Your Bear Market
Survival Guide
A long-term strategy for beating the bear and
coming out with a stronger portfolio…
Including three stocks to buy now and eight to
immediately put on your watchlist.
Friday the 13th…
They say it’s unlucky.
Well, Friday, 13 August 2021 was when the ASX 200 peaked.
Nearly a year ago.
And while the index itself hasn’t performed as bad as US markets…many stocks are down.
Like most investors, you’re probably feeling some pain.
How long will this last? How bad will it get? When will the bull market return?
What does it mean for your long-term portfolio? What moves can you make now to help ensure it grows rather than falls?
The market feels incredibly lonely right now for Aussie savers who had a carefully laid plan…what measures can you take to shore up your capital?
And specific stocks?
Most that you own have probably been hammered. Hopefully that hasn’t led to terror and panic selling. Because most will recover.
Don’t try to time the bottom. That’s silly.
But you SHOULD be aware that some stocks might be getting tantalisingly close to their bottoms.
And it’s these equites I want to focus on.
My name, by the way, is Greg Canavan. I’m the director of research here at Fat Tail Investment Research.
I’d say we are one of – if not the – largest independent investment research companies in Australia today.
We have close to 100,000 daily readers across our two e-letters…and around 30,000 paying subscribers across our various investment advisories.
We tend to fly under-the-radar. And that’s just the way we like it.
Our goal is simple: to show you ideas for investing and wealth protection that the mainstream is NOT showing you.
Of course, it’s stupid to follow the mainstream blindly. But equally, it’s also stupid to be contrarian for the sake of it.
‘Buy when blood is running in the streets,’ is the ancient Rothschild advice.
We would add yes, that’s a good idea. Just make sure it’s not your blood.
Look, you’re in a weird situation right now.
It’s actually REALLY perilous.
You probably feel that already, but I just want to emphasise it.
The key thing is…you need a plan.
Bear markets can be brutal. Not only on your finances, but on your mental health too.
As humans we hate uncertainty. It makes us anxious. And bear markets are chock-full of uncertainty.
Which is why I wanted to put this report together for you.
I call it a ‘survival plan’ because your aim in a bear market should be to ‘survive’ with a good portion of your capital intact.
You can then put it to work more aggressively when the bull returns.
I’m not saying I have all the answers by any means.
But I’ve been around long enough to see a few big bear markets play out.
I’ve learned some valuable lessons that will get you through the next six months or so.
What we can see in 2022 is that a major bear market has unfolded thanks to out-of-control inflation and sharply rising interest rates.
In addition, the quantitative easing we’ve had for years has now turned into ‘quantitative tightening’.
It may be ugly out there, but I think the worst will be over in six months or even less.
For reasons I’ll explain, I don’t think this will be a long, drawn-out affair.
One thing I am certain of is this…
What you decide to do in the next few
weeks will determine the success of
your portfolio in the next few years
You see, there are signposts that tell you when this bear market might be coming to a close sooner than most people think.
As you’ll see, we’ve already passed a few of them.
Moreover, Australia is much better placed than the US to weather the storm and come out the other side.
But you also have to be realistic.
And the reality is that this bear market is not over yet.
Based on the adage that it is darkest before dawn…the worst is more than likely still to come.
This is why I want to get this survival guide out to you now.
This is a story I’ve been following for some time.
Throughout the latter half of 2021, I prepared my subscribers for the coming bear.
I warned stocks were overvalued…and investors way too bullish.
The good thing about knowing a bear market is coming is that you can mentally prepare for it.
It won’t take you by surprise and make you do dumb things at the worst time.
It also gives you the clarity to see the light at the end of the tunnel.
That is, the return of the bull.
And while I’m not saying it’s going to happen immediately, it will happen.
In this report, I’ll show you how I think things are likely to play out over the rest of 2022…and how you should position your portfolio for it.
While it’ll be useful for all types, it’s specifically aimed at long-term investors.
If you manage your superannuation, for example, and are looking to pick up quality blue-chip stocks at attractive, beaten down prices…this will be ideal for you.
It’s easy to forget that quality stocks can deliver great returns.
You just have to buy them at the right price!
