What Doc’s ‘Deeply Concerned’ About in the Market

A warning from Dr. David ‘Doc’ Eifrig… The ‘ticking time bomb’ in millions of Americans’ portfolios… More problems for Boeing… The stock still isn’t cheap… Our Stansberry Research conference is days away… Livestream Pass details here …

Dr. David ‘Doc’ Eifrig is no fearmonger…

Anyone who has heard from Doc over the years at Stansberry Research – either in his Retirement Millionaire or Income Intelligence newsletters or his Retirement Trader advisory, or listened to him speak at our annual conferences – understands what we’re saying…

As you likely know, Doc gets his nickname from his medical training as a board-eligible eye surgeon, which came after a storied Wall Street career. He’s known for his confidence in great American companies, and he once likened making financial prognostications to the challenge of predicting when a volcano would erupt. As he wrote in a 2022 Digest…

You don’t know what will happen. They may explode. They may thrive… You just don’t know. And you can do all the work in the world to figure it out…

So, when Doc just said that he’s “deeply concerned” about something in the market today, particularly for those who are near or in retirement, I (Corey McLaughlin) wanted Digest readers to hear about it.

This isn’t ‘safe’…

In brief, Doc sees red flags in a way of investing that millions of Americans rely on as a “safe” thing to do with their money.

Rather… Doc says it’s the opposite of what you should be doing right now.

You’ve heard us warn about buying certain expensive mega-cap tech stocks today. Instead, we repeatedly suggest buying shares of high-quality companies trading at reasonable valuations… and owning inflation protection via well-chosen stocks and “hard assets” like gold…

Doc’s message right now – and the strategy he’s discussing that he uses for his own money – is another approach that’s worth hearing out. I don’t want to spoil it, but this warning has to do with a specific behavior he is seeing that is typically a sign of trouble ahead for the broad market.

For the full details, I urge you to check out this new, free presentation from Doc right now. Here’s a snippet about why he’s sharing this message…

Already, the retirement situation in this country is tragically fragile… Inflation has crushed the dollar’s value… And retirees are worried they’ll run out of money. Worse, they live in constant fear of everything getting wiped out.

And you know what? They’re right. That’s exactly what I think could happen.

This warning reminds me of Doc’s call – in the summer of 2021 – about the likely hit the conventional “60/40 stock-bond portfolio” would endure ahead as inflation (and then interest rates) pushed higher. The only direction for prices to go was down, he warned.

That is one of the most important messages I’ve seen us send subscribers in the past five years. The 60/40 portfolio – a bedrock of so many folks’ retirement accounts – had a disastrous year in 2022… its worst return in 100 years.

But if you listened to Doc’s warning in 2021, you could have been spared of the damage. Not only that, Doc told folks the better way to allocate their money to grow or protect their wealth. What he’s talking about now could help you avoid what he calls another “ticking time bomb.”

Again, check out Doc’s free presentation here.

Moving on, we have an update on the woes at Boeing (BA)…

Back in February, I covered some of the issues that the airline manufacturer was facing… including a Federal Aviation Administration (“FAA”) investigation into the company’s safety protocols amid a frightening passenger jet door “plug” blowout earlier this year.

At the time, the stock had fallen about 20%, and I wrote that “there are better buying opportunities elsewhere.”

Since then, Boeing’s problems have only gotten worse. Its stock has fallen a further 24% since our February 29 issue. And for good reason…

Most recently, Boeing factory workers have been on strike for more than a month. The company recently announced layoffs for more than 17,000 employees, or 10% of its global workers. And it’s continuing to burn through mountains of cash…

Credit-ratings agency S&P estimates that the strike will cost Boeing $1 billion for every month it goes on. In total, between the strike, production halts, and investigations, Boeing has used more than $8 billion in cash in the past two quarters.

Another ratings agency – Fitch – has threatened the company with a downgrade into “junk” territory if the strike lasts longer than a few weeks. (Again, we’re past the one-month mark.)

To counter this, Boeing just filed plans to raise as much as $25 billion through new stock and debt.

And the first step of this could come soon, with the Wall Street Journalreporting that Boeing will offer $10 billion in new shares (equal to about 11% of the company’s current market cap). That dilution means existing shareholders suddenly own a much smaller stake of the company.

It’s clear that Boeing is scrambling to avoid a downgrade into junk territory…

Such a downgrade would make raising debt even more expensive for the company. The company’s moves aren’t great news, but they’re keeping it afloat.

We recently read an interesting piece from Rob Spivey, director of research at our corporate affiliate Altimetry. He covered Boeing in the October 9 issue of his free Altimetry Daily Authority e-letter. As Rob wrote…

While an extremely long strike could be damaging to Boeing, its financial picture still looks good enough to survive… for the time being.

