Yesterday I shared a chart that helped us to determine that the S&P 500’s correction was a “buy the dip” opportunity, NOT the start of a serious correction/ bear market.
By quick way of review…
1) The chart showed the percentage of S&P 500 companies trading above their 50-day simple moving average (DSMA). This is a GREAT tool for tracking where the market is trading relative to its prior trend.
2) Prior to last week’s rally, the reading on this chart had fallen to ~15%.
3) A reading this low is typically associated with significant market bottoms. Indeed, the only times the reading has fallen lower during the last five years was during the pandemic crash or the major bottoms of the 2022 bear market.
You can review the chart below.
I sincerely hope all of you bought the dip. If you did, you’ve made a significant return on your trade as the S&P 500 has ripped higher by 280 points in the span of a single week.
Our research indicates this move is just getting started.
High yield credit typically leads the stock market. The reason for this is that high yield credit investors are typically more sophisticated/ sensitive to macro changes for the simple reason that they are investing in bonds that have a high probability of default. As a result of this, high yield credit can give clues as to where stocks will be heading.
The short answer today is “UP, A LOT.”
The high yield credit ETF (HYG) is back at its all-time highs. This strongly suggests stocks will be moving sharply higher from here.
Ultimately, it all comes down to this: as investors, our goal is MAKING MONEY.
To do that, you NEED to know when to “buy the dip” and when to get out of stocks to avoid bear markets. And the best way to do that is to use real quantifiable tools, not opinions, that tell you when to get out to the markets.
To start receiving these kinds of actionable insights, join 56,000 readers in over 56 countries in receiving our daily market alert every weekday before the markets open (9:30AM EST).
Yesterday, I noted that the S&P 500 has a clear Head and Shoulders pattern. As a result of this, the bears were convinced that a top was in.
Unfortunately for them, investing is rarely easy or obvious. And everyone and their mother saw that pattern forming. Thus, the odds of it actually working out in their favor were slim.
Sure enough, stocks exploded higher yesterday. And by the look of things, the S&P 500 will retest its former highs if not establish new all-time highs shortly.
High yield credit typically leads stocks. It is roaring higher after putting in a series of higher highs and higher lows. Based on this alone, the S&P 500 should be over 6,000 already.
Indeed, Senior Loans, which also lead equities are already at new all-time highs. This is NOT bearish. If anything it indicates the financial system is in an aggressive risk on framework.
Put simply, the pullback of the last two weeks was a MAJOR “buy the dip” opportunity. We had our clients ready to profit from it with specific downside targets at which to buy multiple new trades.
Come join us!
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Ignore the doomers, there is ALWAYS a profit to be made somewhere.
Because of a 5% drop in the last two weeks, the overall stock market, as measured by the S&P 500, is effectively flat since election night. Put another way, stocks have gone nowhere for two months straight. Worse still, the S&P 500 is clearly forming a Head and Shoulders topping pattern.
Seeing this, the doom cloud is proclaiming that the market is forming THE top for this bull market begun in 2022. Perhaps this is true. I doubt it. None of my proprietary market timing tools are registering that this is THE top or even a major top.
Moreover, in investing, the REAL money isn’t made in timing a top. It’s made in following market leaders. And while the S&P 500 has done nothing for the better part of eight weeks, certain key sectors of the markets are EXPLODING higher.
I mentioned Quantum Computing as a key sector to watch in mid-December. This area of the market continues to EXPLODE higher with some names like Rigetti Computing (RGTI) up QUADRUPLE digits.
Quantum Computing isn’t the only area of the market showing massive returns. Robotics is another area of the market that has begun to ignite upwards. Nauticus Robotics (KITT) is just one play that is up triple digits in the last few weeks.
And then there are drones. Here again numerous names are exploding higher producing triple digit gains in the last few weeks alone. Mobilicom Limited (MOB) is just one such name that has proving the “there’s no money to be made in stocks” narrative incorrect.
These are just a handful of market leaders. But there are more. Many more. So feel free to listen to the doomers who tell you the market is done. But you’ll be missing out on a lot of great opportunities in the markets.
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Last week I warned that that the Fed would be spooked by the uptick in inflation.
In particular, I noted that the CPI had begun turning up after effectively flatlining for six months. See for yourself.
The incoming Trump administration has made it clear that it sees the Fed as a political entity that favors the left. In this context, Trump sees any uptick in inflation as 100% the fault of the Fed.
As I warned last week, this meant the Fed was likely to disappoint the markets at its Wednesday meeting, resulting in stocks getting slammed lower. Specifically, I warned that the Fed would get spooked by the inflation data, that it would pull back on its intended rate cuts in 2025, and that this would result in stocks getting slammed downward as investors panicked.
And that is precisely what happened.
The S&P 500 experienced one of its worst down days in years, falling nearly 3% and wiping out all of its post-election gains. Most investors panicked and sold the farm as they believed this was IT as far as the bull market was concerned.
