From the spring of 2020 to the fall of 2021, it was “game time” for investors.
Interest rates were low. And the government was pumping trillions of dollars of stimulus into the economy.
Tech stocks… cryptos… and pre-IPO (initial public offering) deals all soared.
As the rest of the Legacy Research team and I (Chris Lowe) hammered on… it was rare opportunity to really move the needle on your wealth in a short time.
Then we saw the downside of all that stimulus.
The stimulus-driven extra spending met broken supply chains. And inflation took off.
Last November, the Fed began hinting that it would raise interest rates faster than expected.
And tech, crypto, and other high-flying investments fell back to Earth again.
Since their all-time highs last November, the tech-heavy Nasdaq is down 19%… bitcoin (BTC) is down 43%… and some tech stocks are down 30%, 40%, 50%, and more.
Judging by the feedback your fellow readers have been sending in, you’ve been worried not only about falling stock prices… but also about rising living costs.
On February 24, Russian president Vladimir Putin declared war on Ukraine.
This has unleashed horrific suffering on Ukrainians… And it’s sent several key commodities markets haywire.
Russia is the world’s second-largest exporter of crude oil.
Russia has been clearly menacing its neighbor since the start of the year. Since then, U.S. crude oil has shot up 60% to $119 a barrel.
That’s its highest level since 2008.
And the price of natural gas in Europe has hit an all-time high.
Today, it briefly touched €345 per megawatt-hour. According to The Wall Street Journal, that’s equivalent – in terms of British thermal units (BTUs) of energy – to oil prices of $600 a barrel.
If that’s not inflationary enough… the war has also sent wheat prices soaring.
Together, Ukraine and Russia supply about 25% of the world’s wheat. So far this year, the price of wheat is up 68%.
And as bad as all that is… it’s not the only big geopolitical risk right now.
Chinese leader Xi Jinping has made it no secret. He sees Taiwan as part of China. And he wants to take over.
Here’s how he put it last October at a government event in Beijing…
No one should underestimate the Chinese people’s staunch determination, firm will, and strong ability to defend national sovereignty and territorial integrity. The historical task of the complete reunification of the motherland must be fulfilled, and will definitely be fulfilled.
That would not only trigger another war. It would also further cripple the supply of semiconductors.
Taiwan accounts for 92% of the world’s most advanced semiconductor manufacturing capacity.
And these conflicts could mark the beginning of an alliance between Russia and China.
China hasn’t joined in on Western sanctions against Russia. Instead, it’s helping Russia get around them.
It expects Russia to do the same should it send its troops into Taiwan.
That’s the message Xi and Putin sent to the world last month after a meeting in Beijing…
Friendship between the two States has no limits. There are no “forbidden” areas of cooperation.
This has been the biggest worry for America and its allies for decades. China is already a formidable power. With Russia’s backing, it would be even harder to check militarily.
And it’s left a lot of folks feeling lost… afraid… and confused.
But don’t worry… Here at Legacy Research, we’ve got you covered.
Teeka Tiwari, Jeff Brown, Dave Forest, Nomi Prins, and the rest of the team are tracking the situation closely.
And I’ll bring you their latest ideas about how to protect your wealth… and grow it… all this week.
I don’t mean typical “crash preparedness” advice like making sure you own plenty of cash and gold. I mean opportunities to really turn your financial life around.
As my old friend and Palm Beach Research Group cofounder Tom Dyson put it…
I find crash-preparedness about as exciting as dieting. I’d much rather read about the five ways I can make 10x during the crash… and then another five ways I can make 10x in the aftermath.
But first, some important perspective about where the market is.
The S&P 500 hit an all-time high of 4797 points last January.
As I type, it trades at 4227 points – a 13% drop.
That’s not great… But it’s nothing to be alarmed about.
Going back to 1950, the S&P 500 has experienced about two corrections of between 10% and 20% every year.
And there’s no reason to expect this year to be different.
As I showed you after Russia invaded Ukraine, stocks tend to weather wars better than you might expect.
It’s all in a chart our tech investing expert, Jeff Brown, showed his readers.
It looks at how the Dow has performed through conflicts going back roughly a century.
As you can see, since World War II, the stock market has raced higher in the months following the start of each conflict.
This may make it seem as though investors are heartless. But when you boil it down, their job is to predict where corporate earnings will go.
Unless war affects those earnings, there’s no rational reason to bet against them.
We’re just wrapping up earnings season.
And despite growing fears of a war in Eastern Europe, companies in the S&P 500 had an average earnings gain of 31% during the fourth quarter of 2021 versus the same quarter a year earlier.
This is the fourth straight quarter of year-over-year earnings growth of more than 30%.
And Labor Department figures show that the U.S. added 678,000 jobs in February. That’s the strongest job growth in seven months.
This sent the unemployment rate down to 3.8% – the lowest level since the pandemic began.
None of that lessens the suffering of Ukrainians. Nor is it meant to…
But if you’ve been glued to CNN or CNBC for the past couple of weeks, that’s probably not the message you’ve been getting.
I’ll show you some of our analysts’ best ideas on how to profit during these difficult times.
As you’ll see, crisis doesn’t mean you have to give up on your dream of making life-changing wealth in the markets. You just have to get smart about how to do it.
Sure, there are lots of problems with the world right now… such as soaring energy and food costs.
But there are also ways to profit from their solutions…
Regards,
Chris Lowe
March 7, 2022