A significant down day for stocks... More troubling economic signals... It's early August all over again... My trip to Rite Aid... Going full circle... From big winner to 'zombie' and bankrupt...
 Hello, September...
You brought with you the most significant down day for the major U.S. stock indexes since the mini panic a month ago... The benchmark S&P 500 Index was off about 2%, the tech-heavy Nasdaq Composite Index was 3% lower, and the Dow Jones Industrial Average was down 1.5%. Small-cap stocks, as represented by the Russell 2000 Index, finished off the most today, down 3.1.% What some call the market's "fear gauge" – the CBOE Volatility Index ("VIX") – spiked to above 20, its highest level since the backside of the mini panic of early August. The calendar has turned a page and brought with it more volatility. This is a possibility we've been writing about over the past few weeks (as concerning economic data has accumulated) and something that folks like Ten Stock Trader editor Greg Diamond have been expecting. In fact, Greg warned of a "September surprise" in a new free presentation he debuted last week. Without giving away too much, today's action – and more like it – is precisely what Greg had in mind. You can check out all the details here... What's the why?... Longtime readers know I (Corey McLaughlin) hesitate to attribute broad market performance to "just one thing." People (and computers) make millions of buying and selling decisions in the market for all kinds of reasons. However, we do like to point out when we see a pattern developing that appears to be driving enough action or sentiment. We'll cite today's top headline on CNBC, which said stocks were falling to start September "as slowdown fears pick up again." Looks like it. You may recall that a few weeks ago, I wrote about troubling signs from a widely followed leading indicator of manufacturing activity in the U.S.: S&P Global's Purchasing Managers' Index ("PMI"), which showed numbers consistent with a "contraction" or a recession. This appeared to me to be a catalyst for a down day for stocks... And the data was consistent not only with signs of a recession, but even with the great financial crisis in one particular way. (Devoted readers may recall that this was when we wrote "ruh-roh" and started our whole Scooby-Doo conversation in the mailbag.) Today was more of the same... This morning, the Institute for Supply Management ("ISM") released another look at manufacturing, in which only 47.2% of those surveyed reported "expansion" for the month of August. "Contraction territory," said Timothy Fiore, chair of the ISM Manufacturing Business Survey Committee, which publishes the research. He noted the contraction wasn't as slow as July, but that "demand continues to be weak [and] output declined..." Ruh-roh. There's also the not-so-insignificant matter that the Bank of Japan is once again raising the specter of an interest-rate hike. Per Bloomberg... Bank of Japan Governor Kazuo Ueda reiterated Tuesday that the central bank will continue to raise interest rates if the economy and prices perform as expected by the BOJ, a comment that supported further gains in the yen. The Japanese central bank, which has kept rates negative for years, appeared to pump the brakes on the idea just a month ago. As you may recall, its stock market sold off by about 12% in a day in its worst one-day performance since Black Monday in 1987. That was a catalyst for last month's panic in U.S. stocks as well... due to concerns about global investors who depended on a weak yen for "carry" trades. In other words, if you're concerned about the relationship between the yen and the U.S. dollar, the Bank of Japan is telling you it's time to pay attention again. It's looking almost like early August all over again... Two months in a row is interesting. Soon enough, you might have a pattern. And only maybe a year from now will the "official" economists call it a recession... Looking ahead, Uncle Sam reports his next "nonfarm" payrolls report on Friday. Should it "surprise to the upside" with a higher unemployment rate, stocks' recent "bad news is bad news" theme should continue... Alternatively, a not-so-bad jobs report could ease some fears about the economy – for a time, at least. Then, later this month, the Federal Reserve meets to decide on its benchmark lending rate. The market is convinced the central bank will lower the federal-funds rate, but traders and investors are weighing whether the Fed will do it by 25 or 50 basis points. We're getting to the point where the bigger the monetary-policy "rescue" that is deemed "needed," the more volatile the market can become. A larger "cut," or the idea of one, from the Fed could spook investors in the short term. Moving on, we have a follow-up on dollar stores... We wrote last week about the latest quarterly earnings report from Dollar General (DG). If you missed it, the company said its profits fell more than 20% year over year... and while it was seeing more traffic to its stores, people were spending less. Here's a note we received in response from subscriber Gerald B., with thoughts on what might be going on with the business... I managed retail stores my whole work career and while it wasn't Dollar General (it was much larger, actually) I would bet the house that their largest problem right now is theft. With just one or two employees in every store nowadays for much of the day theft has to be eating their lunch. But they can't bring it up while discussing quarterly results or it will only increase in the future. I think they are doomed due to the level of dishonesty that has occurred in this country over my lifetime. I have the craziest story in response to this, Gerald. Below is a picture I took at the front checkout register of a retail store just yesterday. It wasn't at a Dollar General, but the combo general store/pharmacy Rite Aid... 