That means you don’t have to speculate on tiny stocks that may go bust.
You can get capital growth AND a healthy dividend return from well-known, everyday stocks.
Why punt when you can invest soundly?
As I’ll show you, there are cheap, quality stocks on the market right now with dividend yields of 6–8%.
Yet everyone is scared of buying them!
Think about it…
You can buy large companies with high-quality earnings that will deliver you a 6%-plus dividend yield at current prices.
During the bear phase, the stock price might not do much…or it might even go down a bit.
But you’ll still get the income. And that income will be far, far better than anything the bank will pay you.
The funny thing is, 12 months ago, there were no such opportunities.
Stocks were much more expensive and everyone wanted to buy!
That’s investor psychology for you.
With this in mind, here’s a valuable tip. It’s one of the rules of the market I always keep in mind:
When perceived risk is low…actual risk is high.
And when perceived risk is high…actual risk is low.
At the end of 2021, the market was flying high.
The ASX 200 was back to its August all-time highs…and the US market was at an all-time high too.
Perceived risk was low.
But in December 2021, I warned my subscribers otherwise:
‘Right now, the reality is that ultra-cheap money is still flowing into growth and momentum stocks, while leaving the “boring” value-oriented stocks behind.
‘As an investor, the most important thing is for you to remember that ultimately, returns are about the price you pay, and the cash flows a company produces.
‘In times of heightened speculation, the market will absolutely forget this lesson. And it can ignore it even in the face of obvious headwinds, like rising interest rates.
‘So it’s important to remain disciplined and remember there is a difference between investing and speculation.
‘Much of what is going on right now is pure speculation, it’s as simple as that.’
For a quick update on how this ‘pure speculation’ is going, check out Cathie Wood’s ARK Innovation fund:
Source: Optuma
It’s completely blown up!
The fund is down nearly 80% from its high.
That’s a similar fall to the NASDAQ during the dotcom bubble. It took the NASDAQ around 15 years to get back to its old highs.
Speculation is great in bull markets. But it can be devastating in bear markets.
This report is not about speculating, it’s about investing and doing so in a smart way.
The single most important
driver of this bear market
Like it or not, all smart investors right now have their eye on one institution and one institution only — the US Federal Reserve.
And the only question they’re trying to answer is this: How high will interest rates go?
It’s important because when interest rates stop going up, you know we’re close to the end of the bear market.
But for interest rates to stop going up…inflation must first be brought under control.
Inflation surged thanks to the bungled handling of the pandemic.
Western governments ran massive deficits, paying healthy people to sit around, consume, and not produce anything.
Central banks directly financed these deficits.
It doesn’t take a Nobel Prize in economics to know that excess demand and reduced supply leads to…inflation!
Consumer price inflation numbers went from near zero…to the highest level in 40 years.
Now, central bankers are scrambling to fix the problem they created by sharply raising interest rates.
So how high do they go?
Well, to answer that question…you must first figure out when they’ll likely stop…and work back from there.
In short, I’m convinced they’ll stop raising rates in September.
Let me explain why…
The stock market — specifically in the US but more generally around the world — is all about the Fed.
In a post-2008 world, with a broken monetary system, it’s always about the Fed!
Thanks to Fed rate rises this year, stocks are now clearly in a bear market.
You can see this is the chart of the S&P 500 below.
The trend, characterised by a series of lower lows, has turned down.
I first highlighted this to my subscribers back in May.
You can see I added in a couple more up and down moves to show you where I think things will head in the months to come.
So far, I’ve been spot on:
Source: Optuma
Will that continue?
Well, again, it depends on the Fed…and how high they raise rates.
It’s expected to raise rates by 75 basis points in late July, bringing the Fed funds rate to as high as 2.35%.
And while the market has scaled back its rate rise expectations…it still expects the Fed to push official rates above 3%.
But I’m not so sure that will happen.
I humbly submit that by the time the Fed meets again in September, it will be apparent that inflation pressures are easing substantially, and that the economy will be in recession.
So official interest rates in the US could peak at around 2.35%.
A bottom in September?
Also, keep in mind that the policy of quantitative tightening (QT) started on 1 June…and ratchets up on 1 September.
