Update - October 12, 2021

Where Are Stocks Headed Next?

“What’s your take on the markets?”

“What’s the big thing driving stocks these days?”

Those were the questions tossed my way by Buck Sexton – famed radio host and Rush Limbaugh’s successor – over the weekend.

My answer was what you’d expect. It’s what I’ve told my Manward Letter readers many times before.

Trillions in freshly printed dollars and the death of interest rates will continue to send stocks higher.

Our whole philosophy, right down to the popular Modern Asset Portfolio (also known as our beloved MAP), hinges on one thing… interest rates. Unlike so many old-school models that stick to the same diversification strategy no matter what the economy is doing – an idea that guarantees a good-sized portion of your wealth is always underperforming – we stay much nimbler.

As rates rise and fall, so do the sizes of the allocations within our portfolio.

That’s why, as the market worries about the oh-so-unholy marriage of inflation and a stagnating economy, we just entered a position in Sandstorm Gold (SAND). As a royalty company, its value doesn’t derive just from the price of gold. Because it acts much like a bank, its value also hinges on interest rates.

Good news at a time when both gold and interest rates are on the rise.

We’ve been in it for just a week, and already we’re up double digits on the play.

If you have not read the issue yet – or if the fine folks at the post office are running behind – you can read the online version here.

Another unique aspect of the Modern Asset Portfolio is the fact that it not only recognizes Bitcoin as an investable asset class (an idea that’s anathema to traditional models) but also says we should own an outsized portion of the speculative play when rates are this low.

A Winning Strategy

According to old-school logic, crypto is too risky for a baseline portfolio. To the folks who have followed that advice… my apologies. It’s simply not true. The math tells a much different story.

Just as I told Buck in New York this weekend, when there is this much free money circulating through the economy, there’s no option but for a lot of it to flow into speculative assets like Bitcoin and its even stronger altcoin brethren.

Did you know that the value of the money the Fed printed over just a few months last year exceeds that of all the fake Monopoly money ever printed?

That’s crazy.

Add in more than 18 months’ worth of negative real interest rates on the 10-year Treasury, and you get a virtual safety net under just about every asset class.

It significantly alters the “traditional” risk-reward equation.

Again, we can see it in our portfolio. Our stake in the popular privacy coin Monero (XMR) has jumped 190% since we got in.

Anybody who’s shunned crypto this year because it’s “too speculative” just got a huge lesson in the ideas behind our MAP. Bitcoin is now just a few points away from smashing its all-time record high.

Many smaller coins are doing even better.

Will it last forever? Or as the famed radio personality asked me on Saturday… “Are you one of those crypto fanatics?”

No.

As rates rise and fall and the underlying story changes, our allocation will change. We can’t fall in love with an asset class and blindly hold it forever.

Right now, even with the modest tick up in yields over the last two weeks, the real yield on the 10-year Treasury is -0.89%. That’s the same level we saw through most of the spring and early summer… when stocks were quickly moving higher.

It means we face a tremendous buying opportunity.

Don’t get sucked into the headline trades.

Stocks will continue to rise. They have to. All that freshly printed money must go somewhere. The inflation that has so many folks (rightfully) worried will show up on corporate income statements.

If you want to stay afloat, owning those stocks is the only solution.

Be selective. Follow the MAP. And don’t fall for the headlines.

Let real rates lead the way. As long as they’re negative… it’s game on for our current allocation model.

It’s paying off handsomely.

Be well,

Andy

P.S. There is still time to get in on a red-hot crypto “penny stock.” It trades for just about a buck, and a unique and rare move on its chart tells me it could soon make a huge run higher. Will it be the next $60K coin? Click here to get my thoughts.