I didn’t.
This was a BUYABLE dip as I alerted subscribers of our stock/ ETF-trading newsletter Private Wealth Advisory in last week’s market update.
Why?
Our proprietary research told us that the markets would correct but that it was a buyable dip that would quickly rebound into year-end. And that is precisely what is unfolding as I write this.
To start receiving these kinds of actionable insights, join 56,000 readers in over 56 countries in receiving our daily market alert every weekday before the markets open (9:30AM EST).
One of the key differentiators for investors is your ability to find profits in the markets. It sounds obvious, but you’d be amazed how many people keep staring at the same charts waiting for something to happen… while other investments are soaring and making investors extraordinary profits.
Consider the “Trump Trade,” for example.
The overall stock market as indicated by the S&P 500 is up only 4% since election day. And in fact, it’s down for the month of December. Seeing this, numerous analysts have claimed that the Trump Trade is fizzling out.
Meanwhile, key areas of the market that are closely aligned with the incoming administration’s policies and agendas are breaking out to new highs. Rather than fizzling out, these areas of the market are showing investors serious profits.
Consider…
Bitcoin: the incoming Trump administration is extremely pro-Bitcoin, going so far as to propose a Strategic Bitcoin Reserve designed to hold and acquire a Bitcoin stockpile for the U.S. much as the Strategic Petroleum Reserve houses our oil reserves.
Bitcoin is up 33% since the election vs ~4% for the S&P 500. And the momentum isn’t stopping either. Bitcoin has just broken out to new all-time highs, clearing $100,000 for the first time in history. This has been a place to profit even as the S&P 500 sputters out.
Tesla (TSLA) has been another area of market momentum and profits. TSLA founder Elon Musk has become one of Trump’s most trusted advisors. This cozy relationship, combined with TSLA’s development of autonomous robots, self-driving taxis, and other revolutionary technologies, has resulted in TSLA shares ERUPTING nearly 60% higher since election night.
Put simply, investors have seen EXTRAORDINARY profits here while the overall market has been going nowhere. Again, the profits are there if you know where to look!
Quantum Computing: the incoming Trump administration has made it clear it will be aggressively promoting American innovation. Quantum computing uses quantum mechanics to solve extremely complicated problems in a fraction of the time traditional computing would require. This is the next “AI” or revolutionary technology that will dramatically alter the corporate landscape. As a result of this, quantum computing stocks have been on an absolute tear with shares of IonQ (IONQ), the industry leader, more than doubling since election night.
Again, there are MAJOR profits to be found in stocks today, if you know where to look.
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You’re going to be hearing a LOT about quantum computing in 2025.
Quantum computing is a type of computing based on quantum mechanics. Experts believe it to be the next generation in computing. It is highly complicated and capable of handling problems that traditional computers cannot.
And by the look of things, it’s going to be the next “AI” theme: a technological breakthrough that produces massive gains for investors.
Quantum computing names have been EXPLODING higher in the markets.
IonQ (IONQ)
Quantum Computing Inc (QUBT)
Rigetti Computing (RGTI)
Again, the first major move has already happened in these names and the easy money has been made. But the bigger players will be moving into the space shortly. Indeed, Alphabet (GOOGL) has just announced the introduction of its own quantum computing chip Willow.
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The stock market is increasingly being driven by Trump and his agenda for his second term. If you’re looking to make money in this market, focusing on these items has been working well.
Consider what has taken place with Meta (META).
Historically, META’s CEO Mark Zuckerberg has been left leaning in his political views. He wasn’t just verbal in his politics either: he spent $400 million helping the Democrats defeat Trump in 2020.
With this in mind, one of the biggest “tells” that Trump would win the election was when Zuckerberg pivoted politically away from the left. In late August, he penned a letter to Congress claiming that he didn’t want to suppress right wing views on META but had done so due to pressure from the Biden administration. This was quite a move as polls had Harris leading at the time.
However, polls are quite inaccurate (as we’ve discovered this election cycle). But Zuckerberg had/has access to one of the greatest databases for voter behavior in the world via META. Americans might not tell pollsters who they intend to vote for, but you better believe they’re revealing that in private to their family and friends on social media. In this sense, Zuckerberg’s political pivot had less to do with true repentance for prior transgressions and more to do with pragmatism: he saw voters were going to deliver a landslide victory to Trump and was positioning himself and his company accordingly.
Having said that, once Trump won on November 5th, META shares lagged as investors were uncertain whether Trump would seek vengeance for Zuckerberg’s prior political actions. While the overall market exploded higher on election night (red line in the chart below), META shares (black line in the chart below) failed to participate.
Then Zuckerberg had dinner with Trump on November 27th, and META shares EXPLODED higher. They’re now up 6% since that date, having broken through critical overhead resistance (red line in the chart below) and soaring to new all-time highs.