From this date, the Fed will shrink its balance sheet by US$95 billion per month…up from US$45 billion currently.
Put simply, the stock market doesn’t like QT.
Stock markets go higher with easy money.
They do the opposite when that money gets taken away.
It means loss of liquidity from the financial system.
The Fed last tried QT in late 2017, at just US$10 billion per month, increasing each quarter thereafter.
By the time it jumped to US$50 billion per month in October 2018…the market fell hard.
The S&P 500 sank 20% in around three months.
This forced the Fed to abandon its QT plans.
Now, keep in mind that last time around, the Fed tightened into an expanding economy.
Now, it’s tightening into a slowing economy with an inflation problem.
And by September, it will start removing nearly US$100 billion of liquidity a month from the market.
How do YOU think the market will react to that?
It’s not going to like it at all.
Which is why I think this bear market will continue for a few months yet.
With this in mind, you should be looking for the market to bottom around September.
So…why September?
I believe this is when it will finally dawn on the Fed that it has gone too far.
It will signal that it has done enough for now…and put QT and interest rates on hold.
But we’re not at that point yet.
For now, the Fed is firmly focused on containing inflation. And it will drive the economy into recession to get inflation under control.
But by September, you’ll start to see a very different discussion about inflation, the economy, and interest rates.
Forget rising prices…FALLING
prices are next
Let me show you some charts that you’ll never see in the mainstream business news.
They show that the bond market is already telling you inflation has peaked.
The first is the 10-year ‘breakeven inflation rate’. In other words, this is the market’s forecast of average inflation over the next 10 years:
Source: St Louis Fed
In early July it was 2.30%, down significantly from a peak of 3.02% on 21 April.
As the Fed hikes again and continues with QT…causing more economic and financial market damage…watch for this to come down even further.
In other words, long-term inflation expectations in the US reached a limit.
And that’s a positive development for our bear market survival strategy.
Why?
Because falling inflation expectations means ACTUAL inflation readings will start coming down from recent elevated levels.
That means inflation won’t get out of control…and central banks won’t have to raise rates too aggressively.
In theory, anyway.
In reality, the Fed is more concerned about backward-looking inflation readings and employment numbers.
But they are lagging indicators.
The US economy is slowing sharply NOW.
That should start to show up in the numbers by September.
That, in my view, will see the Fed hit the pause button on rate hikes.
And when the market realises the Fed is done tightening…it will be the beginning of the end of the bear market.
Commodities are also telling you inflation
is in the rear-view mirror
The general commodity complex has now joined in the bear market.
For example, the chart below shows the Thomson Reuters CRB Industrial Metals Equity Index.
It’s an index of listed global industrial metal producers.
After peaking in early April…the index was down around 33% in early July.
Industrial commodities are the building blocks of economic growth.
Such sharp falls tell you the economy is slowing fast.
Check it out:
Source: Optuma
Oil prices are starting to break down to lower levels too.
Following the Russian invasion of Ukraine, oil prices spiked.
Brent crude hit a high of US$133 a barrel while the US benchmark, West Texas Intermediate (WTI), peaked around US$129.50.
But by early July, oil prices were starting to succumb to the effect of higher interest rates.
Weaker demand appears to be pushing prices lower.
The WTI fell below US$100 a barrel for the first time since May.
This is good news for bear market survivalists.
The Fed wants to see lower oil prices as it leads to lower prices at the pump and takes pressure off inflation.
It also gives the Fed cover to go on hold if the economy continues to slow.
So keep a close eye on the oil price!
Even if the Fed does go on hold in September, I’m not suggesting we go straight back into bull market mode.
I’m just saying the Fed moving to an ‘on hold’ stance is a necessary precondition to the bear market ending.
You could see a situation where the market forms a low in September, rallies for a few months, then sells off back to the lows a few months later.
A bottom is a process that takes a while to play out.
