Chris’ note: With inflation on the rise, many fear a sharp dollar decline. That’s why this week at the Cut, we’re sharing tips from our colleagues on how to best protect your wealth.
Today, we’re handing things over to Grant Wasylik. He’s Palm Beach Research Group’s senior investment analyst. He’s worked in the investment industry for almost two decades – and has seen his fair share of booms and busts.
Below, he shares a strategy that’s proven to protect your wealth from a pandemic… inflation… economic meltdowns… you name it.
Read on for the full story.
Over the last 15 months, COVID-19 has caused historic volatility. We’ve seen the market crash as much as 34% and rally as high as 89% since March 2020.
And now, there’s a new threat on the horizon: inflation.
Earlier this month, the S&P 500, Nasdaq, and Dow fell as much as 5% due to concerns over rising consumer prices, which jumped 4.2% in the last 12 months. It’s the biggest increase since September 2008.
Generally, when inflation rises, markets fall due to increased borrowing costs combined with an increase in the price of goods and labor.
These drops lead to market uncertainty, and most people can’t stomach that type of volatility. They usually buy stocks at the top on FOMO (fear of missing out)… and sell at the bottom on FUD (fear, uncertainty, and doubt)…
Just like we saw earlier this month.
That’s a recipe for losing money, and many sleepless nights.
But what if I told you there’s a strategy that protects your portfolio during crashes and outperforms during rallies…
Or that there are stocks that don’t drop more than 10% in bad years (or any year for that matter)… And that return over 12x the market over the long term.
A strategy like that would insulate your portfolio from events like a pandemic, inflation, economic meltdown, or social unrest… and make you double-digit gains when the market rebounds.
You wouldn’t fall victim to FOMO or FUD, and you’d be able to sleep at night.
Today, I’ll tell you what that strategy is – and how you can profit from it.
The Untouchables Strategy
At Palm Beach Research Group, we call it the “Untouchables” strategy for two reasons…
First, you’ll never want to touch these stocks in your portfolio. And second, nothing can touch their performance.
Not only do our Untouchable stocks outperform the market over the long term, but they’re also unaffected by extreme drops like the ones we saw when the market ended the year down 37% in 2008 and 22% in 2002.
To find these exceptional stocks, we studied the two major bear markets over the last two decades…
And we combed through 19,000-plus publicly traded stocks in North America using multiple data subscriptions that cost over $50,000 per year combined.
What was the goal? To spot stocks that won’t suffer during significant drawdowns in the market while also easily outperforming over the long term.
In the end, only 13 stocks made the cut.
These “bulletproof” investments stayed afloat even in the worst downturns. The Untouchables strategy cranked out positive returns in the worst calendar years over the last two decades (and all 21 calendar years).
Take a look at how our strategy performed:
It was up 4% in 2000 when the S&P 500 was down 9.1%.
It was up 1% in 2001 when the S&P 500 was down 11.9%.
It was up 6% in 2002 when the S&P 500 was down 22.1%.
It was up 9% in 2008 when the S&P 500 was down 37%.
It was up 6% in 2018 when the S&P 500 was down 4.4%.
But what about making money over the long run?
As you can see below, the Untouchables not only outperformed the market… they also outperformed investing legends like Warren Buffett, Carl Icahn, and Prem Watsa.
|2000-2020 Strategy Comparison (Annualized Returns)|
|Broad Market Indices|
|Dow Jones Industrial Average||7.3%|
|Hedge Fund Indices|
|HFRI Fund of Funds Composite||3.7%|
|5-Star Investors (Publicly Traded Vehicles)|
|Berkshire Hathaway Class A (Warren Buffett)||9.1%|
|Icahn Enterprises (Carl Icahn)||14.4%|
|Fairfax Financial (Prem Watsa)||7.6%|
|Loews (Tisch Family)||8.2%|
|Fidelity Contrafund (Will Danoff)||9.5%|
|Average Investor (2001-2020)|
|The “Average Joe” (per JPMorgan Asset Management)||2.9%|
Over the last 21 years, the S&P 500 had a cumulative total return of 283%. Meanwhile, the average Untouchable returned 3,419% – more than 12x the market – over the same span.
That’s why you’ll never want to touch these stocks.
Bulletproof Your Portfolio With Untouchables
Over the past year, we’ve seen how a pandemic crisis can roil the markets. And there’s more uncertainty ahead with fears of rising inflation.
So there’s no better time to bulletproof your portfolio with Untouchables.
Here’s Daily editor Teeka Tiwari…
This ignored class of stocks not only delivers steady gains… they’re also bulletproof. Since 2000, the Untouchables haven’t seen double-digit losses in any year… Including during the Great Recession of 2008. In short, the Untouchables are safe and they can deliver 12x more gains.
If you want to find Untouchable stocks yourself, they share five key traits:
They have simple business models.
They pay dividends.
They have ultra-low volatility.
They produce positive returns when the broader market declines.
And they outperform the market over the long term.
One example of an Untouchable is Johnson & Johnson (JNJ).
It’s broadly diversified through three key business lines: consumer products, pharmaceuticals, and medical devices. And it pays a 2.5% yield.
On top of that, the company now trades near its all-time high of $173.65… up more than 55% from its March 2020 pandemic bottom.
And as an Untouchable, the company has a history of outperforming when the broader market falls…
In 2000 and 2001, JNJ ended the year 14% higher, while the S&P 500 ended the year down 9% and 12%, respectively…
And in 2008, when the S&P 500 ended the year down nearly 40%, JNJ was only down about 8%.
If history is any guide, Untouchables like JNJ are the types of stocks that’ll do well no matter where the market is headed… even during the kind of volatility we’ve seen the last month.
To sleep better at night, make sure you bulletproof your portfolio with Untouchables. They’ll profit in the good times… and protect you in the bad.
Analyst, Palm Beach Daily
P.S. For years, the rich have been getting richer with Untouchable stocks… even during some of the volatile markets in recent history.
That’s because Untouchables not only outperform when the market is up… they often hold their own and soar as the broader market falls.
As Teeka puts it, Untouchables let you “mint money while the sun is shining, and the markets are soaring… without losing your shirt when a storm hits.”
But Teeka also predicts that fewer than one in 1,000 American families even know what they are.
That’s why he’s put together a presentation explaining how you can use Untouchables to survive – and thrive – no matter which way the market is headed… Go here to learn more.