We usually go to a nearby Rite Aid for the pharmacy, but the wife asked me to pick up a few routine items on Labor Day evening. The store was empty, except for what appeared to be an employee in the distance of the aisles... I like to live honestly, so I rang the bell. As promised, an employee "appeared" like magic after a brief wait. But we certainly see your point about the likelihood of theft, especially at understaffed stores all over America. We've discussed theft in these pages before... You're right, you're probably not likely to hear about "theft" much on corporate earnings calls... at least by that name. However, we did see theft discussed by companies like Target (TGT), Dick's Sporting Goods (DKS), and Dollar General competitor Dollar Tree (DLTR), which said underwear was going missing. If you are interested in tracking this, look for a code phrase called "inventory shrink." As we wrote last year... "Inventory shrink" is corporate speak for items that go missing... It could be due to theft, fraud, accounting errors, or damage, like falling off the back of a truck or something. But let's be real... Inventory shrink isn't surging across the retail industry because everyone suddenly forgot to close the truck doors. That said, Rite Aid management might not have cared what I did yesterday... The business filed for bankruptcy last year and, last month, announced it was closing 44 more stores as it worked through the bankruptcy process. This follows five other rounds of store closures stretching back to 2023. Rite Aid is not what it used to be... Longtime subscribers may recall Stansberry Research's history with the company... A Rite Aid convertible bond we recommended back in the credit-cycle bust of 2008 to 2009 remains in the Stansberry Research Top 10 all-time returning positions you can see at the bottom of our daily Digest e-mail. Back then, that 8.5% bond – bought in a time of fear at about a third of its par value – was an opportunity in a "recovering" business, recommended by analyst Mike Williams in the True Income publication. (Today, this is the kind of strategy we offer in Stansberry's Credit Opportunities.) In 2009, Rite Aid was the third-largest drugstore chain in America and the largest on the East Coast, with almost 5,000 stores and $26 billion in annual sales. Investors' fear about the company presented an opportunity in a bond due to mature in 2015. As analyst Mike Williams wrote way back then... Rite Aid came back from the brink of bankruptcy in 1999. A new and experienced management team has put this company back on track. The company borrowed more money to buy the Eckerd chain in 2007, so it is leveraged. But it has the right management and is in a growing industry. The integration process is now complete and Rite Aid is making great progress... Rite Aid is on the road to recovery. It is generating plenty of cash to pay us and is doing well in this terrible retail environment. Same-store sales in January 2009 increased again, like they have for 11 out of the last 13 months. This recommendation worked out fantastically. The position – in a corporate bond! – returned 733% in almost five years, twice the total return originally projected in the recommendation. That said, folks were right to worry about the company... They just got the timing wrong. Things have gotten messy over the past nine years... The decline started shortly after that 2015 bond matured, actually. Notably, a deal for competitor Walgreens Boots Alliance (WBA) to take over Rite Aid outright in 2015 and 2016 ran into trouble because of Federal Trade Commission concerns. Walgreens had agreed to acquire Rite Aid and its 4,600 U.S. stores, but after 15 months of negotiations, it didn't work out as initially envisioned. Instead of buying all of Rite Aid, Walgreens took about 2,000 Rite Aid locations... leaving Rite Aid with barely half of its store count. So a decade after growing with its own acquisitions, Rite Aid's footprint shrunk dramatically because of another one gone bad. When the original acquisition framework fell through, Rite Aid stock tumbled so much that investors who felt they were misled about the likelihood of a merger filed a class-action lawsuit against Walgreens. (Walgreens later agreed to a roughly $192 million settlement.) Rite Aid last turned a profit in 2018. That's when another competitor, grocery and pharmacy chain Albertsons, reached a deal to buy the rest of Rite Aid's stores. At that point, our team closed another bond recommendation on the company because the deal added more risk for Rite Aid. Then that deal fell through, too... Rite Aid ran a $425 million free cash flow deficit in 2019, and it was paying around $230 million per year for interest on its debt. In 2020, our Bill McGilton wrote about Rite Aid as a "zombie" company – meaning it couldn't even afford to pay interest on its debt. He also disputed the idea some had that another takeover offer would come for Rite Aid. As Bill wrote... In this environment, it doesn't seem like the major drug chains are planning a takeover to add more stores any time soon – especially stores of a company with a declining business and huge debt. Rite Aid has $6.8 billion in total debt and is burning through cash. Any potential suitor must be big enough to (and willing to) take on that debt and turn the company around. That's not going to be easy. Rite Aid hasn't been able to fix its business in years and there's no indication that it can ever fix it. And with all the debt, it's running out of time. Bill said, "Rite Aid's capital structure is unsustainable." Sure enough, now Rite Aid is in bankruptcy. As Stansberry's Credit Opportunities editor Mike DiBiase told Digest readers in 2023, the drugstore chain "finally succumbed to its debt load." Shares of the bankrupt company now trade for less than a penny under the ticker RADCQ, down from Rite Aid's all-time high of $1,000 per share in January 1999... And I may need to find another pharmacy soon. | | | | A 'Very Important' Week for Stocks "This week is going to be very important" for the market, as Ten Stock Trader editor Greg Diamond shares in his free Diamond's Edge video this week. Greg runs through possible fundamental catalysts and the path ahead for U.S. stocks through Friday... 
