Video Update: Don’t Listen to Doomsday Prophets

There are a lot of scary headlines out there… but now is not the time to give up on your investment portfolio.

It’s time to double down on safe, high-yield, dividend blue-chip stocks.

Today, Chief Analyst Adam Galas debunks the latest doomsday article spooking readers into consider selling all their stocks.

He'll share why prioritizing market timing over time in the market causes average investors to miss out on incredible gains... And how you can secure your wealth over the long term instead.

Click here or scroll down to read the transcript.

Happy SWAN (sleep well at night) investing,

Brad Thomas Editor, Fortress Portfolio

Welcome, Fortress Portfolio members to another weekly video update.

Now, we were initially planning on covering the jobs report, which I know is so exciting.

I’m sure many of you were looking forward to that.

But this week, I'm going to cover a special “Mad as Hell” edition because I have heard from several subscribers who have been terrified by recent scary headlines from charlatans, scoundrels, and con artists.

And I know that this subscriber is hardly alone.

This member told me they were losing sleep over their investments and even thinking about selling everything in a panic – locking in short term losses completely unnecessarily – because of this terrifying headline: “It's All Collapsing Now, and There is No Way Out!”

Now, first of all, please stay away – for the love of God – from any website called The Daily Doom. That title alone tells you everything you need to know. As J.P. Morgan said, “The man who is a bear on the future of the United States will always go broke.”

(Source: Imgflip)

Anyone telling you America is finished and the only salvation is selling everything and investing it all (based on their book – which they've been peddling like dangerous snake oil salesmen for over a decade) is a charlatan you need to avoid like the plague.

This is a con artist that is after your money.

Now, I won't link to this clickbait trash article, but I will tell you the basics of how all these hyperbolic, scare-mongering articles work.

They're based on what's called the Gish gallop.

It's a method of debate in which you throw out lots of ideas and claims, sometimes dozens very quickly. But each one sports a nugget of truth. Because after all, if all you're doing is spewing out pure lies, debunking that can be done really quickly.

But if you throw out claims that have a nugget of truth, then it's going to take a lot longer to debunk them.

In fact, an analyst like me might spend all day going point by point trying to expose the lies, which of course, we don't actually have time to do.

And that's how they get away with it.

So let me give you just a quick synopsis of the Gish gallup from this article, which is similar to a lot of other doomsday articles I have seen in recent weeks.

First, interest rates are soaring. Yes, at the fastest rate in 20 years.

Banks are sitting on large unrealized bond losses. Absolutely. About $600 billion worth.

Mortgage rates are at 8%, 20-year highs. Yes, that's true.

The market for existing home sales is effectively frozen. Correct.

And thus, the article concludes that home prices are set to crash. Absolutely not.

The last time this happened, of course, the financial system imploded.

Of course. Yes, that's true. But this time is completely different.

The things that blew up the banks last time do not exist.

Another point the article makes is that banks are already weakened by loan losses, are set to fail, and no bank is safe. A complete lie.

Hyperinflation is just around the corner. Zero evidence of this, as I'll explain in a moment.

And thus, cash, bond, stocks - nothing is safe.

Except, of course, for this article’s super-secret investing strategy, which you have to pay for.

Now, let me quickly debunk three of these core claims to put your mind at ease in case you've seen some of these headlines in recent weeks.

Now, as you can see below, inflation certainly has been absolutely horrendous for the last three years.

(Source: Truflation)

24% (that's 7% annualized inflation) the same rate as the 1970s.

Americans, understandably, are mad as hell about these soaring prices.

And I can't blame them. Heck, my own personal inflation due to family cancer bills is up 500% – making Argentina's 130% inflation look like a picnic in comparison.

Thankfully, most Americans do not face that kind of hellish actual hyperinflation.

But as you can see here, they face many other problems.

(Source: Charlie Bilello Twitter Account)

Food prices are up 20%. Home prices up 40%. Gasoline prices up almost 80%.

Meanwhile, wages are up just 15%.

And, of course, the way inflation works – these prices will stay high, and simply rise slower.

So let’s look at home prices. The median mortgage is now up 300% in the last decade.

(Source: The Daily Shot)

That's why in the last ten years, according to Redfin, the amount of income that the average family needs (to afford the average home) has risen from $34,000 a year (something the middle class can afford) to $114,000/year (something they most certainly cannot).

(Source: Redfin via The Daily Shot)

But the good news, of course, is that the actual rate of inflation is coming down.

According to Truflation, as you can see below, it’s about 2.4%.

(Source: Truflation)

Now, this is the most accurate estimate of actual inflation. Truflation used the same weighting as the government, but added 10 million data points from J.D. Power, Zillow, Trulia, CarGurus, AAA (American Automobile Association), the IHS Markit, the U.S. Energy Information Administration (EIA), Statista, and others to give us a real time inflation estimate. 97% correlated with CPI (Consumer Price Index).

