Investors pay $50,000 per year to hear insights from this man.
Today, I’m going to share one of his biggest insights with you for free…
I saw the $50,000 man—Mark Lapolla—present at a conference on an island off the South Carolina coast.
In 2007, Mark knew the market was near the top and about to crash. And he wanted to warn people. So, he started a financial research firm called Sixth Man Research.
Back then, Mark said the housing market was overvalued… and homeowners would eventually default on their mortgages.
At first, no one believed him… or no one wanted to believe him.
But a year later, people stopped paying their home loans and the market crashed.
Big market calls like this turned Sixth Man Research into one of the most sought-after research firms in the industry.
Hedge funds pay upwards of $50,000 per year for Mark’s research.
Now you’re getting a glimpse of his work for free…
Today, I want to tell you what Mark thinks is the biggest threat to the market. And why, as a precaution, you should listen to what he has to say.
Not All Good News
Mark’s presentation was first on the last day at the conference. And he started off with a flurry.
Luckily, I had already caffeinated because he jumped from one data point to the next. Anyone not on their A game was left behind.
At the beginning of his talk, Mark dismissed many of the media’s misconceptions about the economy.
For instance, he said U.S. worker productivity is up… employees are actually getting paid more… and increased borrowing is good for stock prices.
But the presentation was far from being all Pollyannaish. There’s one thing that has Mark worried about the future.
The Big Threat
Mark is watching one signal very closely. And if it changes, he thinks the market could crash.
That signal is inflation.
A consistently low level of inflation is the one force stabilizing the market.
It makes sense…
When inflation is stable and low, businesses can project profitability with more confidence. They’ll also have a good idea of what the economy will do in the near term.
And they can better predict what the value of the money they get back will be. That means they can invest more in the growth of their companies.
But if inflation starts swinging around, the future value of their money becomes uncertain.
Crestmont Research specializes in tracking long-term market cycles. And its findings back up what Mark told us at the presentation.
The firm says if you can predict future inflation levels, you can predict how expensive the market will be.
The sweet spot for inflation is between 1–2%. And when inflation moves out of that range, the stock market trades more cheaply.
In periods of low inflation, Crestmont found that the stock market often traded at a price-to-earnings (P/E) multiple of over 20.
Today, inflation is a low 1.3%. And the S&P 500 trades around 22. So, the market is not expensive based on current economic conditions.
Inflation levels have been in the sweet spot since the end of 2009. That’s how we’ve managed to have a consistently expensive market.
What Mark’s Monitoring
But Mark said if inflation starts to get volatile, investors will become less certain about the future. And that leads to selling.
Multiples drop quickly once inflation leaves the sweet spot.
In 1990, when inflation reached 4.7%, the P/E ratio of the S&P 500 was 15.
And in 1980, when inflation nearly topped 10%, the P/E ratio was 7.
When stock multiples like the P/E ratio fall, it’s typically prices (the “P” of the equation) that go down.
We’re watching this very closely at the Daily.
Inflation is staying still for now. If you want to track inflation yourself, check out this website.
But for now, stick to the advice we’ve given you. Stay in the market and buy reasonably priced stocks like those in the Elite 25 portfolio.
This signal gives us the all-clear for now. When it changes, we’ll let you know how to best position your portfolio to profit.
Nick Rokke, CFA
Analyst, The Palm Beach Daily
From Robert C.: I’m a current subscriber to Palm Beach Confidential. When Teeka Tiwari first wrote about cryptos months ago, I tried to understand them… but at 84 years old, it seemed to require more mental energy than I could muster.
I finally opened a Coinbase account, then got bogged down in linking it to a bank. Then a few weeks ago, I found all the educational material on your website that had been there all along. How dumb I felt. Now I’m in and excited about this new source of potential profit. Thank you, Teeka, for passing along this information.
Nick’s Reply: Congratulations, Robert, on opening up your first cryptocurrency account. We know it can be hard for first-timers to get started in cryptos. But as you found out, we have a wealth of resources—including instructional guides and videos—in our new and improved “Crypto Corner.” And as you now know, it doesn’t take long to learn how to open an account, trade on the exchanges, and start making money.
From James P.: As a Fidelity investor, I was intrigued by the news that the Coinbase cryptocurrency exchange would be made available on Fidelity’s website. (“We Could See 26 Million New Bitcoin Investors by the End of 2017”). But upon calling Fidelity, I learned they only allow you to trade the limited cryptos on Coinbase’s exchange. I’d love to see Fidelity offer an expanded crypto exchange and wallet services… and told them as much. Unlike every exchange out there, Fidelity’s customer service is outstanding. And unlike the exchanges, I can actually call Fidelity. I’d love to see them put every exchange out of business.
From Nick F.: Hi Nick, I loved your essay on Iraq. (“This Dangerous Market Is One of the World’s Safest Investments”). I like “crisis” investing. I believe it’s the best way to make a small fortune. Please keep those coming.
Nick’s Reply: Thanks Nick. I’m sure you’d like Wednesday’s essay on these other frontier markets you can invest in, as well.
For the next few days only, former hedge fund manager Teeka Tiwari is revealing his next big cryptocurrency prediction for 2018.
Last year’s prediction was spot-on… Those who followed his best ideas had the chance to turn a small stake into nearly $200,000.