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The Market Is Undecided

Sep 10, 2024 | Stansberry Digest | Corey McLaughlin

Trump vs. Harris… What the market is saying… The presidential election cycle…
How to know the winner… The recession factor… Then comes the next four years…

--------------------------------------------------------------------------------


THERE'S A BIG DEBATE TONIGHT, OF COURSE...

As we send out today's Digest, Donald Trump and Kamala Harris are about to meet
onstage in Philadelphia for their first – and possibly only – presidential
debate before November's election.

Devoted readers might recall back in late June when we previewed the first
debate between Trump and President Joe Biden. "Anything could happen," we said,
for various reasons. It did.

Nearly three months later, we're back... this time, with Harris on stage with
Trump.

Anything could still happen. Outside of a handful of brief appearances in front
of reporters, it will be Harris' first major unscripted event since her
vice-presidential debate against Mike Pence four years ago.

In any case, we'll be watching – the high or lowlights, at least – and I (Corey
McLaughlin) will report back tomorrow with significant economic or
market-related points. In the meantime, you can send your thoughts to
feedback@stansberryresearch.com, as usual.

I'm also human and American, so like many of you, I will keep tabs on any
"moments" that could shake up the race, too. Though as I will explain today, you
might want to look at something else instead if you want to know who will win
the White House.


SHORT TERM VS. LONG TERM...

During and after the debate (or any major news event, really), emotions will be
stoked and analysis issued. You may see parts of the market reflect certain
ideas about taxes or health care reform from either side. And you'll hear who
everyone thinks won the debate and what that will mean for the presidential
race.  

All of this may present trading opportunities. Our friend and Ten Stock Trader
editor Greg Diamond is looking out to see if the debate turns out to be a
catalyst in either direction for the market, though he told subscribers today
he's not certain it will play out that way.

(I'm personally interested to see how Harris' idea of price mandates for cereal
and other foods plays tonight and afterward... or if that part of the economic
agenda has gone into a dark place, never to be seen again.)

But remember our frequent, perhaps disappointing view on the long-term impact of
presidential elections on the market. Over time, the outcome of the election
tends to matter less and less than the dates on the calendar – and than what the
market is saying.

Since I started working at Stansberry Research, I've learned a few big things
about the market and presidential election years. I've also written the Digest
through an entire cycle, and I've been fortunate to learn from all the bright
minds on our team. Firstly...


RESPECT THE PRESIDENTIAL ELECTION CYCLE...

History has clearly shown that a "presidential election cycle" pattern exists
over a century of market history, for each of the four years in the cycle. You
can debate the "why," but the history is there.

Broadly speaking, as our colleague and True Wealth editor Brett Eversole wrote a
couple years ago...

> Stocks perform OK during a president's first year in office. Then, in the
> second year, they go through a major slump. That's when the worst returns show
> up. Many believe this happens because of the uncertainty around midterm
> elections.
> 
> After the midterms, certainty returns to the markets... and Year 3 leads to
> the biggest returns. Year 4 is also usually another solid year as we head into
> the next presidential election.

The pattern is more or less playing out again this year.

The S&P 500 Index's average return in presidential election years is around 11%,
and stocks finished higher roughly three-quarters of the time.

The S&P 500 is up roughly 15% in 2024. And with concerns and uncertainties about
the economy (and politics) ahead with rising unemployment (at least if you're
reading our work), perhaps more of a trim is due before year end.


MORE THAN ANYTHING ELSE, THE MARKET TENDS TO PREDICT THE ELECTION WINNER...

Most people look at the stock market and try to think about which will be the
"winning" companies or sectors if a certain candidate wins the White House or
one party or the other controls Congress.

It's true that some parts of the economy may benefit from the specific policies
of Democrats or Republicans. And there may be trades to be made around the
likelihood of either side winning in the short term. But that's not the most
telling information to consider.

I'm not going to sit here and predict November's election result with any
certainty.

Whoever wins, we will end up with more debt as a nation. We will want to own
inflation protection, like shares of high-quality stocks and other assets that
can't be printed because Congress or a central banker says so. We will sleep
easier that way.