So that's the good news. No hyperinflation.

But the bad news is, of course, the inflation rate.

The prices are not going to go down.

But there is good news – that is – cash right now.

T-bills (Treasury bills) yield 2% above the rate of inflation.

Now that happens to be the 200-year average. Basically, the day of zero rates and negative real rates are gone forever.

Thank God savers are finally not being screwed.

Now, what about accelerating inflation, in the future?

Will negative rates come back when adjusted for inflation?

Well, Goldman Sachs expects headline inflation CPI to rise about 4% or 5% by the end of the year. And our economic model says that’s a reasonable estimate. So basically, they agree with us.

Now, if inflation does go as high as 5%, then the Fed is going to be forced to hike more aggressively… about 1% more to 6% or 6.5% according to James Bullard, former president of the St Louis Fed.

And Jamie Dimon, CEO of JPMorgan, says in a worst-case scenario, maybe as high as 7% interest rates.

Now, the good news is that short term, high-yield saving rates and T-bills or cash yields are based on the Fed funds rate.

So if the Fed hikes to 6% or 7% interest rates, your cash will go even farther. So that 1% to 2% real rate, even if inflation goes up, should be maintained.

In other words, there is a place to hide for risk free savings that can offset inflation.

Now, the bad news is for anyone looking to buy a home (such as myself in a few years), well, we are truly screwed.

Because as you can see, home prices are going back up again.

(Source: The Daily Shot)

In fact, they only dipped as low as about -1% off of record highs last year. And now they're going up again.

Now, you might be wondering, how on earth is that possible?

With 8% mortgage rates, the housing market is frozen...

Absolutely. But think of it this way – imagine it's 2020. Mortgage rates are now 3% and you buy a home locking in that amazing 3% interest rate.

Three years later, home prices up 40%.

Now, if you sell your home, you've got to live somewhere.

So you're going to have to pay 40% more for a nearby home. And now your mortgage rate is 8%.

So would you actually make that deal? Of course not.

And that's why existing home sales have collapsed to the lowest level in 20 years. And pretty much the only new supply is coming from the home builders.

We've actually been under building homes adjusted for population since 1995.

And now, there's about 150 million millennials and Gen Z’s looking to start families, which means they have to pay an extremely high price or simply by smaller homes.

Now, the good news is Morgan Stanley thinks that home prices might come down a bit… as much as 10% over the next two years. That's half as much of a decline as the Great Recession.

Now you might be thinking, “Oh, my goodness, does this mean the banks are screwed?”

Absolutely not.

Remember, in the Great Recession, what happened is banks like Citigroup were leveraged 40 to 1 on toxic assets. They were giving loans and mortgages to people with no income, no job, no assets. And then bundling them together and leveraging them 40 to 1 with dangerous derivatives.

Well, the banks are no longer casinos, but there are plenty of casinos out there like the shadow banking industry. These are things like private credit. But it's the hedge funds and not the banks that are basically exposed here.

If you can remember, Archegos Capital Management, a hedge fund that managed the assets of Bill Hwang, lost $32 billion in two days in 2022.

Hwang’s hedge fund collapsed, but the economy did not go into a recession.

So you might be wondering, “If there was a financial crisis brewing, how would we know?”

Well, take a look at this.

(Source: YCharts)

We have the St Louis Fed Financial Stress Index and the Kansas City Fed Financial Stress Index above and the Chicago Fed National Financial Conditions Index below.

(Source: YCharts)

Together, these look at 134 financial metrics updated every week – every single part of the financial system from bank lending to loan losses to consumer credit conditions. Everything you could ever hope to see, to see a financial crisis coming.

And right now, all of them are signaling below average or average levels of financial stress compared to 1990 and 1973. So there is zero indication of a financial cataclysm coming.

Now, let me explain why it's so important that you beware of these doomsday prophet con artists.

As you can see below, even people like George Soros, Bill Ackman, Ray Dalio, or even Paul Krugman, a man who won a Nobel Prize in economics… have made hilariously wrong doomsday forecasts that cost investors dearly.

(Source: JPMAM & Bloomberg via The Daily Shot )

Of course, you've probably seen me poking fun at Robert Kiyosaki, my favorite doomsday prophet.

Things like “starvation is coming” and “God have mercy on us all.” And his prediction for 2016 – “the worst market crash in history.” Instead of crashing, stocks roared higher in 2016.

Kiyosaki is a perfect example of a doomsday prophet.

Even Paul Krugman, who got it wrong, is not going to be telling you to get out of all stocks and stay out of them permanently.