Here are some of the other signs of a bottom I will be looking for…
Look for these signs of a bottom
- Earnings downgrades and the resetting of future earnings expectations (started to happen)
- Genuine panic selling, reflected in a spike higher in the VIX (an indicator of fear)
- Stocks reacting positively to bad news
- A falling oil price — back towards US$80 a barrel (potentially underway)
- Falling market-based future inflation expectations (already happening)
- Bond yields falling (already well off their peaks)
- Attractive valuations (in some sectors, already apparent) and, eventually
- Share prices starting to trend higher
Will that all happen by September?
Probably not.
But they don’t all need to happen for the worst of it to be over.
If the Fed stays aggressive with its language and actions, then a lot of bad news will be priced in by then.
What about Australia?
I’m focusing on the US market here because global stock markets march to the beat of the US drum.
When the US sneezes, so the saying goes, the world catches a cold.
But even in Australia, bond yields are down sharply since their June peaks.
This tells you the market thinks inflation is nearly over here too…and that the RBA’s rate rises are working.
The market thinks the RBA will get the cash rate up to around 3.5% by April next year.
All I can say is good luck with that!
In early July, the Aussie 10-year bond yield was around 3.4%, down significantly from its mid-June peak of 4.2%.
That tells you the long-term bond market anticipates lower growth and inflation.
If the market sees a slowdown taking place already…I can’t see the cash rate going all the way to 3.5% by April next year.
That said…
Australia is in a strong position — and you are too if you’re willing to see the big picture…and act accordingly
Australia is far better placed than the US to deal with this bear market…and come out strong on the other side.
In general, the Aussie market saw very little speculative excesses following the post-COVID bout of stimulus.
I mean, the ASX 200 barely got above its February 2020 high. It’s now trading around 10% below that high.
The US, on the other hand, surged well above its pre-COVID peak.
You can see below the relative performance of the ASX 200 (red line), the S&P 500 (green), and the NASDAQ 100 (blue) since the February 2020 highs.
The NASDAQ and the S&P 500 hugely outperformed the Aussie market:
Source: Optuma
But now, with interest rates rising and quantitative tightening underway, the speculative bubble is bursting.
I would argue there’s no such bubble to burst in Australia.
It’s like back in the early 2000s…
The NASDAQ fell 83%, the S&P 500 50%, while the ASX 200 declined just 23%.
The bigger the bubble, the bigger the bust. It’s pretty simple, really.
And then there are the longer-term fundamentals.
In a bear market, I get that no one cares about long-term fundamentals.
The only focus for investors is central banks tightening and draining liquidity.
Fair enough.
But there will come a point in the next few months when central banks realise they’ve done too much.
They’ll take their foot off the brake.
The market will again focus on longer-term fundamentals…unconstrained by short-term interest rate and liquidity concerns.
And it’s those fundamentals that tell me you should be very bullish on Australia in the years to come.
Australia’s next ‘China’
In the early 2000s, we had the rise of China underpinning our growth.
Over the next 5–10 years, it will be the ‘green revolution’, but not in the way you think.
Let me explain…
A few months ago, a fund manager friend sent me a report from the Manhattan Institute titled ‘Mines, Minerals, and “Green” Energy: A Reality Check’.
While it was published back in July 2020, the implications for the next decade or so are immense.
Here’s the key takeaway (emphasis added):
‘Compared with hydrocarbons, green machines [solar and wind farms] entail, on average, a 10-fold increase in the quantities of materials extracted and processed to produce the same amount of energy…
‘This means that any significant expansion of today’s modest level of green energy—currently less than 4% of the country’s total consumption (versus 56% from oil and gas)—will create an unprecedented increase in global mining for needed minerals…
‘For example, building a single 100-MW wind farm—never mind thousands of them—requires some 30,000 tons of iron ore and 50,000 tons of concrete, as well as 900 tons of nonrecyclable plastics for the huge blades.’
Look…I think the whole renewable economy thing is a pipedream, at least in the time frames the politicians are promising.
But like it or not…elected politicians are going to pump trillions, here and around the world, into ‘greening’ the economy…whether it supplies reliable energy or not.
As the above excerpts highlight, this is a hugely commodity-intensive process.
At the same time, the world will still need fossil fuels to power the process…as well as produce reliable energy for decades to come.
These are very strong long-term fundamentals for Aussie resources.