Using Altimetry’s proprietary Credit Cash Flow Prime analysis, Rob showed that Boeing has enough cash on hand to cover its obligations in the near term. Take a look at this chart he shared…

We’ve been vocal about our thoughts on Boeing’s stock. A turnaround could be years away… And in the meantime, it’s still plagued by repeated problems. You’re far safer watching the fireworks from a distance.

The stock still isn’t cheap…

Our colleague and Stansberry’s Investment Advisory editor Whitney Tilson is of a similar mind. Yesterday, he did a deep dive into Boeing’s financials in his free daily e-letter. For the most part, he agrees with Rob that the company isn’t out of the woods yet.

As Whitney wrote…

Boeing still has too much debt and is burning too much cash – not to mention a half-dozen other major issues like FAA scrutiny and the machinists’ strike – which makes me think this stock is likely to be a value trap.

Whitney said Boeing’s plan to sell $10 billion in shares is the right move to “stave off financial distress” but still isn’t so sure the stock has finally hit a bottom, even after the string of bad news for the company. Its valuation still isn’t cheap, he noted…

As of [Monday’s] close, Boeing’s $137 billion enterprise value (“EV”) – $92 billion market cap plus roughly $45 billion of net debt – was equal to 1.9 times trailing revenue of $73.6 billion and 77.1 times trailing earnings before interest, taxes, depreciation, and amortization (“EBITDA”), which is especially high because EBITDA is so depressed. (It has no price-to-earnings multiple since earnings are negative.)

If we look at Boeing’s EV-to-revenue multiple over the past two decades, we can see that the stock consistently traded at around 1 times for the first dozen years through 2016, so the fact that it has fallen from a peak of 3.4 times to 1.9 times today doesn’t make me think it’s cheap.

One could argue that revenues are currently depressed at $74 billion… but even if we assume they quickly rebounded to their former peak of $101 billion, the stock’s EV-to-revenue multiple would still be 1.4 times – that’s 40% above the long-term average prior to all of the financial engineering that destroyed this once-great company.

Today, our proprietary Stansberry Score gives Boeing a 47 out of 100, for a “C” grade. But under the hood, it gets grades of “D” for both its financials and capital efficiency – for the exact reasons Whitney highlights.

We’ll repeat the same advice as eight months ago: There are better buying opportunities elsewhere. Don’t go bottom feeding today with Boeing shares.

Lastly, it’s almost here…

Our annual Stansberry Research conference is just days away. We’re excited about heading to Las Vegas this weekend and getting things going with attendees starting Monday morning.

Even if you’re not going to be at the conference in person, you can still catch the action with our Livestream Pass. Click here for details on how to get access. You won’t be able to purchase livestream access after this Friday.

A sit-down interview between our founder Porter Stansberry and acclaimed author Michael Lewis kicks off the conference on Monday. They will take the stage together for the first time ever for what will surely be an entertaining and informative conversation.

From there, the conference will feature dozens of presentations… insights and ideas you won’t hear anywhere else from some of the brightest minds in finance… and exclusive investment recommendations from our Stansberry Research editors and invited guests.

You’ll hear from your favorite folks at Stansberry, like Doc, Dan Ferris, Eric Wade, Greg Diamond, Brett Eversole, Mike DiBiase, Bryan Beach, and Dave Lashmet. And this year’s lineup of guests, in addition to Michael Lewis, includes our friends Marc Chaikin, Joel Litman, former Texas Governor Rick Perry, and many more.

I’ll have more of a preview of the conference in tomorrow’s edition and discuss a few things I’m specifically looking forward to next week. During the conference, we’ll also share some highlights here from on the ground at the Aria Resort & Casino in Vegas.

But if you’re interested in the conference at all and won’t be there in person, make sure you check out our Livestream Pass option. You can find more information here. Not only can you watch the conference live, but you’ll have access to replays and more special features in the broadcast.

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Recommended Links:

Doc Eifrig: “The ‘Boring’ Investment That Helped Me Launch a California Winery” For a limited time, you can find out the secret to how Doc Eifrig has made real, lasting wealth year after year… money he has used to travel the world, open a vineyard, eat at the finest restaurants, and sleep easy every night. He shares his secret here for free. Financial Nightmare Coming After the Election In 2018, one independent research firm predicted Kamala Harris was on her way to becoming the president of the United States. “Frankly, she scares us to death… and she should scare you,” they wrote. That’s why you need to check out their newest Kamala prediction immediately.

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In today’s mailbag, we received a few notes on the 2020 election, which we briefly mentioned yesterday when discussing how U.S. stock market performance has predicted most election results in the past 100 years… Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.

“Why did you bother to add ‘and contested by Trump?’ B/c it was an invalid protest based on a willful lie… But that’s my only knock. I like all your work very much.” – Subscriber Chuck W.

Corey McLaughlin comment: Well, because of other feedback like this…

“Catch up guys, I do not believe you understand that 2020 was definitely stolen…” – Subscriber Gregg C.

All the best,

Corey McLaughlin with Nick Koziol
Baltimore, Maryland
October 16, 2024