Sitting on the Brink

Written By Jason Williams

Posted November 17, 2017

If you’re familiar with my work, then you know I’m not one of those doomsayers, constantly looking for the next crash. If anything, I’m one of the more optimistic analysts out there.

I’ve got faith in the free market economy. I’ve studied history. And I know that even though markets go through recessions and corrections, the typical trajectory is up.

That’s why you should take this warning extremely seriously. I’ve literally spent years doing research trying to prove my hypothesis wrong. But the more research I do, the more apparent it’s become that we’re heading for a crash.

Now, don’t get me wrong; I’m not saying the bottom is going to fall out of the entire market. But there’s an industry that’s been struggling for years. And the more I look into it, the more obvious it is that it’s poised to come crashing down.

It’s not going to be nearly as big as the housing crisis. And it’s not going to topple global markets. But it’s still incredibly scary. And that’s because this industry has been such a solid investment for so long.

Conservative Investors Beware

Because of that, it makes up a large part of nearly every mutual fund on the market. It’s also a massive chunk of almost every retirement account out there. In fact, at least 90% of everyone reading this article likely has stocks from this industry littering their retirement accounts.

It doesn’t matter if you have a 401(k), a 403(b), an IRA, or a pension plan. If you’ve been saving for retirement, these stocks have likely become a big part of your investing strategy.

I say that because these stocks have always been a favorite of every fund manager. They’ve provided consistent returns and steady income for decades. So, it’s always been second nature to recommend holding them in a retirement account.

In fact, they’re part of some of the most conservative investment strategies out there. Heck, they’ve been part of mine for a long time, too.

But I’ve spent countless hours examining the markets and researching the companies that make up this industry. And it’s clear that we’re in for a massive shock in the very near future…

How Big Is It?

When I say massive, I’m not exaggerating. Not at all. I’m talking about the potential to see $620 billion erased from retirement accounts virtually overnight.

Even people who don’t think of themselves as investors — those who let a fund manager handle their accounts — are going to get hit. That’s because literally anyone with any kind of retirement account is at risk.

And preparing for this imminent disaster is going to mean the difference between a comfortable retirement and struggling to make ends meet.

Overvalued and Underfunded

Before I go any further, let me give you a little background into why I started investigating this industry and what’s driven me to declare its downfall…

A few years ago, I noticed that valuations were growing to unheard-of levels. I’m not alone. Lots of folks have pointed out that the S&P 500’s average price-to-earnings ratio (P/E) is through the roof. Some have even said it means we’re heading for another recession to rival that of 2008.

I’m not inclined to agree with that. You see, most of these high valuations are supported by growing earnings. But there’s one industry that’s seen P/E ratios skyrocket. And there’s absolutely nothing to support it.

Just look at these three companies. They’re some of the biggest in the industry, and they provide a perfect snapshot of a bubble that’s been growing for years…

time bomb pe vs price

The line in blue is the price, and the line in orange is the P/E ratio. You can clearly see that while the prices of all three have been growing a little, the P/E has been growing much faster. Early this year, it catapulted for all three of them. And then it kept on growing.

Well, let’s use some simple algebra to see what’s going on…

Numbers Don’t Lie

You’ve got a fraction that keeps getting bigger. And the number on top (the numerator) is staying the same.

What does that mean? It means the number on the bottom (the denominator) is shrinking.

And in a P/E ratio, the numerator is the price and the denominator is the earnings.

So, watching price remain relatively flat and P/E grow astronomically, it should be clear that earnings fell drastically last year and have continued to drop ever since.

But if you don’t trust the math, just look at the chart. The numbers don’t lie. Earnings per share (EPS) at all three companies took a huge hit at the end of last year. And they’re still slipping:

time bomb eps drop

But the price has held constant. That doesn’t make sense. Price is supposed to follow earnings. It’s not supposed to rise when earnings fall. But in this industry, that’s exactly what’s been happening.

But that’s not going to last. It just can’t. This isn’t Tesla. These aren’t companies that can continually lose more and more money and still see their stock prices go up.

And when those prices catch up to the earnings, there’ll be hell to pay. And every single person with a retirement account will be paying it.

Don’t Be a Victim

But there’s a way you can protect yourself from this collapse before it happens. And there’s even a way you can profit from it…

Just like the investors who saw the housing collapse coming and turned the grief of millions into a multibillion-dollar gain for themselves.

big short gif

You can protect your hard-earned savings and watch them grow by triple-digits while the unprepared struggle to get by.

Your Own Dream Team

I’m not the only one who’s been researching this bubble. My colleague, Briton Ryle, has been, too. He’s the one who clued me into it.

And through our combined efforts, we’ve come up with the strongest possible defense for your retirement account. Plus, we’ve found a way to bank a potential profit of more than 400% when the collapse happens.

We’re putting the final touches on a special research report right now. And we’re going to release it first to the members of Wealth Daily.

We want you to have access to this groundbreaking report before anyone else gets a chance to see it.

You Can’t Afford to Miss This

So, keep an eye on your inbox next week. We’ll be sending you a special email on Tuesday, November 21st. In it, you’ll find a link that will take you to our presentation detailing the crisis that’s about to rock the retirement accounts of millions of people.

This is not something you want to miss. Not only will you be able to avoid the catastrophe that’ll decimate millions of portfolios, but you’ll also have the tools to profit while everyone else struggles to recoup their losses.

So, set a reminder in your calendar, tie a string around your finger, do whatever you have to do to remind yourself to read our report as soon as it comes out next week. 

You don’t want to put this off. If you do, by the time you read it, the worst may already be happening. And someone else might be raking in the rewards while you’re trying to figure out what happened to all your retirement savings.

In the meantime, give a listen to this podcast where Briton discusses some of the other dangers that can be involved with investing for retirement.

Keeping you ahead of the curve,

Jason Williams
Wealth Daily

Follow me on Twitter @AllBeingsEqual

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