But in the short term, the market will focus on liquidity issues and interest rates, not longer-term fundamentals.
As central banks push the world toward recession, commodity prices will suffer.
But this short-term dynamic presents a very
compelling long-term opportunity for you
If you’re patient, you’ll do very well from this trend in the years ahead.
That’s because Australia is very well placed to supply these commodities.
This green energy revolution is Australia’s ‘next China’.
It will underpin our national income, sustain economic growth, and prevent the housing bubble from bursting.
I’m not saying housing won’t lose some air thanks to interest rate rises.
But central banks will crush demand with their rates rises this year, setting the scene for rate cuts in 2023.
I submit that Aussie stocks and housing may correct…
But they will not crash.
And this correction sets you up for some wonderful long-term buying opportunities.
I’m not just talking about the resource stocks exposed to the green energy revolution. There will be a lot of hits and misses in that sector.
I’m talking about stocks in general as new resource-based income powers the Aussie economy in the years to come.
In a moment, I’ll show you how you can get your hands on my report that gives you EIGHT such high-quality stocks to add to your watchlist ahead of this trend.
These are all well managed, dominant, high return on equity businesses that I expect to perform very strongly when the bull market returns.
The bear market has already been brutal to this high-quality cohort, with prices down between 45% and 65% from their peaks.
In short, there’s good long-term value emerging.
But…you must be patient and wait for the right signals before taking a position. I’ll let you know when we get these signals in the months ahead.
For now, I also want to give you some ideas to implement right away.
Three ‘recession survival stocks’ to buy now
The bust will turn into a boom, I’m confident of that.
But the bust will last a while longer, as central banks get inflation under control.
I’m confident they’ll do exactly that.
Which is why I have three stocks for you that I think will benefit from the ‘peak inflation’ trade.
That is, as the economy slows…and inflation and bond yields fall…some stocks will do better than others.
The idea here is that you’re buying a relatively secure income stream (in the form of a dividend yield)…that’ll become relatively more attractive as bond yields fall.
Let me explain…
If a stock has a dividend yield of 5%…and government bonds are 2%…the stock looks attractive even though it’s a higher risk investment.
But if government bonds are 4%, the stock isn’t so attractive.
Why buy a stock with a 5% yield (and the risks that come with it), when you can get a government-backed income of 4%?
In this example, the share price will likely fall, which increases the yield until it looks favourable again.
Now, consider if bond yields fall back to 2%.
The dividend yield of, say, 6% now looks very attractive and the share price will likely move higher to reflect that.
This is a simplified version of what I think will play out over the next few months.
That is, falling bond yields will see capital flow into high yield stocks with relatively secure income streams.
And here are my top three ways to play it…
Bear Market Survival Stock #1:
Aurizon Holdings [ASX:AZJ]
Aurizon is Australia’s largest rail freight company.
At the time of writing (early July), it had a market capitalisation of $6.9 billion…and a share price of $3.75 per share.
Aurizon is the owner of key rail infrastructure that moves critical commodity production to ports around Australia.
Aurizon’s rail assets consist of three separate business units:
- The Central Queensland Coal Network (CQCN),
- Coal, and…
- Bulk
The CQCN is Aurizon’s biggest earner, generating around $850 million in EBITDA (earnings before interest, tax, depreciation, and amortisation) in the 12 months to 30 June 2021.
It consists of 2,670km of rail network, connecting multiple customers from more than 40 mines to five export terminals located at three ports.
The CQCN includes four major coal systems (Moura, Blackwater, Goonyella, and Newlands).
Aurizon owns the physical rail network and provides open access for freight carriers (including its own coal division) to move coal from the mines to the ports.
Around 70% of the coal freight is metallurgical coal (used in steel production), with 30% thermal coal.
The CQCN is a regulated asset, owing to its critical nature and monopoly position.
That means the amount it can charge for access is subject to regulations.
Currently, Aurizon is allowed to earn a 6.3% return on the capital value of the network, up from 5.9% previously.
Aurizon’s Coal division transports coal from all of Australia’s east coast coal mines to ports and domestic end users.
Unlike the CQCN, the coal division primarily generates revenue and earnings from its rolling stock, not the rail lines.
