The Bear Market Isn’t Over

Editor’s Note: Today, we’re sharing a special insight from a new name, Mason Sexton. Mason is a long-time Wall Street veteran. Since 1984, he has been deploying a special brand of analysis to steer his wealthy clients through some of the biggest market events in history.

Today, he believes something big is coming…

A market event is set to kick off in the weeks ahead. Mason believes it will catch many investors off guard as their portfolios are wiped out. What is this market event? And how should you prepare? Read on…

I remember it to this day…

In my Long-Term Forecast 1985-1992, published in early 1985, I predicted that, “in 1987, the stock market will enjoy its biggest rally in history.” The Dow Jones opened the year at 1,908 points. At the peak, two months before the crash, it was at 2,722 points.

People often forget the tremendous stock market rally of 1987. They only remember the crash. As it happens, I predicted that, too.

In an interview I had on August 14, 1987 with CNN, I said (emphasis added):

What we think will happen is that we’ll get an important top somewhere around August 24 or 25.

[…] 

If I had to guess the final top, it would be the first or second week of October. When I say, the final top, that would precede a correction of 15 to 20% ‘minimum’ in the [Dow].

On August 20 of that year, I repeated my warning. When I was interviewed by the New York Post, I said:

We are seeing a top in the stock market in a generational sense.

As it happens, the Dow Jones topped out at 2722 precisely on August 25^th of that year. It was the all-time high for 1987. And it was a level that the Dow would not see again until two years later in August of 1989.

I’m sure many of us remember what happened next…

On Monday, October 19, the Dow Jones collapsed by 508 points, or 22.6%. It was, and remains, the worst one-day drop for the index in percentage terms. Black Monday had arrived.

Of course, it’s one thing to make a prediction. It’s something else to follow through and tell people exactly what to do.

That’s what I did.

On October 2, 1987, I advised clients of my Harmonic Research newsletter “to sell all stocks.” Six days later on FNN (the precursor to CNBC) I advised investors to “Buy puts on the S&P index…. short IBM, GM, PA, XON and CHV.”

I don’t retell this story to bring up bad memories for those of us that were around for the crash.

But it’s important we understand what’s at stake…

Investors that were prepared for the crash could have made a fortune. In fact, I later had a client brag about how her traders had turned $100,000 into $13 million over the course of a few weeks by following my research.

But for those that were blind-sided by the crash, it was devastating…

While the Dow officially reclaimed its 1987 high two years later in 1989, the reality is that many investors waited much longer to be made whole.

Adjusted for inflation, the Dow would not reclaim its 1987 high until 1992. That means it took five years just to get back to even. For those of us in retirement or nearing retirement, that’s an eternity.

Those are the stakes.

I believe a cataclysmic event could be headed for markets and the economy. And it could start in the next eight weeks. Worst case, we’re looking at a wealth-destruction event unlike anything we’ve seen in our lifetimes.

What follows will sound shocking, unbelievable perhaps. Some might say it’s “alarmist.” But I am alarmed.

For that reason, I’ve come forward to share my warning. And I urge you to read on to prepare for this event.

But first… allow me to introduce myself.

Four Decades of Market Forecasting

My name is Mason Sexton. For the better part of four decades, I have made a career for myself forecasting the precise movements of the markets.

I began my career on Wall Street after graduating from Harvard Business School in 1972. I spent three years in the Corporate Finance Department of Morgan Stanley. I did a stint with Salomon Brothers in M&A. Then, I headed the Sales and Research Department of Mabon Nugent & Company.

In March of 1984, I founded Harmonic Research, a bi-monthly newsletter that specialized in making uncanny, specific predictions for the market. The story above was based on my research with Harmonic.

I’m happy to say I have a devoted group of institutional clients that pay tens of thousands of dollars per year to review my research. Out of respect for my clients, I won’t name names. But I can say several run successful hedge funds. Others have a net worth in the billions of dollars.

I’ve mostly stayed behind the scenes these past few years. And were it not for the alarming nature of my next prediction, I likely would have stayed out of the public eye.

But as I said at the top, something is coming.

For those who are prepared, it could be a generational opportunity. But sadly, I fear many investors will be completely blindsided.

Let me explain…

An Extinction-Level Event

Given the fundamental factors in place that should support the demand for housing, we believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited.

That’s what Ben Bernanke—then Chair of the Federal Reserve—had to say to Congress in May of 2007. At the time, the housing market had been experiencing considerable strain. In January of that year, mortgage lenders Ownit Mortgage Solutions and American Freedom Mortgage had both filed for Chapter 11 bankruptcy. But—as Bernanke assured us—the brewing crisis was contained.

I don’t have to remind us of what happened next. But it’s curious that—in the wake of today’s financial turmoil—we have Jerome Powell, Chair of the Federal Reserve, making statements like this:

Conditions in [the banking sector] have broadly improved since early March, and the U.S banking system is sound and resilient. We will continue to monitor conditions in this sector.

Fed Chair Powell must have been behind on the news. Precisely two days prior, regional bank First Republic had collapsed. It would eventually be sold to JPMorgan.

Ask yourself, does it feel like the banking system is sound and resilient? Does any of this feel okay?

Human beings have a remarkable intuition for danger. And if we were being very honest with ourselves, we would admit that something is amiss. Something is not right. As I said at the top, something is coming…

What precisely is coming? And what will it mean for our investments and retirement?

For that answer, I would ask you to join me on May 23 at 10 a.m. ET. On that day, I will be holding a special briefing that I hope you can attend.

During the event, I will share my next prediction (it’s something far worse than a simple bank failure). I’ll also detail precisely when I believe it will start, and what investors can do to prepare.

If you are at all curious, then I would ask you to market that date: May 23 at 10 a.m. ET. I hope to see you there and we will speak again soon.

Regards,

Mason Sexton
Editor, New Paradigm Research

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