And Ray Dalio, although he's been bearish for the last decade, has admitted that when he disagrees with the algorithms that his hedge funds use (which is most of the time), 90% of the time he's wrong.

That’s why his hedge funds, which have nearly $200 billion worth of other people's money, never base their trades on his forecasts. They do what the math says, and Dalio simply goes on TV and spouts off his generally wrong predictions.

Now, the bad news about doomsday prophets is this – they will never stop.

Any time there's any kind of scary headlines – if the market's down 8% or interest rates are soaring – they will come out with a dozen reasons why it's all about to fall apart.

And here is the problem. They cherry pick. They spin the data. They tell a tale of death, despair, and doom that causes even perfectly rational people like yourself to panic… and sometimes make very costly mistakes.

Now, take a look at this. This is one of the most important tables you will ever see.

Over the last 90 years, according to Bank of America, had you missed just ten of the best market days of each decade (the best single day's performance of each year)… instead of earning 178-fold returns on your money, you would have earned nothing…

(Source: Bank of America & S&P 500 returns via CNBC)

And adjusted for inflation, you would have lost 94%.

Remember how Robert Kiyosaki is always going on about those 90% crashes?

Well, the only way you can actually lose 90% of your money is by trying to time the market.

And, of course, that's a 90-year situation. Almost no one actually invests that long.

So what about the actual realistic conditions?

According to JPMorgan, in the last 20 years, the market's returned a very solid 9.5%, which is 7.3% adjusted for inflation. But the average investor that tried to time the market made 1.4% real returns or 3.6% before adjusting for inflation.

(Source: J.P.Morgan Asset Management)

What does that actually mean?

It means that in 20 years (half an investing lifetime) while the market was up 309%, quadrupled if you adjusted for inflation, the average investor made 32% and lost all those gains because they tried to time the market.

That is the difference between retiring in splendor, retiring in comfort, or not retiring at all.

So now you can see why these doomsday con artists make me so mad. Because they are preying on the fears of good people just like you.

They threaten your sanity, your sleep, and your retirement dreams by telling you the sky is constantly falling.

And worst of all, they will never, ever tell you to buy stocks – not if they're down 30% or 40% or even 50%, like in the Great Recession or tech crash of 2000.

And as you can see below, there are always going to be scary headlines for them to peddle to try to scare you and take your money.

(Source: YCharts)

Now, usually, of course, these risks are not long term – but sometimes they are.

I've used these videos in the last few months to warn you about things like record amounts of reverse money printing and bond issuances by the government.

But here's the difference. We always tell you to stay invested. And to stay focused on quality and safety – first… prudent valuation and risk management – always.

Because we know that the studies are clear. Time in the market not market timing, is the best way for you to retire rich and stay rich in retirement.

We can help protect you against the true risks, not the fantastic lies that the peddlers of nonsense and despair are constantly pushing.

So what does this mean for Fortress? How can we protect you?

Well, in the last few weeks, we've talked about our 3000-point safety and quality model.

I've gone into how we use and incorporate S&P’s 1,000 risk metric management model, and how our system was built over eight years with 20,000 people hours, and $1 million in R&D (research and development).

And every day I spend one to two hours examining hundreds of economic charts to make sure I have a God's eye view of the economy.

I also spend 15 to 20 hours watching Bloomberg and C-SPAN to keep up with the latest news affecting our financial markets. I also compare my analysis to about 100 weekly blue-chip analysts that Bloomberg's data confirms are the most accurate economist teams in the world – not cranks on YouTube or sites called The Daily Doom.

When you make Nouriel Roubini, the actual Dr. Doom, sound optimistic…

You know, you've gone down a very dark rabbit hole indeed.

Remember, I watch Bloomberg and C-SPAN, so you don't have to. And believe me, you don't want to.

We use the world's best data, including FactSet, Bloomberg, and many others.

We have AI algorithms sending us news articles as well as company specific reports. And any time something important happens, we have the bond market itself telling us each company's fundamental risk of bankruptcy. And that’s updated daily.

When news breaks, we see how the smart money on Wall Street and the bond market responds so that we know exactly what’s happening in an ocean of noise, scoundrels, charlatans, and con men.

We know what matters and what doesn't. And that's why it's a privilege and an honor to help you harness the world's best high-yield blue chips in your Fortress Portfolio. We want you to turn your retirement dreams into reality.

At Fortress, we're not charlatans. We're fact-based financial scientists following the fundamentals wherever they lead.

And that's how we harness the math behind getting rich and staying rich on Wall Street so you can retire in safety and splendor.

I hope you enjoyed this special video report and join us next week.

Please remember to send us your questions and comments so I can respond to them in these videos and our monthly issues.

Just a reminder, I can't provide personalized investment advice.

Until next week – this is Adam Galas, wishing you and your family safe investing, and a healthy and relaxing weekend.