It operates under contract with Australia’s major coal producers.
Aurizon’s Bulk business provides integrated supply chain services, including rail and road transportation, port services, and material handling for a range of mining, metal, industrial, and agricultural customers throughout QLD, NSW, and WA.
Aurizon’s Bulk business includes haulage of a range of bulk commodities such as iron ore, bauxite, alumina, base metals, grain, and livestock.
The recent decision by the Queensland Government to increase royalties has impacted the share price and led to a slight downgrade of earnings estimates for the 2023 and 2024 financial years (FY).
Still, the price looks good here.
Based on these reduced estimates, Aurizon trades on a FY23 price-to-earnings (P/E) multiple of just 12.6 times, and a dividend yield of 5.9%.
For FY24, the forecast P/E is 12.6 times and the prospective dividend yield an even juicer 6.94%.
Look, these aren’t guaranteed yields.
A deeper than expected global recession could cause reduced demand for coal around the world. But at the time of writing, coal prices remain firm despite weakness in a broad range of other commodities.
The longer-term supply/demand dynamics are positive.
But with the stock already down 40% from its 2019 peak, I think a lot of bad news is already priced in. And if bond yields head lower, those yields will start to look very attractive.
Now, this should be enough for you to at least kick start your own research and further due diligence.
Or, by all means, allocate some capital to this stock.
If you want a fuller, more detailed, and ongoing analysis — including future potential sell recommendations — I invite you step inside and try out my newsletter.
Details on that to come.
First, though, the next two survival plays…
Bear Market Survival Stock #2:
Chorus [ASX:CNU]
Chorus is an NZ-based company (listed on the ASX) with a market capitalisation of around NZ$3.3 billion based on an ASX-listed price of around $6.65.
Chorus is a wholesale provider of telecommunication services. It owns the majority of NZ’s telecoms infrastructure.
It split from Telecom NZ (now Spark NZ) in 2011 on the condition of it winning most of the government contracts to build NZ’s Ultra-Fast Broadband network.
Chorus has built around 70% of this network over the past decade.
So, to be clear, it’s an owner of telecommunications infrastructure.
It owns, operates, and maintains exchanges, cabinets, poles, ducts, and fibre and copper wires. It maintains this infrastructure and sells access to a range of retail providers.
It’s a bit like a combination of Telstra and the NBN, in that it owns all the old copper-based network and associated infrastructure as well as a good chunk of the new fibre-based network.
The key reason why I think now is a good time to take a position in Chorus is because it has largely completed its Ultra-Fast Broadband network build.
That means its heavy capital expenditure bill of the past few years will drop considerably, boosting free cash flows.
This gives the company more options to increase shareholder value, as explained in the half-yearly profit result statement to the ASX dated 21 February:
‘With Chorus on the cusp of becoming free cash flow positive and beginning to earn more than it is investing in the network, it has updated dividend guidance for the next three years.
‘Throughout the decade-long fibre build, our shareholders have seen their returns constrained. They endured two years of no dividend payments during the copper pricing review and then the impact of the delayed implementation of the new regulatory framework.
‘The finalisation of crucial inputs for the new regulatory framework, together with the subsequent increase in credit thresholds for Chorus by ratings agencies, means Chorus now can increase returns to shareholders as network investment demands reduce.’
In that ASX release, it also updated its dividend guidance for the next few years:
- FY22: 35 NZ cents per share (4.8% yield)
- FY23: 40 NZ cents per share (5.4% yield)
- FY24: 45 NZ cents per share (6.1% yield)
Again, in an environment of falling bond yields (if I’m right about inflation pressures declining), this is an attractive income stream from a company that owns essential infrastructure.
The risk is obviously a deeper than expected slowdown from tighter monetary policy that could impact dividend guidance in the short term.
Also, Aussie investors have currency risk to consider.
Chorus generates earnings and pays dividends in NZ dollars, so exchange rate movements will impact the translation of these dividends into Aussie dollars.
These risks notwithstanding, I think Chorus is a compelling trade for the rest of this bear market.
Just like with my first play, this is enough for you to go on. But for ongoing advice and analysis on this stock, I invite you to take the next step.