If you need to scratch an election-prediction itch, though, the more reliable
thing to do is to look at what the market is doing before a presidential
election to see who will win the election.

In brief, if the stock market is up from July 31 to October 31, the incumbent
party's candidate generally wins. When the market is down, it's a more likely
victory for the challenger.

It's not a perfect predictor, but the evidence is pretty compelling. We last
discussed this in July, just before this indicator was about to get going...

> In the 23 presidential elections since 1928, 14 were preceded by gains in the
> three months prior. In 12 of those 14 instances, the incumbent (or the
> incumbent party) won the White House.
> 
> Conversely, in eight of the nine elections preceded by three months of stock
> market losses, incumbents were sent packing. This was the case in 2020, by the
> most razor-thin of margins. From July 31, 2020, to October 31, the S&P 500
> lost a slim 0.04%.
> 
> And, perhaps appropriately, the election result was slim in Biden's favor (and
> contested by Trump). In any case, this indicator was again "right" about the
> election result, as it has been about every one since 1984.

Today, many polls – and believe them as much or as little as you'd like – have
Harris and Trump neck and neck to win November's election. So does the market.
Since July 31, the S&P 500 is nearly flat, down roughly half a percent.

The benchmark index was up slightly, 0.4%, today.

Pay attention to how the market performs over the next two months if you want to
predict who might win come November. And don't forget about one more feature of
election season...


THE 'RECESSION FACTOR' IS STRONG...

Since 1932, the incumbent or incumbent party has never failed to win reelection
unless a recession has occurred during his time in office. That's also what we
had in 2020, albeit briefly amid the COVID-19 panic.

This makes some sense because if voters are upset with the economy, they want
change. Whether that change works or is "right" is another story. In most cases,
the answer is simply "more spending" and inflation and debt, but we digress...

Today, the unemployment rate has been generally trending higher since April
2023, up to 4.2%. We're seeing various recession indicators flash (the Sahm Rule
and an uninverting yield curve). The Federal Reserve is signaling it will cut
interest rates.

Defensive sectors of the market, like consumer staples, have become the leaders.

It looks like pre-recession or early-stage-recession market behavior.

Yet while the economy may indeed be weakening as we speak – and job creation is
dwindling – it's unlikely right now you'll hear an "official" recession
declaration before Election Day. That's not a conspiracy theory, on the surface
at least, but a matter of timing.

The job market may be weakening, but the other part of the "recession" equation,
GDP, is still holding up. (Of course, government spending plays a role, but we
play the cards we are dealt here.)

Estimates for the current (third) quarter still call for GDP growth in the 2%
range. But if GDP growth turns negative by the end of the quarter, folks won't
wait around to talk about a recession.

The first third-quarter GDP estimate is due on October 30. Wouldn't that be some
timing, a week before people head to the polls? Otherwise, though, any further
economic weakness isn't likely to come to light until after the election.

Then we'll deal with the next four years.

New 52-week highs (as of 9/9/24): American Financial (AFG), Altius Renewable
Royalties (ARR.TO), Clorox (CLX), Compass (COMP), Direxion Daily Real Estate
Bull 3X Shares (DRN), JPMorgan Chase – Series LL (JPMPRL), Kenvue (KVUE),
Lockheed Martin (LMT), London Stock Exchange Group (LNSTY), NYLI CBRE Global
Infrastructure Megatrends Term Fund (MEGI), Northrop Grumman (NOC), Pembina
Pipeline (PBA), Procter & Gamble (PG), ResMed (RMD), iShares 1-3 Year Treasury
Bond Fund (SHY), Stryker (SYK), Travelers (TRV), Vanguard Short-Term
Inflation-Protected Securities (VTIP), Consumer Staples Select Sector SPDR Fund
(XLP), and the short position in SolarEdge Technologies (SEDG).

A quiet mailbag for today. As always, send your comments, questions, concerns,
suggestions, gripes, praise, rage, etc., to feedback@stansberryresearch.com.

