A Major Shift In The Global Monetary System May Be Imminent

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This is Porter & Co.’s Sunday Investment Chronicles. Every week, the Porter & Co. research team pores over thousands (and thousands) of articles, reports, social media posts, analyses, regulatory filings, and anything else we can get our hands (and eyes) on to understand what’s happening in the world of investing and finance – and to uncover the most original, compelling, and double-head-fake ideas…

… and we curate the best of those here. We do it all the old fashioned way: Hours of reading and brainpower (no AI curation here). We read everything – for you.

In Case You Missed It

On Monday, to put the recent 10% correction in U.S. stocks in context, Porter & Co. Distressed Investing senior analyst Marty Fridson explained what a “real bear market” looks like, drawing upon his experience in the bond market in the late 1970s/early 1980s, which was a “bond market apocalypse” driven by soaring inflation. From the end of 1977 to early 1981, the Merrill Lynch U.S. Corporate Index, consisting of investment-grade issues rated from AAA to BBB, plummeted by 27% – an unheard-of collapse for an asset class that supposedly was the ballast of a diversified portfolio. The silver lining: the bond index rose 51% in the four years after the end of the “apocalypse.”

Marty was on this month’s Black Label Podcast, discussing with Porter and co-host Aaron Brabham risk and how to manage it… talking about how tariffs could play out for corporate bonds… and why bonds are better than stocks… Watch this latest episode now, or listen on your favorite podcast platform.

The second issue of the week of the Daily Journal was all about our subscribers – thoughts and feedback from our readers, focused mostly on distressed debt and Porter’s recent piece on what he called the “global reset.” And in response to a reader who’s concerned about a stock in The Big Secret On Wall Street‘s portfolio that’s down, Porter explained that a long-term time horizon is key…

I’d recommend completely re-adjusting your timeline. You need three to five years to know whether you’ve gotten it right or wrong.”

In Thursday’s issue of The Big Secret, we returned to the theme of falling asset prices, addressing the many indicators by which U.S. stock markets are overheated today. One of them: mutual fund cash levels, which right now reflect one of the lowest levels of cash in history – which in the past has been a reliable contrarian indicator… The more enthusiastic mutual fund managers (supposedly among the so-called “smart money”) are, the worse the market performs. And our advice:

… we continue to recommend that Porter & Co. readers remain extremely conservative today.

Stay patient. Be sure to hold plenty of cash. And keep the bulk of your equity portfolio in the highest-quality companies trading at reasonable prices… or better yet, consider investing in an asset – like distressed bonds – that can generate equity-like returns with far less risk.”

In Friday’s Daily Journal, Porter & Co. senior analyst Ross Hendricks (Porter is out of town with his son Seaton) wrote about America’s “two-tiered economy,” and how “it’s the best of times for the wealthiest top 10% of earners, and the worst of times for the bottom 90%.” The deterioration in the outlook for Walmart (WMT) and Costco Wholesale (COST), and some of America’s biggest airlines, reflects how that top 10% is increasingly in financial trouble – which spells big problems for America’s economy.

The Best Things We Read Last Week

Out of the hundreds of sources of investment, finance, and economics news and insight we regularly review – our Bloomberg terminal, hedge-fund letters, annual reports, the financial news media, Securities and Exchange Commission (“SEC”) filings, investment newsletters, newspapers, X (Twitter) threads, conferences, podcasts, and more – here’s what we’ve read that we think you might find interesting.