Bear in mind, literally NOTHING changed about META’s business during this time other than Zuckerberg cozying up to Trump and publicly stating that he’d love to have a role in Trump’s new administration. But as you can see for yourself, those developments had a MAJOR impact on META’s share price action.
So again, as I stated at the beginning of this article, The stock market is increasingly being driven by Trump and his agenda for his second term. If you’re looking to make money in this market, focusing on these items has been working well.
If you’re looking for guidance on this, we just published a Special Investment Report detailing that, as well as the #1 investment to own during Trump’s 2nd Term.
We are selling this report as a standalone item for $499… but you can pick up a copy FREE simply by joining our daily market commentary, Gains Pains & Capital.
We are making only 99 copies available to the public.
As I keep stating, Donald Trump will win the 2024 U.S. Presidential election.
The first major signal (aside from the betting markets) was Meta (formerly Facebook) founder and CEO Mark Zuckerberg pivoting politically in August 2024.
Zuckerberg has been left-leaning for most of his career. But he is also a pragmatist. And with Meta, he has access to what is perhaps the largest dataset of voter sentiment in the world. We’re talking about what voters really think as opposed to what they tell a pollster.
Zuckerberg pivoted politically in August 2024, writing a letter to Congress in which he stated that the Biden administration had pressured him and Meta to limit free speech.
That is one heck of a statement by one of the most powerful, connected elites in the world. Do you think Zuckerberg would do this if he didn’t see the writing on the wall via Meta’s massive collection of voter sentiment?
Zuckerberg isn’t the only one who’s figured out that Trump will win either.
Yesterday, Ukrainian President Volodymyr Zelenskyy outlined the steps he would take to make sign a peace treaty with Russia. This comes after 2+ years of armed conflict between the two countries… conflict that was financed by the Biden administration/ congress to the tune of $175+ BILLION.
Zelenskyy has had countless opportunities to end this conflict since it began in early 2022. Indeed, there was a full peace deal prepared as early as April 2022 that the U.S. and U.K. rejected. The only reason Zelenskyy is looking to make a deal now is because he knows Trump will soon be the next President and the U.S. will no longer be funding this conflict.
Again, Donald Trump will win the 2024 U.S. Presidential election. The most connected tech and political elites are already preparing for it.
You should too…
We just published a Special Investment Report detailing that, as well as the #1 investment to own during Trump’s 2nd Term.
We are selling this report as a standalone item for $499… but you can pick up a copy FREE simply by joining our daily market commentary, Gains Pains & Capital.
We are making only 99 copies available to the public.
Politics are a full contact sport that brings out the ugliest aspects of human nature. And the political environment today is more toxic than at any other time in my lifetime.
Unfortunately for investors, the President and his/her agenda for the economy has a MAJOR impact on the markets. For those of us who want to make money from our investments, we have to address recent political events.
With that in mind, it is clear that Donald Trump will be the next U.S. President. That is not an opinion, it’s a fact: the betting markets give Trump a ~60% chance of winning.
This will have clear implications for risk assets, specifically stocks.
Why?
Trump is the Ultimate Stock Market Cheerleader
First and foremost, former President Trump LOVES the stock market.
During President Trump’s first term, then-Treasury Secretary Mnuchin stated that the Trump administration viewed the stock market as a “barometer” for the economy. Put another way, with stocks, President Trump had a real-time measure he could point to when claiming that his agenda was benefiting Americans’ net worth.
Indeed, between 2016 and 2020, President Trump posted 256 tweets mentioning the term “market”, 162 tweets mentioning the terms “stock market” another 26 tweets mentioning “stocks,” 23 tweets mentioning “highs” in relation to stocks, and finally 15 tweets mentioning the “S&P 500” all on X (formerly Twitter).
All told, we’re talking about ~500 tweets touting the stock market in a four-year span. That comes to at least TWO tweets per week during Trump’s first term!
I do not anticipate this focus on stocks to change during Trump’s 2nd Term. Say what you will about Donald Trump, but he loves wealth. And the stock market is the 2nd most-owned asset class in America behind housing: 56% of American households have exposure to stocks vs. 65% who own real estate.
Moreover, President Trump has already figured out that the stock market is a segment of the economy that he can rapidly and dramatically influence via social media. To wit, dozens of times during the trade war with China during Trump’s 1st Term he tweeted positive news about negotiations (oftentimes extremely vague) and stocks would rip higher.
The only thing Trump might love more than wealth is power. And the power to push stocks higher is one that I doubt he’ll forgo during his 2nd term.
With that in mind, it is very likely the stock market will push after Trump’s November win in 2024. This is particularly true when you consider the macro environment President Trump will inherit and create.
The Fed has already started cutting interest rates. So, Trump will inherit a stock market driven by Fed initiating a new easing cycle, at a time when the economy is still growing.