All the best,

Corey McLaughlin
Baltimore, Maryland
September 10, 2024



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LATEST ARTICLES

--------------------------------------------------------------------------------

A One-Day Spike Signals 36% Upside Potential

Sep 10, 2024

It's always easy to assume you missed the boat... Watching an investment jump on
unexpected news can be frustrating. Maybe you thought about buying earlier...
But now, if you did, you'd be stuck paying a higher price. Worse, it might feel
like you already missed the easy money. This is the wrong mindset. The trend is
the most powerful indicator for investors. That means when unexpected news sends
a stock soaring, it's usually a good reason to buy. That's true for one global
brand right now. This stock recently enjoyed its best one-day return ever... But
you haven't missed all the upside yet. Instead, history shows a 36% gain is
possible over the next year. Starbucks (SBUX) has a multidecade history. And it
has built itself into one of the best brand names in the world.
Management-consulting firm Interbrand rated this coffee giant as the 48th most
valuable brand name in the world in 2023. But Starbucks has suffered in recent
years... The company ran into trouble due to operational inefficiencies and a
major slowdown in growth. So in mid-August, management went public with a major
change. On August 13, Starbucks announced that it was firing its CEO and hiring
Brian Niccol for the job. Niccol was the CEO of fast-casual chain Chipotle
Mexican Grill (CMG) from 2018 until the end of last month, where he directed the
company with incredible success. The market loved the news. Investors were
waiting for a shake-up to turn Starbucks around. Shares soared an incredible
24.5% on the day of the announcement. Take a look... This one-day rally erased
months of losses. And if you were thinking about buying the stock before it
happened, I bet the sudden move frustrated the heck out of you. It shouldn't,
though. That's because this kind of one-day rally is a powerful sign of more
gains to come. To see it, I looked at every one-day rise of 10% or more for
Starbucks' stock. These are rare. They've happened just 22 other times in more
than three decades. And it turns out, they were darn good opportunities to buy.
Take a look... Starbucks has built a valuable global brand. And that has
translated into incredible returns for investors. The stock has increased at
19.1% per year – roughly double the overall market – since 1992. But you can do
even better if you buy after massive one-day rallies... Similar situations led
to 6.9% gains in three months, 22.8% gains in six months, and 36.2% gains in a
year. That's fantastic outperformance. And the stock was higher a year later 86%
of the time. So yes, it's an easy mistake to assume you missed this rally. But
according to history, you didn't... not at all. Starbucks is a dominant global
brand in the middle of a turnaround. Shares are likely headed much higher in the
months ahead... And investors who act could see fantastic gains. Good investing,
Brett Eversole Further Reading "It's tempting to sell your assets after a big
rally," Sean Michael Cummings writes. "But doing so robs you of one of your
biggest advantages as an individual investor." Even Wall Street pros have a
tough time predicting the future. But you have one crucial advantage over the
"big guys"... Read more here. "If you got out of the market in July, don't make
matters worse by repeating that mistake today," Brett writes. One major index
snapped back in just two weeks after last month's market shake-up. And history
shows that buying after similar rebounds could lead to solid outperformance...
Learn more here.

Keep reading...

