Don’t Be Like Joe

“Sell everything,” came the phone call on a night in January 1981… A crash was coming.

The next morning, stocks dropped 2.5%. The market headed in that direction for most of the year, losing 9.7%.

That phone call came from a masterful crystal-ball gazing by market commentator Joe Granville. He would later say, “The market told me, ‘Sell.’ And we do what the market tells us to; we never hedge. Only losers hedge.”

Granville became a rock star of financial calls. He traversed the country… performing in wild financial conferences with his own theme song, a Moses costume, and wire-stunt entrances.

But it turns out, Granville was all style and no substance. He claimed to have 18 key indicators that told him where the market would go next. But later studies showed they had little to no predictive power.

In fact, his stock predictions typically performed worse than the market. He predicted bear markets in 2002 and again in 2012 – both calls were wrong. He tried to predict earthquakes, too… down to the specific dates that California would be shaken off the continent and into the ocean. None of those came to pass.

Brilliant prognosticators who make bold, massive calls that are right are turned into Wall Street heroes. The trouble is that they rarely have repeat performances…

George Soros won fame for making $1 billion in a day shorting the British pound. (I even know how he did it – I worked for Goldman Sachs in London.) However, Soros bet that the markets would crash when Trump got elected. It’s estimated that he lost $1 billion before he could get out of his positions.

We just can’t predict what’s going to happen next week or even next month in the market. That’s why you need to use common sense strategies to be a successful investor. And one common sense strategy that lots of folks ignore is diversification.

And right now, with so much uncertainty surrounding November’s election, it’s time to take a hard look at your portfolio. I don’t want you to just look at what industries you’re invested in. You also need to make sure you’re diversified across countries.

Stansberry Research’s Asia-based analyst Brian Tycangco thinks you should consider emerging market stocks.

According to Brian, forces are lining up to create an incredible opportunity in emerging markets. And they’re going to propel a bull market that will dwarf the run that U.S. stocks had over the last decade.

If you want to make massive gains with emerging market stocks, I suggest you watch a presentation that Brian recently put together. He talks about why the boom in emerging market stocks is happening now, where you need to look for the best gains, and how incredible gains are possible over the next few years.

Click here for all the details.

Now, let’s dig into this week’s Q&A… As always, please keep sending your questions, comments, and suggestions to us at [email protected].

Q: The recent issue of AARP Bulletin contained an article on statins. It claimed that for persons over 75 using statins, the risk of dying from any cause is reduced by 25%. I believe that you have written in the past that you don’t think much of them and I am wondering if you have rethought your position. Thank you. – R.W.

A: Quite a few readers wrote in asking about this. The study that AARP reported on focused on medical records for veterans. The researchers found that for those 75 and older, new statin users did have a lower risk of all-cause mortality.

But there are some pretty big caveats here. First, 97% of the veterans in this study were men. That hardly gives any sense of balance for statins that both men and women take. Second, it’s not a cause-and-effect study. They found an association looking at records, but it’s not a controlled study with one test group and one placebo group. Third, there’s no indication we can see that they accounted for other factors like obesity, exercise, family history, or other underlying diseases. It’s a far cry from conclusively saying statins are the root cause.

In fact, the authors even say that a randomized control study is needed. And that’s my point. No such studies exist for folks over the age of 75. In fact, several medical groups like the U.S. Preventive Services Task Force and Choosing Wisely urge caution in prescribing statins due to the serious side effects in seniors. These include increased risk of falls (a leading cause of death for those 75 and older), dementia, and gastrointestinal problems. In other words, until we see a randomized control trial in folks over 75, I’m still going to advise against it.

Q: Hi Doc and team. I haven’t seen a COVID-19 alert from you in a while. Are you still sending those out? – T.F.

A: We had to skip a couple weeks, but we just released our latest briefing this week. We talk about the most striking things about the crisis, including the politicization of the virus, the failure of the media, and the mountains of misinformation spread by the Internet and social media.

We also cover people who are “pretty sure” they’ve had the virus, how a COVID test works (or doesn’t), the best numbers on COVID mortality, and if it’s “just the flu”… including the meteorite hypothesis.

And that’s all before we even check in on the economic recovery, zombie companies, and the odd pricing anomaly in markets driven by the election.

You can watch (or read) it all right here.

What We’re Reading…

Here’s to our health, wealth, and a great retirement,

Dr. David Eifrig and the Health & Wealth Bulletin Research Team
September 18, 2020