But before that, here’s my third survival play…
Bear Market Survival Stock #3:
iShares Core Composite Bond ETF [ASX:IAF]
As I said at the very start of this report, your aim during this bear phase we’re in is to survive.
There’s no point taking big risks when major indices are all trending lower. Don’t try and swim against the tide.
Your aim should be to take small risks with the prospects of small rewards and limited downside if you get it wrong.
That’s the aim behind the first two recommendations.
This next bear market survival play is even more conservative.
The iShares Core Composite Bond ETF is one of the largest bond ETFs in Australia, with assets of $1.7 billion.
The fund’s objective is to provide investors with a similar performance to the Bloomberg AusBond Composite Index before fees and expenses.
It does so by investing mainly in federal and state government bonds, with some exposure to sovereign and corporate debt.
The management fee is 0.15% per annum and the buy/sell spread (effectively, the cost incurred when buying and selling) is around 0.05%.
More than 70% of the fund is invested in AAA-rated securities, so it’s a relatively low-risk investment. The fund invests in a combination of maturities, producing a running yield of 2.82% (as at 5 July).
Now, a yield of 2.8% isn’t all that exciting, is it?
But this investment idea isn’t about the income stream. It’s a bet that (after a period of massive underperformance) bonds will do better than the stock market over the next 4–6 months.
In other words, it’s a bear market investment. It’s designed to help you survive this difficult short-term period.
Of course, please understand…
I offer these ideas in good faith that you will conduct any further, necessary due diligence to make sure you are comfortable before you invest any capital.
As conservative as these investments may be, no investment is without risk.
I could be wrong in my outlook about the length of this bear market. I could be wrong in estimation for interest rates. And you should be aware that future dividends are never guaranteed.
As long you understand that…there you have it.
My three Bear Market Survival Stocks, yours to investigate and act on, free of charge.
But really, these three recommendations are just the start.
As I’ve tried to make the case today, this bear market will end.
And when it does, I believe Australia will be in one of the strongest positions in the world thanks to our abundance of resources.
Resources CRITICAL to the inevitable transition to green forms of energy, fuel, and technology.
But the time to prepare for that is not when it happens…BUT RIGHT NOW.
To that end, I’ve also prepared a special report detailing eight stocks to learn about and be ready to buy when the time comes.
Like I said, these are high quality, highly profitable stocks that have already taken a big hit during this downturn.
Some have lost up to 50% of their value since their share prices peaked.
Amazing value is now beginning to emerge…and I want you to be ready to buy when the time is right.
Again, I’m not saying I can pick the bottom.
But I do want you to be able to pick up some quality companies during the bear phase…and hold for the inevitable return of the bull market.
You can access this briefing, which forms the second part of the bear market survival plan, by taking a look at my newsletter, covered by a trial period for the first 30 days.
It’s called…
Fat Tail Investment Advisory
Every month, you’ll get my latest comprehensive overview of the market in an exclusive report.
In this briefing, you’ll also get my analysis on individual securities.
You’ll know which Australian stocks I think are currently undervalued — which are overpriced — and why.
You’ll learn that you don’t have to take crazy risks to achieve success. Calculated risk-taking is what’s needed at this time.
If you want to be a successful investor, you need to be smart…no matter what’s happening in the market.
Being a student of the financial markets for more than 20 years, I consider myself adept at deciphering price signals in a world of mainstream noise…and leading you to exciting investment opportunities many would rule out.
More importantly for many Investment Advisory members — I provide a truly Australian-focused analysis, like the one I’ve talked about in this report.
The aim of this analysis is to help you invest as soundly as possible, using rational and contrarian thought processes.
I know, I know…everyone is a ‘contrarian’ these days.
But I’d wager most are not. Not when it comes down to it.
It takes a certain kind of person to recognise when something is truly showing value…and buy when the rest of the market hates it.
Like I did with coal and oil and gas stocks in 2021, when everyone else thought the world was going green.
Or recommending bank stocks in September 2020 while the economy was reeling from the COVID shock.
In our group of like-minded investors, that’s what we do.
