Care THC -14.3%
Wynn Resorts WYNN -13.6%

Countries Symbol Change
Ireland IRL -5.1%
Thailand TTF -2.6%
Israel ISL -2.0%

Sectors Symbol Change
Big Pharma PJP -8.1%
Biotech PBE -8.0%
Gold Mining GDX -5.7%

Commodities Change
Live Cattle -7.1%
Natural Gas -6.1%
Cocoa -5.7%
Date Range:9/24/2015 to 10/1/2015
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