This is as close to a “goldilocks” environment for stocks you can get. And Trump will inherit this without lifting a finger.
Moreover, Team Trump has already leaked that they intend to pressure and potentially even assume partial control of the Fed via the Treasury.
This is what’s known as a “trial” balloon through which politicians gauge the public’s response to a potential policy.
I’ve posted a blurb from CNBC on the policy below…
This proposal is not surprising. From 2018-2019 Trump routinely harassed the Fed on social media, emphasizing that the Fed’s decision to raise rates and drain liquidity via Quantitative Tightening (QT) were harming his beloved stock market.
The below tweets are two such examples.
To recap…
1) The Fed was already talking about cutting rates before Trump took the lead in the polls. There is no way the Fed can reverse this intended policy path without drawing President Trump’s ire.
2) During his first term, Trump was extremely combative with the Fed, particularly any attempt by the latter to tighten monetary policy.
3) Team Trump has already leaked a document proposing several policies including
A) allowing the President to fire the Fed Chair prior to the end of the latter’s term,
B) giving the White House greater control over the Fed’s interest rate decisions, and C) using the Treasury to influence the Fed’s bond buying activities.
Considering the above items, it is clear that President Trump will have an even greater influence over the stock market during his second term.
Put simply, you could almost argue that “stocks going up” will be a Presidential Mandate!
How high could stocks go on a Trump win?
We just published a Special Investment Report detailing that, as well as the #1 investment to own during Trump’s 2nd Term.
We are selling this report as a standalone item for $499… but you can pick up a copy FREE simply by joining our daily market commentary, Gains Pains & Capital.
We are making only 99 copies available to the public.
Upon observing the current movement in the stock market, it’s evident that stocks have recently crossed a critical resistance point on a weekly timeline. The market is now backtesting this breakout, which is to be expected. The key issue is whether or not this breakout holds. The line to watch is 5,675 on a weekly chart.
High yield credit often guides stock movements. Currently, high yield credit is strong, signaling continued momentum and a potential S&P 500 hit 5,750 soon.
Pay attention to high yield credit’s strength – it could lead to a significant S&P 500 breakthrough to 5,750 in the near term.
The market breadth is on the rise, signaling a strengthening bull market rally that is expanding, not constricting. Once again, we see no indications of an imminent collapse. In fact, the current scenario presents a prime opportunity to ‘buy the dip’ in stocks.”
I bring all of this up because a LOT of analysts have gotten bearish. Their clients have MISSED out on these gains! Don’t be one of them!
To avoid making the mistake of panicking during a garden variety pullback, I’d refer you to our special investment report, How to Predict a Crash which details a quantifiable tool that has accurately predicted Black Swan market crashes. It caught the 1987 Crash, the Tech Crash, and the Great Financial Crisis, to name a few.
With just one look at this tool, you can tell whether it’s a good time to buy stocks or not. I detail it, along with what it’s currently saying about the market today in How to Predict a Crash.
Normally, I’d charge $499 for this report as a standalone item. But I’m giving it away FREE to anyone who joins our daily market commentary Gains Pains & Capital.
To pick up your copy now (it doesn’t cost a dime)…
Stocks have broken above critical resistance on a weekly basis. Historically, this has lead to several months’ worth of gains. As I write this, the S&P 500 is backtesting the breakout.
High yield credit, which typically leads stocks is showing no signs of slowing down. It has turned up again and anticipates the S&P 500 breaking above 5,750 in the near future.
Breadth is also strengthening. This bull market rally is getting broader, NOT narrower. And here again, there are no signs of a collapse about to begin. This is a “buy the dip” moment for stocks.
I bring all of this up because a LOT of analysts have gotten bearish. Their clients have MISSED out on these gains! Don’t be one of them!
To avoid making the mistake of panicking during a garden variety pullback, I’d refer you to our special investment report, How to Predict a Crash which details a quantifiable tool that has accurately predicted Black Swan market crashes. It caught the 1987 Crash, the Tech Crash, and the Great Financial Crisis, to name a few.
With just one look at this tool, you can tell whether it’s a good time to buy stocks or not. I detail it, along with what it’s currently saying about the market today in How to Predict a Crash.
Normally, I’d charge $499 for this report as a standalone item. But I’m giving it away FREE to anyone who joins our daily market commentary Gains Pains & Capital.
To pick up your copy now (it doesn’t cost a dime)…
You are going to hear a LOT of people talking about this, saying it’s a sign that the economy is in recession.
It’s not.
This business cycle, is unlike any other. If you’re comparing what’s happening now to what happened in 2000 or 2007, then you’re comparing apples to oranges.
Was the economy shut down prior to the Fed cutting rates by 0.5% in 2000 or 2007?
No.
Did the Fed and Federal Government pump $11 trillion into the financial system in the years preceding the Fed’s decision to cut rates by 0.5% in 2000 or 2007?