As a Digest reader, you get the first look at Greg's new Diamond's Edge video each Monday. (Since we were off yesterday, this week it comes to you on a Tuesday.) For more free videos, check out our YouTube page... And if you're interested in more research and analysis from Greg, click here to watch his new free presentation on the "surprise" that could be in store for the market starting right about now. | | | | |
| Recommended Links: | |  Here's What You Missed Last Week The man who called the 2020 and 2022 crashes explained why a surprising, upcoming twist to the Harris-Trump election could double your money 10 different times – as he showed during the 2020 election year. Plus, he shared his terrifying blueprint of exactly where stocks could go next and why it could be "lights out" for one of the candidates. Click here to learn more. | |
 Day 1 for President Kamala Harris If elected, Kamala Harris has pledged that she will "take on price gouging and bring down costs" on Day 1 of her presidency. Yet throughout history, the same "strategy" she's planning to deploy has led to skyrocketing inflation... food and commodity shortages... and, in the worst cases, widespread famine, starvation, and death. Learn how to prepare and protect yourself now. | | |
New 52-week highs (as of 8/30/24): Automatic Data Processing (ADP), Altius Minerals (ALS.TO), Alpha Architect 1-3 Month Box Fund (BOXX), Berkshire Hathaway (BRK-B), Brown & Brown (BRO), Colgate-Palmolive (CL), Clorox (CLX), Cintas (CTAS), Commvault Systems (CVLT), CyberArk Software (CYBR), Direxion Daily Real Estate Bull 3X Shares (DRN), Electronic Arts (EA), Comfort Systems USA (FIX), iShares iBonds December 2024 Term Treasury Fund (IBTE), Intercontinental Exchange (ICE), Intuitive Surgical (ISRG), iShares U.S. Aerospace & Defense Fund (ITA), JPMorgan Chase (JPM), Coca-Cola (KO), Linde (LIN), Eli Lilly (LLY), Lockheed Martin (LMT), Mueller Industries (MLI), Altria (MO), VanEck Morningstar Wide Moat Fund (MOAT), Motorola Solutions (MSI), Newmont (NEM), Northrop Grumman (NOC), Novartis (NVS), Omega Healthcare Investors (OHI), Invesco High Yield Equity Dividend Achievers Fund (PEY), Procter & Gamble (PG), Ryder System (R), RadNet (RDNT), Rithm Capital (RITM), ResMed (RMD), Construction Partners (ROAD), Sprouts Farmers Market (SFM), Sherwin-Williams (SHW), S&P Global (SPGI), SPDR Portfolio S&P 500 Value Fund (SPYV), Stryker (SYK), Trane Technologies (TT), Texas Instruments (TXN), ProShares Ultra Financials (UYG), Veralto (VLTO), W.R. Berkley (WRB), Utilities Select Sector SPDR Fund (XLU), and Health Care Select Sector SPDR Fund (XLV). We're back from Labor Day weekend... In today's mailbag, feedback on Dan Ferris' essay from Friday. As always, send your comments, questions, and observations to feedback@stansberryresearch.com. "Dear Dan, In regards to your Friday Digest I would add one more thing about the moral failing of gambling – it's now public policy ushered in by tax-hungry state legislators. Further, the ease of gambling either on investing markets or sports is made enormously easy by the advent of mobile apps. I am about your age, and for a good chunk of my life you had to know a bookie to place a bet, or a stock broker to buy shares on an exchange. This made it not so easy to bet, and you could not be as impulsive in the stock market." – Subscriber Bob L. All the best, Corey McLaughlin
Baltimore, Maryland
September 3, 2024
Stansberry Research Top 10 Open Recommendations Top 10 highest-returning open stock positions across all Stansberry Research portfolios. Returns represent the total return from the initial recommendation. | Investment | Buy Date | Return | Publication | Analyst | MSFT
Microsoft | 11/11/10 | 1,368.9% | Retirement Millionaire | Doc | MSFT
Microsoft | 02/10/12 | 1,330.0% | Stansberry's Investment Advisory | Porter | ADP
Automatic Data Processing | 10/09/08 | 995.3% | Extreme Value | Ferris | WRB
W.R. Berkley | 03/16/12 | 825.2% | Stansberry's Investment Advisory | Porter | BRK.B
Berkshire Hathaway | 04/01/09 | 743.8% | Retirement Millionaire | Doc | HSY
Hershey | 12/07/07 | 480.6% | Stansberry's Investment Advisory | Porter | TT
Trane Technologies | 04/12/18 | 476.7% | Retirement Millionaire | Doc | AFG
American Financial | 10/12/12 | 463.9% | Stansberry's Investment Advisory | Porter | NVO
Novo Nordisk | 12/05/19 | 404.0% | Stansberry's Investment Advisory | Gula | TTD
The Trade Desk | 10/17/19 | 391.5% | Stansberry Innovations Report | Engel | Please note: Securities appearing in the Top 10 are not necessarily recommended buys at current prices. The list reflects the best-performing positions currently in the model portfolio of any Stansberry Research publication. The buy date reflects when the editor recommended the investment in the listed publication, and the return shows its performance since that date. To learn if a security is still a recommended buy today, you must be a subscriber to that publication and refer to the most recent portfolio.
