Well, it turned out to be a pretty good PR stunt.

Michael Wilson, the chief U.S. equity strategist at Morgan Stanley and a longtime Wall Street bear, warned in an analyst note this week that the stock market has entered a level known as the “death zone” – the name used in mountaineering to describe an altitude so high that climbers do not have enough oxygen to breathe.

The term “death zone” has gone viral in the financial journalists’ world. And has taught a whole new cohort of individual investors a new term used by extreme mountain climbers.

“Many fatalities in high-altitude mountaineering have been caused by the death zone, either directly through loss of vital functions or indirectly by wrong decisions made under stress or physical weakening that lead to accidents,” Wilson wrote. “This is a perfect analogy for where equity investors find themselves today, and quite frankly, where they’ve been many times over the past decade.”

Wilson sites data on the S&P Equity Risk Premium as inspiration for his metaphor:

During a recording of The Wiggin Sessions yesterday, we asked our buddy Jim Rickards what he thought of Mr. Wilson’s forecast. He not only “called” the Morgan Stanley analysts bluff, but “raised” him a few percentage points on the down side.

Rickards pointed out that the Dow dropped 19.8% in just six weeks last year between August 18, 2022 and September 30, 2022. This morning on the open the Dow was down 400 points taking its current losing streak to over 1600 points. Or 7%… in the past 4 weeks.

Rickards said he thought a 26% drop in the broader S&P 500 is not only possible, but likely a conservative forecast. “A twenty-six percent drop?” says Rickards, “yeah, I’d call that a ‘crash’.”

We asked our viewers on The Wiggin Sessions YouTube channel a simple question:

Generally on a Friday, we want to feel good going into the weekend. These data points don’t make us feel very good.

Alas, our beat is money, history and forecasting, right? So when there appears to be a shift in the market taking place, we look for opportunity. This morning we didn’t have to look very far.

“We’re probably entering one of the greatest ‘stock pickers markets’ ever,” writes Tom Dyson of Bonner Private Research in a note to subscribers yesterday, “and I think there’ll be plenty of special situations we can take advantage of, especially now that interest rates have hit 5%.” (Dyson, you may be aware, is a contributor to our mini-series America’s Generational Failure and offers a few choice picks in one of our Essential Investor special reports.)

Even mainstream sources are picking up on the market shift. “A stock-picker’s market” advises the AARP means “the overall stock market isn’t ‘a rising tide’ that is lifting most stocks… so in order to make money you have to be very smart and selective about which stocks you buy.”

This kind of freedom to choose is both good and bad for the individual investor. For one, if you are uncertain about the quality of your finances (like our survey dictates above), then picking a stock might seem like a daunting task.

For nearly a decade it was relatively simple. “It was pretty easy to make money in the stock market over the past nine years,” the AARP continues:

The Vanguard Total Stock Market Index Fund Admiral (VTSAX) has increased by 411% in total return (with dividend reinvestment) since it bottomed on March 9, 2009. That’s ~19.2% annually through June 20, 2018.

Now, a twisted mélange of economic factors has made managing your own money that much harder. If you’ve got your ducks in a row, go for it. But, in 2023, putting your money in just anything won’t cut it.

So it goes,

Addison Wiggin
The Wiggin Sessions