We think for ourselves. We take responsibility for our own choices and actions. And put the wellbeing of our families first and foremost.
Connecting our group is our monthly newsletter.
Your monthly communiques also have my full portfolio of current buy, sell, and hold recommendations — for you to incorporate into your financial plan as you see fit.
Also, I’ll send you a private email (usually weekly) to keep you posted on the progress of the stocks in the Investment Advisory portfolio.
I’ll tell you whether I think you should buy more, sell, adjust the portfolio weighting, or hold the position.
In this email, I’ll also pass on any time-sensitive tips, plus reveal details of other investments that are on my value radar.
Remember, you have the next 30 days to see if our community and my ongoing research and advice are right for you.
So with that mind…
How will your membership work?
First things first, let me tell you that the regular price for an annual membership is $499.
If you’re wondering whether it’s worth that kind of outlay, let me just ask you a question…
What would you pay right now to learn about a strategy that could save and make you tens of thousands of dollars over the next five, 10, or 20 years?
A serious, long-term strategy…especially handy if you’re managing your own super or retirement fund…that aims to buy assets of great value when few others want them…and sell them when others will pay any price?
When I talk about how to survive and prosper in this bear phase that we’re in, the operative word is ‘survive’.
If you can survive the next 3–6 months, your kids and family are going to be very thankful.
There are a lot of people who simply don’t understand the big picture forces at play in the global financial system right now.
Many will make rash — and ultimately harmful — decisions as this bear market plays out.
They’re going to lose a lot of capital.
The most important thing you can get out of this presentation is to understand where we are in the bigger picture.
This is very difficult to do when you’re down on the ground on a daily basis, bombarded with headlines and information.
It’s easy to get swept up in all that information, and not even think about the bigger picture of where we are.
But what if I could show you?
And what if I could show you a sound investment blueprint that could help set up your portfolio to take advantage of the months and years that follow…so you can really enjoy life down the track?
Would it be worth $499 then?
I think so.
But I realise that we are in the midst of an ugly bear market…and perhaps you may not know me, especially if you are new to Fat Tail Investment Research.
So here’s what I’m going to do…
To get the full eight-stock watchlist for the end of the bear…and the start of the bull…I’ll make you a very special deal…
Practically free, for the next 30 days…
If you decide to begin a 30-day, no obligation trial today, you can do so for just $1 now.
That’s right…one dollar.
To join, you can just pay $1 right now.
You’ll have 30 days to look around our members-only website and go through all of my research, including my ‘eight stocks to watch’ report, plus my archive of monthly issues, old and new…and full access to all current open investment recommendations.
At the end of the 30-day $1 trial period…and only if you decide to stay with us…we’ll charge you your $499 subscription fee, and your subscription will officially start.
In fact, scratch that…we’ll even give you a FURTHER 30% reduction on that price.
Meaning, you’ll pay a special introductory rate of just $349 for your first year of your Fat Tail Investment Advisory membership.
But ONLY after you’ve satisfied yourself that it’s right for you with your 30-day $1 trial.
How good is this deal?
Well, just consider what $349 buys you in the investment world today…
You might be able to get a few sessions with a Certified Financial Planner…or a few meetings with an accountant.
But for the same amount, a whole year of access to an independent investment community of like-mind individuals all trying to achieve the same thing as you…plus access to everything I’ve discussed today.
And better still…you can ‘try before you commit’ for the next 30 days for just $1 outlay today.
For the price of a 7-Eleven coffee, you’ll get a secure passcode to access our website area for the next 30 days.
And if you decide it’s not for you in that time. No problem. Just let us know, and we’ll deactivate your passcode.
We’ll only charge your credit card $1. You’ll never have to pay a single cent more after that.
Again, we want as many people as possible to understand the opportunities available to them in this market today.
And this ‘$1 trial deal’ of our most comprehensive and long-term-focused advisory letter is the best way we can think of to do that.
In fact, I’ve no doubt it is the most inclusive deal we’ve ever offered.
To take advantage immediately, click here.
Thank you for your time, and whatever you decide, I wish you all the best for the future.
Cheers,
 |
Greg Canavan,
Editor, Fat Tail Investment Advisory