| Top 10 Totals | | 5 | Stansberry's Investment Advisory | Porter/Gula | | 3 | Retirement Millionaire | Doc | | 1 | Extreme Value | Ferris | | 1 | Stansberry Innovations Report | Engel |
Top 5 Crypto Capital Open Recommendations Top 5 highest-returning open positions in the Crypto Capital model portfolio | Investment | Buy Date | Return | Publication | Analyst | wstETH
Wrapped Staked Ethereum | 12/07/18 | 2,291.8% | Crypto Capital | Wade | BTC/USD
Bitcoin | 11/27/18 | 1,472.7% | Crypto Capital | Wade | ONE/USD
Harmony | 12/16/19 | 1,120.0% | Crypto Capital | Wade | MATIC/USD
Polygon | 02/25/21 | 729.0% | Crypto Capital | Wade | OPN
OPEN Ticketing Ecosystem | 02/21/23 | 279.3% | Crypto Capital | Wade | Please note: Securities appearing in the Top 5 are not necessarily recommended buys at current prices. The list reflects the best-performing positions currently in the Crypto Capital model portfolio. The buy date reflects when the recommendation was made, and the return shows its performance since that date. To learn if it's still a recommended buy today, you must be a subscriber and refer to the most recent portfolio.
Stansberry Research Hall of Fame Top 10 all-time, highest-returning closed positions across all Stansberry portfolios | Investment | Symbol | Duration | Gain | Publication | Analyst | | Nvidia^* | NVDA | 5.96 years | 1,466% | Venture Tech. | Lashmet | | Microsoft^ | MSFT | 12.74 years | 1,185% | Retirement Millionaire | Doc | | Inovio Pharma.^ | INO | 1.01 years | 1,139% | Venture Tech. | Lashmet | | Seabridge Gold^ | SA | 4.20 years | 995% | Sjug Conf. | Sjuggerud | | Nvidia^* | NVDA | 4.12 years | 777% | Venture Tech. | Lashmet | | Intellia Therapeutics | NTLA | 1.95 years | 775% | Amer. Moonshots | Root | | Rite Aid 8.5% bond | | 4.97 years | 773% | True Income | Williams | | PNC Warrants | PNC-WS | 6.16 years | 706% | True Wealth Systems | Sjuggerud | | Maxar Technologies^ | MAXR | 1.90 years | 691% | Venture Tech. | Lashmet | | Silvergate Capital | SI | 1.95 years | 681% | Amer. Moonshots | Root | ^ These gains occurred with a partial position in the respective stocks.
* The two partial positions in Nvidia were part of a single recommendation. Editor Dave Lashmet closed the first leg of the position in November 2016 for a gain of about 108%. Then, he closed the second leg in July 2020 for a 777% return. And finally, in May 2022, he booked a 1,466% return on the final leg. Subscribers who followed his advice on Nvidia could've recorded a total weighted average gain of more than 600%.
Stansberry Research Crypto Hall of Fame Top 5 highest-returning closed positions in the Crypto Capital model portfolio | Investment | Symbol | Duration | Gain | Publication | Analyst | | Band Protocol | BAND/USD | 0.31 years | 1,169% | Crypto Capital | Wade | | Terra | LUNA/USD | 0.41 years | 1,166% | Crypto Capital | Wade | | Polymesh | POLYX/USD | 3.84 years | 1,157% | Crypto Capital | Wade | | Frontier | FRONT/USD | 0.09 years | 979% | Crypto Capital | Wade | | Binance Coin | BNB/USD | 1.78 years | 963% | Crypto Capital | Wade | | 
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