Save Your Life in Just Three Minutes a Day

Sep 10, 2024

This powerful preventive against all of those chronic diseases in old age takes
just three minutes of your day... But most of us lie about doing it. Ask a
dentist how many of their patients claim to floss daily and they'll tell you
most of them. But the truth is that more than half of Americans don't floss
regularly, and about 20% don't do it at all. It might seem like a waste of time,
but as we age, flossing becomes critically important. That's because our gums
recede naturally over time, leaving us more vulnerable to gum disease (also
known as periodontal disease, or periodontitis). A 2011 study estimated that
seniors who never flossed had a 30% higher mortality rate during the study
period than the daily flossers. As it turns out, perpetually puffy and painful
gums can put you at higher risk of heart disease, certain cancers, diabetes, and
dementia, to name a few. Over the decades, we've learned that poor oral health
is linked to poor overall health, with chronic inflammation being the primary
driver. And you can add debilitating, chronic joint pain to the list of possible
health problems from a poorly maintained mouth... In a mouse study published
last month in the International Journal of Oral Science, scientists looked into
a potential mechanism for a bacterial infection that led to more swelling in the
limbs, damage to the lining of the joints, and increased levels of inflammatory
molecules in the limbs. These all happen to be symptoms of rheumatoid arthritis.
Rheumatoid arthritis is where your immune system mistakes the protective barrier
around your joint (called the synovium) as a foreign body and sends
immune-system cells to attack it. That results in swelling, redness, pain...
even the breakdown of bone cells. Rheumatoid arthritis can start anytime between
the ages of 30 and 60. About 1.5 million Americans suffer from this painful
condition. And, as it turns out, this bacteria – called A. actinomycetemcomitans
– happens to be one of the culprits behind periodontal disease. By evading
painful gum disease, you could end up evading some other pretty painful
conditions, too. Here are some of the reasons why you'd want to keep your
piehole pristine... A December 2022 review of 293 meta-analysis studies on oral
versus systemic health tallied up nearly 30 serious signs of inflammation and
chronic diseases that were strongly associated with oral disease. That lineup
included many conditions commonly afflicting older folks. Many scientists
believe that inflammation could be the common thread running through all of
these illnesses. And I've been saying this for many years myself. For example,
constantly inflamed and irritated gums can lead to damaged tissue that bacteria
slip through to enter your blood vessels. Your body tries to fight the foreign
invader by launching an immune response, resulting in even more inflammation.
And the longer that continues, the higher your risk of developing these health
problems... Cardiovascular disease: Research has shown that folks suffering from
gum disease have triple the risk of heart attack and stroke. They're 20% more
likely to also have hypertension, too. And a 2022 meta-analysis found that
treating periodontitis ended up reducing levels of fasting blood sugar and
C-reactive protein, a sign of systemic inflammation. Another study published
last June examined the brushing habits of 1,675 adults who visited the hospital
in a three-year period to see what it meant for cardiovascular problems.
Researchers discovered that the folks who only brushed their teeth in the
morning were twice as likely to suffer from and die of cardiovascular disease
during the study period than those who brushed twice a day. Alzheimer's disease
and dementia: A study published last August in the Journal of Clinical
Periodontology linked periodontitis to poor cognitive performance and higher
baseline levels of markers for Alzheimer's disease. Another study with mice
found that oral bacteria that travel to our brains can make microglial cells
there go haywire. (These helpful cells gobble up the amyloid plaque that clumps
up in the brains of Alzheimer's patients.) Also, a 2019 study found the same
bacteria that causes gingivitis in the brains of 53 deceased Alzheimer's
patients. These bacteria release enzymes called gingipains, which animal studies
have shown to cause memory problems and inflammation in the brain. Diabetes:
Several studies have associated diabetes with a higher chance of developing
periodontitis. But wait, there's more bad news... Severe gum disease and its
inflammation can make cells insulin resistant. That, of course, leads to
constantly high blood-sugar levels. That extra glucose in the blood makes them
dysfunctional. And that means problems fighting infections... like the one
raging in your gums. You can see where this is going – diabetes and gum disease
are, as scientists have called it, a "two-way street." For example, one study
published last year in Cureus reported that Type 2 diabetics who received
nonsurgical treatment for their periodontitis showed decreased blood levels of
inflammatory markers, as well as improved blood-sugar control. We could go on...
Research has also linked poor oral hygiene with depression, inflammatory bowel
disease, nonalcoholic fatty liver disease, and lung disease. So why don't people
floss? Some say they don't have time, or it's hard for them to do it. But
flossing takes just a few minutes, and its health benefits make it worth it.
Some older folks with arthritis or dexterity issues from a stroke could have
trouble maneuvering the thin piece of floss. But lots of products out there,
like the Y-shaped floss picks, can make the process much easier. But the most
common reason dentists hear from patients who don't floss is "my gums bleed and
it hurts when I do it." Healthy gums don't bleed from flossing, so if yours do,
you should be flossing more, not less. The more you do it, the easier it will
get. So stop making excuses and start flossing... Pull the floss around the
tooth in a "C" shape. With the floss wrapping one side of the tooth, gently
slide the floss straight up and down a couple of times without a seesawing
motion to dislodge plaque under the gumline. (Remember, it's not a log-sawing
competition.) The process should take about three minutes, on average, for
someone with all 28 teeth. If you have trouble flossing, do it under bright
lighting and in front of a mirror. It helps to wind the floss around the index
fingertip of each hand. Make sure you floss regularly... Shoot for every day and
after meals. Your mouth and body will thank you. What We're Reading... Gum
disease-related bacteria tied to colorectal cancer. Something different: A
Chinese woman led the largest and most successful pirate fleet in history.
Here's to our health, wealth, and a great retirement, Dr. David Eifrig and the
Health & Wealth Bulletin Research TeamSeptember 10, 2024

