RJ Hamster
Every Crisis Has a Hidden Trade: Here’s Where the…
Eric Fry
Editor, Smart Money
DAILY ISSUE
Every Crisis Has a Hidden Trade: Here’s Where the Smart Money Goes Next
Editor’s Note: Periods of market stress often get framed as times to retreat and reduce risk. But history shows something very different:
Crises are when capital begins to reorganize itself, leaving weaker companies and moving into stronger ones with solid finances, steady cash flow, and pricing power.
So, rather than reacting to headlines, my InvestorPlace colleague Louis Navelleir looks at how money typically moves when uncertainty rises – and why that rotation can reveal some of the most compelling opportunities in the market.
His goal is simple: cut through the noise of panic and focus on where financial strength becomes a competitive advantage.
Louis details a current opportunity in the private credit market in his newest presentation.
And he’s joining us today…
When most investors hear the word “crisis,” they think about danger.
That’s natural. After all, the media loves to juice ratings and clicks by giving you a good scare.
But after nearly five decades of doing this, I can tell you that every crisis on Wall Street has another side.
Opportunity.
Just look at what happened in past market shocks:
- In the 2008 financial crisis, capital fled weak financial institutions and rotated into stronger, more resilient companies like Walmart Inc. (WMT)and Dollar Tree Corp. (DG). And as the panic cleared, long-term winners like Amazon.com Inc. (AMZN) and Netflix Inc. (NFLX) emerged from the wreckage stronger than ever.
- In the 2020 pandemic crash, the biggest winners were the companies powering the stay-at-home economy: e-commerce, cloud computing, digital payments and remote-work stocks all surged as the world changed almost overnight.
- In the 2023 regional banking panic, money again rushed toward stronger names. As Silicon Valley Bank and Signature Bank collapsed, my system identified companies like Nvidia Corp. (NVDA), Meta Platforms Inc. (META), and Royal Caribbean Cruises Ltd. (RCL) as major beneficiaries of that flight to quality.
When a crisis emerges, wealth moves away from weak companies with too much debt, weak cash flow, and no margin for error. And it moves toward fundamentally superior businesses that can keep growing even when the market gets more selective.
That is the pattern I saw in 2008. And it is the pattern I saw again in 2023, when Silicon Valley Bank and Signature Bank collapsed.
In both cases, fear did not hit every stock equally. Money moved quickly toward companies with strong balance sheets, superior fundamentals, and the ability to stand on their own.
That is why, during a crisis, I spend my time thinking about where the smart money is likely to go next.
I’ve been concerned about this $3 trillion “shadow” banking sector for over a year now. But today, I want to focus on the opportunity that can emerge when fear takes hold and investors start moving toward stronger companies.
Now, if you want the full story on what is happening in private credit – and what I believe investors can do to prepare and potentially profit– you can learn more in my full presentation.
In the meantime, I also sat down with InvestorPlace Editor-in-Chief Luis Hernandez for a special conversation about this private credit situation.
In this second part of our discussion, we talk about the pattern I have seen over and over again in past crises… why some stocks get crushed while others surge… and what kinds of companies I believe are best positioned if private credit stress spreads further.
Click here or the play button on the image below to watch my conversation with Luis.
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It’s Time to Move Into “Fortress” Stocks
If this private credit story continues to unfold the way I expect, the biggest winners will be companies with what I call fortress-level fundamentals – strong cash flow, healthy margins, low debt, and the kind of financial strength that becomes even more attractive when investors get nervous.
The question is, which ones will be those fortress-level companies?
That is exactly the question I have been working on – and I’ve been using my proven Stock Grader tool to help me find the answer.
I study data on more than 6,000 stocks every week and use my proprietary algorithm to run the stocks through eight filters. The goal is simple: find stocks with alpha – that is, stocks that deliver a superior risk-adjusted return.
These eight factors sort stocks with no alpha… from stocks with good alpha… from stocks with super alpha.
But don’t let the finance lingo confuse you, because Stock Grader distills all of this info into a simple “grade”… from “A” (Very Strong) all the way to “F” (Very Weak).
That gives us a perfect framework for judging which stocks are likely to suffer from a potential credit crunch… and which will benefit from a flight to quality.
Because in my experience, the best stocks during a crisis are often not the ones everyone is talking about on television.
By then, it’s probably too late.
The real opportunity is to identify and invest in the fundamentally superior companies that are most likely to attract capital as the market gets more selective before the crowd catches on.
In my full presentation, I explain why I believe many companies could be in serious trouble if private credit stress continues to build. More importantly, I also reveal the A-rated “Fortress” stocks I believe are best positioned to benefit as money moves away from fragile balance sheets and toward real financial strength.
If you want to understand both sides of this story – the companies I believe investors should avoid, and the ones I believe could profit from a flight to quality – I strongly encourage you to watch my full presentation now.
Sincerely,
Louis Navellier
Editor, Breakthrough Stocks
P.S. Louis Navellier’s latest presentation goes deeper into this idea of a “flight to quality” — and why certain stocks could attract significant capital if credit conditions tighten. He also outlines the types of companies he believes are most at risk. If you want to see how he’s positioning ahead of a potential shift in the market, I’d recommend taking a few minutes to watch it now while this story is still developing.
The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:
NVIDIA Corporation (NVDA), Royal Caribbean Cruises Ltd. (RCL) and Walmart Inc. (WMT)