No.
Did the U.S. experience an inflationary storm prior to the Fed cutting rates by 0.5% in 2000 or 2007?
No.
Comparing the Fed rate cuts and their implications today to the last two times the Fed cut rates by 0.5% without accounting for these differences is not just bad thinking… it’s actually BAD for your portfolio.
Why?
Because in 2024, the economy is NOT rolling over into recession, nor is the financial system showing any signs of duress. GDP growth is clocking in at 2%+.
As far as the financial system is concerned, stocks are outperforming junk bonds in dramatic fashion. Every time the financial system has been under duress during the last 17 years, this ratio has gone UP, breaking above its 10 month moving average (blue line in the chart below). Today there are ZERO signs of duress in this ratio.
As far as the financial system is concerned, stocks are outperforming junk bonds in dramatic fashion. Every time the financial system has been under duress during the last 17 years, this ratio has gone UP, breaking above its 10 month moving average (blue line in the chart below). Today there are ZERO signs of duress in this ratio.
Again, what’s happening today is NOTHING like what happened in 2000 or 2007. If your guru or strategist is telling you to sell the farm and prepare for a crisis, you need to FIRE THEM and get a copy of my How to Predict a Crash investment report, instead.
How to Predict a Crash uses a quantifiable tool that has accurately predicted Black Swan market crashes. It caught the 1987 Crash, the Tech Crash, and the Great Financial Crisis, to name a few.
With just one look at this tool, you can tell whether it’s a good time to buy stocks or not. I detail it, along with what it’s currently saying about the market today in How to Predict a Crash.
Normally, I’d charge $499 for this report as a standalone item. But I’m giving it away FREE to anyone who joins our daily market commentary Gains Pains & Capital.
To pick up your copy now (it doesn’t cost a dime)…
Stocks have experienced a great deal of volatility in the last week.
However, when you take a step back and look at the big picture for the equity markets, it’s clear that stocks have been in a consolidation phase since mid-May. That consolidation has been between 5,200 and 5,600 on the S&P 500.
Why is this happening?
There are two critical issues the market is trying to determine:
When and how aggressively the Fed will start cutting rates.
Who will win the Presidential election in November.
Regarding #1, three factors have “muddied the waters” in terms of figuring out when and how aggressively the Fed will cut rates this year.
Those three factors are the inflation data, unemployment data, and GDP data.
With the economy not yet contracting, unemployment spiking due to immigration NOT job losses, and inflation trending down, albeit in a noisy fashion, the Fed has suffered from institutional inertia as it opts to focus on the data as opposed to cutting rates.
However, at the end of the day, the Fed tends to take its cues from the yield on the 2-Year U.S. Treasury. And the yield on the 2-Year U.S. Treasury is telling us the Fed is WAAAAAY behind the curve. The Fed needs to take action and soon or it risks a recession.
Regarding #2, the Presidential election has also provided a great deal of confusion for stocks. Some of the more critical items of note include A) the Democrat candidate was replaced in July when President Biden opted to not continue with his campaign, B) Kamala Harris has yet to debate Donald Trump, and C) the economic agenda of the two current candidates couldn’t be more different when it comes to specific policies.
However, at the end of the day, both candidates have proven to be big on social spending. In this sense, whoever wins the election, we can assume the government will continue to run significant deficits. And this will provide stimulus to the economy, which will benefit stocks.
You can see this in the monthly chart of the S&P 500. Sure, it’s experiencing a down month thus far in September, but the uptrend is clearly intact. For this reason, we view the current pullback as an opportunity to “buy the dip” not “sell the farm.”
As investors, our job is to make money, not look for any excuse to dump stocks and panic about something bad happening. And as I’ve outlined in recent articles, this means riding bull markets for as long as possible, and then side-stepping bear markets when they eventually hit.
In the very simplest of terms, you need to be invested in stocks, until an objective, verifiable tool (not your feelings or limiting beliefs) tells you it’s time to “get out.”
I’ve developed a tool that takes ALL of the guessing work out of this problem. With just one look at this tool, you can tell whether it’s a good time to buy stocks or not. I detail it, along with what it’s currently saying about the market today in a Special Investment Report How to Predict a Crash.
The crash callers and bears just got a major lesson.
It’s a lesson that all investors have to learn at some point. Indeed, the only investors who actually make money from the markets are those who have learned that lesson and integrated its outcomes to their investing strategies.
The lesson?
Bears don’t make money.
The reality is that being a bear provides you with endless material to write or complain about. After all, at any point in time there are a million things that can go wrong in the markets. But most of the time, as in over 95% of the time, those terrible things don’t actually play out.
Even when bad things do play out, few if any investors actually make money from them.
Consider the Great Financial Crisis of 2008: arguably the greatest bear market/ crisis of our lifetimes.