Keep reading...

Episode 378: Cannabis Stocks Are Your Next Big Investment Opportunity

Sep 9, 2024

On this week's Stansberry Investor Hour, Dan and Corey welcome Aaron Edelheit
back to the show. Aaron is the founder and CEO of private investment firm
Mindset Capital. He joins the podcast to talk about his investing philosophy...
the importance of relieving mental stress... and all things cannabis – from its
"great replacement" of alcohol to its legalization in more and more states.
Aaron begins with a story about how he received advice from the legendary
Charlie Munger on the "price of admission" of being an investor. He explains
that this advice made him reflect on his own strengths and realize that he
wanted to exclusively do long-term investing rather than trading. This leads to
a conversation about investor psychology and mental strain. Aaron shares a few
tips for relieving the anxiety surrounding investing, from turning off your
phone and computer one day a week to doing hot yoga. In my business, what
investors are paying me to do... is make good decisions. That's my job –
literally to make good decisions. And so, as a money manager, I've got to put
myself in the best possible place both physically and mentally to make good
decisions. Next, Aaron talks a bit about his investing background, his career
path, and how he finds opportunities where others aren't looking. Today, he
believes the big opportunity is in cannabis stocks. He explains that certain
companies in this industry are breaking out despite the lack of federal reform.
Aaron also drops a non-cannabis name that he's interested in and gives an
alternative perspective on value stocks... You can make an argument somebody
investing in Nvidia like four years ago was a value investor... The other way
that you can create value is just being like, "Hey, I understand this trend, and
I understand where earnings are going, and I understand this business model."...
It's this reproducible kind of model: The company gets capital, they reinvest it
at very high rates of return, and there's something that people aren't seeing.
That's where real value . Finally, Aaron compares today's investing landscape
with that of the 1990s. He shares that there's much more financing of private
companies today, which stops them from going public for longer (if at all).
After, Aaron makes his case for cannabis stocks. He believes that they will
eventually steal market share from drug companies and alcohol producers once
more people realize the benefits and switch over... It may be a while before the
financial world is able to participate in cannabis. I may be sitting there for a
while. But I have growth trends behind me, where state after state is
legalizing, and people are turning to it because... "Oh I'm sleeping at night
because of this," or alcoholics being like, "Well, now I have a cannabis
beverage and I'm not an alcoholic anymore." Click here or on the image below to
watch the video interview with Aaron right now. For the full audio episode,
click here. (Additional past episodes are located here.) The transcript is
coming soon.

Listen to the episode

My industry source on the recent turmoil at Lumber Liquidators; Another reason
to avoid Icahn Enterprises' stock; More on Costco Wholesale's high valuation;
Reopening the doors to Stansberry Research's incredible investment breakthrough