In 2008, there were roughly 216 million American adults over the age of 18. Roughly 60% of them had exposure to the stock market via brokerage accounts or retirements accounts (401Ks, IRAs, etc.) So, we’re talking about roughly 130 MILLION people who were involved in the stock market in one way or another.
The number of investors who got rich betting on a crash at that time is under 30. So, we’re talking about 30 people out of 130 MILLION succeeding. That’s roughly one ten millionth of one percent (0.00001%).
To put that into perspective, you are TEN TIMES more likely to be struck by lightning (the odds of that happening are one in one million).
Moreover, those few investors who DID get rich from the Great Financial Crises were all in highly unusual circumstances, none of which apply to the typical trader/ individual investor.
John Paulson is a famous hedge fund manager who became a billionaire betting on the housing crash. What you might not know is that the only reason this happened was because he personally had Goldman Sachs build securities that were chock full of garbage mortgages, which Goldman Sachs then sold to other clients… so Paulson could bet against them.
This was unethical and borderline illegal. And individual investors like you or I would NEVER have this opportunity (when was the last time you told Goldman Sachs to create something for you to bet against?)
Michael Burry is another hedge fund manager who got rich from betting on the housing crash. He had to LOSE money for two years before his bets worked out. And even once things went in his favor, the investment banks who sold him the securities he used to bet against the housing market refused to value his trades as profitable. Then his investors tried to withdraw their funds. When Burry refused to give the money back, they sued him. What followed was years of legal hell as well as an investigation by the FBI.
So let us consider this…
The odds of making a fortune betting on a crisis or some other Black Swan even are less than those of being struck by lightning.
The small handful of people who DO get rich from these situations do so either because they have A) a ridiculously unethical set up like John Paulson B) are willing to experience a nightmarish scenario for months, or even years like Michael Burry.
Again, being a bear is great if you want something to complain about… but it’s terrible if you want to make money from the markets.
If you’re tired of listening to bears who do nothing but lose you money, come join our daily market commentary Gains Pains & Capital. It focuses on proven investment strategies that can boost you portfolio returns.
Indeed, we just published a special investment report that details proprietary triggers that register before every bear market or crash. Unless these triggers go off, we’re putting our money to work, profiting from the markets.
I detail them, along with what they’re currently saying about the market today in our Special Investment Report How to Predict a Crash.
The Crash Callers are out in full force once again.
The problem with calling for a Crash is that you’re wrong 99% of the time. Then, once every few years, you’re correct. The whole process reminds me of a broken clock which is “correct” two times a day… but wrong the other 23 hours 58 minutes.
Remember, the purpose of investing is to make money. The easiest way to do that is to ride bull markets for as long as possible… and then get out before a bear market/ crash hits.
But what about the investors who make huge fortunes during Crashes like the Great Financial Crisis of 2008?
Let me bring you in on a dirty little secret…
Almost NO ONE made money during the market crashing in 2008. And the people who did were in situations that you or I will NEVER be in.
In 2008, there were roughly 216 million American adults over the age of 18. Roughly 60% of them had exposure to the stock market via brokerage accounts or retirements accounts (401Ks, IRAs, etc.) So, we’re talking about roughly 130 MILLION people who were involved in the stock market in one way or another.
The number of investors who got rich betting on a crash at that time is under 30. So, we’re talking about 30 people out of 130 MILLION succeeding. That’s roughly one ten millionth of one percent (0.00001%).
To put that into perspective, you are TEN TIMES more likely to be struck by lightning (the odds of that happening are one in one million).
Moreover, those few investors who DID get rich from the Great Financial Crises were all in highly unusual circumstances, none of which apply to the typical trader/ individual investor.
John Paulson is a famous hedge fund manager who became a billionaire betting on the housing crash. What you might not know is that the only reason he succeeded was because he personally had Goldman Sachs build securities that were chock full of garbage mortgages, which Goldman Sachs then sold to other clients… so Paulson could bet against them.
This was unethical and borderline illegal. And individual investors like you or I would NEVER have this opportunity (when was the last time you told Goldman Sachs to create something for you to bet against?)
Michael Burry is another hedge fund manager who got rich from betting on the housing crash. He had to LOSE money for two years before his bets worked out. And even once things went in his favor, the investment banks who sold him the securities he used to bet against the housing market refused to value his trades as profitable.
To top it off, his investors tried to withdraw their funds. When Burry refused to give the money back, they sued him. What followed was years of legal hell as well as an investigation by the FBI.
So, let us consider this…
The odds of making a fortune betting on a crisis or some other Black Swan are less than those of being struck by lightning.
The small handful of people who DO get rich from these situations do so either because they have A) a ridiculously unethical set up like John Paulson B) are willing to experience a nightmarish scenario for months, or even years like Michael Burry.
Which brings me back to my original point: the purpose of investing is to make money. The easiest way to do that is to ride bull markets for as long as possible… and then get out before a bear market/ crash hits.
Put another way, the Crash Callers have investing totally backwards: you need to focus on the 99% of times stocks don’t Crash, NOT the 1% of the time they do.
So obviously, investors need a tool for determining whether stocks are simply correcting in the context of a bull market… or if a legitimate crash/ bear market is about to unfold.
I’ve developed a tool that takes ALL of the guessing work out of this problem. With just one look at this tool, you can tell whether it’s a good time to buy stocks or not. I detail it, along with what it’s currently saying about the market today in a Special Investment Report How to Predict a Crash.
Stocks have broken down in a big way, leading investors to ask…
Is this a garden variety correction… or the start of a REAL crash?
The S&P 500 sliced through its 50-SMA and plunged down to its 200-SMA in a matter of days. We haven’t seen a collapse like this since the regional bank crisis of March 2023.
First and foremost, you should know that market dips/ pullbacks are quite common.
Consider that stocks will typically pull back 5%+ three or four times every year. Larger drops aren’t that uncommon either: the market corrected 10% or more in HALF of the 20 years from 2002-2021.
Anyone who panicked and sold the farm when that happened ended up missing out in a big way!
Having said that, this correction has been quite violent. Many of the market’s leaders are down 20%+ which technically would be considered “bear market” territory.
Moreover, the Volatility Index (VIX) has spiked to levels that are typically associated with crises. See for yourself in the chart below.
Thus, investors are in a quandary.
One the one hand, corrections are common events in which you should “buy the dip.” But on the other hand, once every 10 years or so, a REAL crash/ bear market will hit that will wipe out years’ worth of gains!
So obviously, investors need a tool for determining whether stocks are simply correcting in the context of a bull market… or if a legitimate crash/ bear market is about to unfold.
I’ve developed a tool that takes ALL of the guessing work out of this problem. With just one look at this tool, you can tell whether it’s a good time to buy stocks or not. I detail it, along with what it’s currently saying about the market today in a Special Investment Report How to Predict a Crash.
Get ready for a “Rip Your Face Off” rally in the stock market.
Why?
Three reasons…
1) The bull market is getting stronger, not weaker.
Regarding #3, for most of the last three months, the overall market’s gains have been driven by a handful of Big Tech plays.
No longer…
Overall market breadth has surged in the last two weeks, hitting new all-time highs before this recent pullback. This bull market is getting stronger, not weaker.
Reason #2 why stocks are about to explode higher.
The Fed is about to start cutting rates… at a time when the economy is still growing. The futures market is predicting between 1.75% and 2% in rate cuts by September of next year. That means seven or even EIGHT rate cuts in a 13 month period!
That is NOT bearish.
And finally, and likely most importantly, reason #3 why stocks are about to rally hard.
The next President of the United States, Donald Trump, is obsessed with the stock market. He tweeted about it an average of two times per week during his first term. And Team Trump has already leaked proposals to take over the Fed if the Fed doesn’t play ball.
Remember, the stock market is forward looking, which means that starting today, the market is going to begin discounting a Trump win.
This will benefit certain sectors and stocks more than others. And those investors who are properly positioned stand to make potential fortunes.
With that in mind, we are about to publish a Special Investment Report detailing the #1 investment to own when during a Trump 2nd Term.
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Politics are a full contact sport that brings out the ugliest aspects of human nature. And the political environment today is more toxic than at any other time in my lifetime.
Unfortunately for investors, the President and his/her agenda for the economy has a MAJOR impact on the markets. For those of us who want to make money from our investments, we have to address recent political events.
With that in mind, it is clear that Donald Trump will be the next U.S. President.
The attempted assassination of former President has horrified and disgusted every decent person in this country. And it is guaranteed two things:
1) Joe Biden will NOT be leaving the race.
2) Donald Trump is going to win the election.
Regarding #1, following a terrible debate performance, President Biden has been struggling to maintain any kind of lead in the polls. Questions abound about the true state of the President’s cognitive/ physical health, resulting in multiple Democrat leaders and mega-donors calling on the President to step down and allow another candidate on the 2024 ticket.
This was problematic before the assassination attempt on President Trump.
For one thing, it is not clear that another candidate could legally replace Biden on the ballot in all 50 states. There’s also the issue of whether another candidate could use Biden’s campaign funds or not. And finally, there’s the fact that Biden himself doesn’t want to step down.
The attempted assassination of Donald Trump has changed all of this. NO other candidate will want to run for President in 2024. The potential upside of doing so is gone.
This presents Team Biden with a MAJOR problem.
Because of the questions concerning President Biden’s cognitive health, the President and his campaign staff had doubled down on vilifying former President Trump as its primary campaign strategy. In their minds, the only way to distract from Biden’s cognitive issues or paint him in a more positive light relative to his opponent was to the depict Trump as a “dictator” or “evil.”