Sep 10, 2024

1) I have a long history with Lumber Liquidators – now known as LL Flooring
(LLFLQ) – so I'm still interested in seeing developments with the company and
the stock. I'll discuss the latest news – a recent bankruptcy filing and some
last-minute corporate maneuvering – shortly via my industry source, but I'll
give some brief context for my history with LL first... In 2013, thanks to a tip
from one of my readers, I discovered that the then-high-flying company was
sourcing toxic Chinese-made laminate flooring and poisoning its customers with
dangerous levels of formaldehyde, a known carcinogen. I pitched it as my
favorite short position at the Robin Hood Investors Conference on November 22,
2013, the day the stock peaked at $115 per share (you can see my slides right
here, and I also showed two minutes of clips from this video: Liquidating the
Forests). Later, I brought the story to 60 Minutes, which aired a segment on
March 1, 2015 in which I was featured. It was an incredible piece of
investigative journalism that exposed what the company was doing (click here to
watch it). Over the following months, the stock eventually crashed to around $11
per share, and I closed out my position. It was a good decision... The stock
later rallied to above $40 per share in late 2017 and, after another crash, back
to above $30 per share as recently as early 2021. You can see the moves in this
10-year stock chart: But since early 2021, it has been downhill for LL – all the
way to a bankruptcy filing. Take a look at the company's revenues and profits
over the past decade and you'll see why – after a pandemic-driven surge in
profits in 2020 and 2021, it began losing money in mid-2022 and never recovered:
How and why did this happen? To answer that question, I turned to my longtime
friend Donovan Royal... I first met Donovan when he reached out after seeing the
60 Minutes segment. He was an industry veteran who ran a handful of flooring
stores in Texas that competed with LL. He quickly became my best source on the
company and industry – all the way to the present. So when I saw that LL filed
for bankruptcy, I asked if Donovan would write up his observations and allow me
to share them with my readers. He was kind enough to say yes, and began: The
days of LL as a publicly traded entity are coming to an end. Last month the
company filed for chapter 11 bankruptcy protection, and at the end of August
announced it would pivot to a full liquidation. However, in some last-minute
maneuvering, the founder, Tom Sullivan, made an offer to acquire 219 of the
company's 430 remaining stores. On Friday, after almost two years of rejecting
multiple offers to acquire the company at above-market prices, LL's lawyers
filed an asset purchase agreement accepting Sullivan's offer, detailing total
consideration of: a) $1 million; b) 57 cents on the dollar for the inventory at
those 219 stores and at one of the company's three distribution centers; and c)
the assumption of certain liabilities. So, subject to court approval, it looks
like Sullivan will finally get his company back (or at least half of it).
Donovan explains the many reasons that sales and profits declined: Over the last
couple of years, LL has seen double-digit sales declines due to a range of
factors: A failed strategy shift; A questionable re-brand from Lumber
Liquidators to LL Flooring that didn't resonate with customers; A tough macro
environment due to a recession in the housing market we're experiencing right
now; and An inept management team that failed to cut costs and kept opening
stores, even as same-store sales turned increasingly negative. Still,
shareholders could have been OK... but the board sank them, as Donovan argues:
Unbelievably, the board rejected offers as high as $8 per share in early 2023
and as recently as April 2024 failed to consummate an acquisition offer for
$2.50. Then, as the company was running out of cash just a couple of months ago,
instead of acknowledging its mistakes, the board doubled down and fought with
its founder, Sullivan, in an effort to keep him and two other nominees off the
board. In July, almost two months after it should have held the annual general
meeting, shareholders rejected the board's candidates and resoundingly voted in
favor of Sullivan's slate. But by then it was too late... The failure of the
board to preserve value for shareholders when multiple suitors showed interest,
instead squandering valuable months and shareholder resources fighting a proxy
contest, paying scores of consultants, and delaying selling its valuable
Virginia distribution center, have led many to believe that it put insider
interests ahead of fiduciary duties. The board's actions will no doubt be
heavily scrutinized in what I am sure will be several shareholder lawsuits in
the coming years. Regarding the stock, which is trading for $0.02 on the pink
sheets, Donovan (who owns it) comments: It remains to be seen if there will be
any residual value for shareholders. When the company filed for bankruptcy, its
assets exceeded liabilities by $84 million. The aforementioned sale of the
Virgina distribution center will bring in an additional $105 million. The
company also listed $248 million in inventory as of the end of the first
quarter. LL is currently conducting liquidation sales (the irony is not lost on
me especially as the signs are bright yellow!) at its remaining 211 stores, with
the first tranche scheduled to be completed in two weeks and the second tranche
of stores shuttering for good in November. Most people may think these sales
will yield pennies on the dollar, as is usually the case for clothes, toys or
books, but flooring is different. When I was in the industry, I never once sold
any kind of flooring below landed cost, not even in a store liquidation context.
Of course, there will still be some overhead, salaries, lawyers, bankers, and
consultants to pay, but the deal with Sullivan will substantially reduce ongoing
expenses and bring in more than $66 million. So while it's rare for shareholders
to see a dime in bankruptcy, I'm not ruling it out. Thank you, Donovan! This is
a good case study of a classic value trap... The financials showed a company
heading toward bankruptcy, but at every step along the way, the stock looked
cheap because the company could have turned itself around under new management
or, failing that, sold itself for a substantial premium. In this case, investors
should have paid attention to the financials – which is why I always start my
analysis of every company there. 2) Speaking of value traps, I've warned my
readers a dozen times (archive here) about Icahn Enterprises (IEP), which
continues to sink for reasons outlined in this insightful New York Times article
from last week: Wall Street Is Worried About Carl Icahn. Excerpt: Mr. Icahn is
under intense scrutiny from Wall Street investors, who are rapidly selling his
company's stock. In the past year and a half, shares of Icahn Enterprises, his
publicly traded investment company, have dropped more than 75 percent, losing
nearly $20 billion of value. After dropping more than 30 percent since
mid-August alone, it now trades at $10.53 a share, its lowest level in more than
two decades. Mr. Icahn owns roughly 86 percent of the shares, so he has
personally lost about $17 billion.... Some Wall Street investors are now worried
that the stock's continuing fall could threaten the health of the entire company
and that it could be forced to sell companies it holds. Continue to avoid this
stock like the plague. There's no price at which IEP is a buy because of the
potential for a "death spiral," in which a declining stock price triggers margin
calls for Icahn (who owns about 86% of the shares) and forced selling (either by
Icahn or his bankers) into a market with few buyers. 3) While the opposite of a
value trap, in my August 13 e-mail I warned my readers about Costco Wholesale's
(COST) stock due to its extreme valuation. This Wall Street Journal Heard on the
Street column from last week makes this exact point: One Bargain You Can't Find
at Costco Is Its Stock – Does That Matter? Excerpt: Investors love Costco so
much they'll pay more for it than Nvidia. But even famed investor Charlie Munger
might balk at his favorite retailer's earnings multiple today. In an interview
last year, Warren Buffett's late right-hand man observed that the "trouble with
Costco" is that the stock trades at 40 times earnings. "Except for that, it's a
perfect damn company, and it has a marvelous future," he said. Since then,
Costco's valuation has expanded even further: It fetches nearly 55 times
trailing-12-month earnings. That makes it the most expensive retail stock in the
S&P 500 – about 60% above the industry average and 29% pricier than runner-up
Amazon. Most impressive is its slight premium to red-hot chip maker Nvidia,
which is expected to grow its earnings per share about three times as quickly as
Costco over the next five years. And as the column continues: Some investors
treat Munger's comments as holy writ, but read them carefully. While he has said
he would never sell his Costco shares, he didn't say he would buy them at any
price... In much the way that prospective Costco members debate whether the
membership fee is worth it, investors should think carefully about the company's
steep sticker price. At today's prices, they might want to consider shopping
elsewhere. 4) On a different note, I'll close today's e-mail with something big
– we've just put together a special limited-time offer for access to Stansberry
Research's incredible quant system... Until tomorrow at midnight, we're looking
for folks who want the chance to make money over the next 12 months by "beta
testing" our company's biggest investment breakthrough in 25 years. In short,
it's a special way to see which stocks could double your money and beat the
market with 91% accuracy, as we've seen in our backtesting. Again, until
tomorrow at midnight, we're reopening the doors to access this strategy. You can
learn all about this system and the special offer we've put together – which
includes a free year of access and a full suite of bonuses – right here. Best
regards, Whitney P.S. I welcome your feedback – send me an e-mail by clicking
here.

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