Following the attempted assassination of President Trump, that strategy is now politically impossible. As I noted before, every decent American is horrified by the assassination attempt. Consequently, Biden cannot portray Trump as a monster after what happened without offending potential voters,
Put simply, following what happened on Saturday, President Biden is now a candidate with no viable campaign strategy… and questionable cognitive functioning.
Which means…
Former President Trump is going win the 2024 Presidential election.
If you don’t believe me, consider what the betting markets are saying. From April until the June debate, the two candidates’ betting odds were within spitting distance of each other.
Then the debate happened, and the odds of President Biden winning the election, represented by the purple line in the chart below, cratered. And following Saturday’s assassination attempt, the odds of President Trump winning, as represented by the light blue line, have skyrocketed.
As I write this, there is now a 71% chance of Trump winning.
The stock market is forward looking, which means that starting today, the market is going to begin discounting a Trump win.
This will benefit certain sectors and stocks more than others. And those investors who are properly positioned stand to make potential fortunes.
With that in mind, we are publishing a Special Investment Report detailing precisely which stocks will explode higher based on a second Trump term on Wednesday of this week.
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I ask because everywhere I look, I see analysts and gurus proclaiming that yesterday’s “bearish” action was the start of a major collapse.
There’s just one problem with this… MOST of the market rallied yesterday.
I’m not making this up… over 400 of the 500 companies in the S&P 500 finished the day UP yesterday. The reason the market fell at all is because big tech, which comprises 30% of the market’s weight, dropped hard.
In fact, the overall market breadth (a measure of internal market strength) actually erupted to new all time highs yesterday.
Does this look like the start of a major collapse to you?
This is why you have to be so careful when someone starts spouting off bearish arguments based on stocks dropping. It’s so easy to panic and sell… when the dip might in fact be a MAJOR buying opportunity.
Case in point, a LOT of people sold in April when the market corrected just ~5% (a totally healthy correction in the context of a bull market). The S&P 500 has since rallied over 600 points. Anyone who sold in April MISSED OUT on making some serious money!
Remember, as investors, our job is to make money, not look for any excuse to dump stocks and panic about something bad happening. And as I’ve outlined in recent articles, this means riding bull markets for as long as possible, and then side-stepping bear markets when they eventually hit.
In the very simplest of terms, you need to be invested in stocks, until an objective, verifiable tool (not your feelings or limiting beliefs) tells you it’s time to “get out.”
I’ve developed a tool that takes ALL of the guessing work out of this problem. With just one look at this tool, you can tell whether it’s a good time to buy stocks or not. I detail it, along with what it’s currently saying about the market today in a Special Investment Report How to Predict a Crash.
As I outlined yesterday, as an individual investor, there are two things you NEED to focus on:
1) Ride bull markets for as long as possible.
2) Get out of stocks once a bear market hits.
If you do this, you WILL get wealthy from investing over time.
I bring this up, because I’m seeing more and more analysts arguing that the bull market is about to end and that a raging recession will crater stocks.
I don’t see what they are seeing. If anything, stocks look ready to go to new highs of 5,800 or even higher by year end. Please note, I’m not saying there won’t be dips and corrections along the way… I mean that this is a bull market, and if anything it’s getting stronger.
One of the primary criticisms of this bull market is that it’s being driven by just a handful of stocks: the big tech plays like Amazon, Alphabet, Nvidia, etc. Meanwhile, the other 495 stocks that comprise the S&P 500 are trailing behind.
This actually makes perfect sense. The big tech companies are the most profitable companies in history. Collectively, Amazon, Nvidia, Microsoft, Meta, and Alphabet generated $116 BILLION in cash flow in 1Q24.
That’s roughly $1.28 BILLION in cash flow… per day.
Again, there’s a reason by the big tech companies lead the market: they’re the largest, most profitable companies in history. They should lead the market!
The key item is whether the rest of the market plays “catch up” or if big tech rolls over. And throughout this bull market begun in October 2022, the rest of the market has played “catch up.”
Take a look at the first leg higher from October 2022 to June 2023. At that time, the regular S&P 500 which is heavily weighted towards tech and is represented by the black line in the chart below dramatically outperformed the equal weighted S&P 500: a version of the S&P 500 in which each company receives 1/500th weighting as represented by the blue line in the chart below.
Then, just like now, stock market bears and misguided gurus were out proclaiming that the stock market was about to collapse because it was “held up by only a handful of stocks.”
Then the rest of the market played “catch up” and the market roared to over 5,000 within eight months.
So again, the fact that big tech is leading the market… and makes up the bulk of its gains isn’t necessarily a BAD thing. If the rest of the market plays catch up… as it tends to do… the bull market will continue MUCH LONGER than most analysts expect.
Remember, as investors, our job is to make money, not look for any excuse to dump stocks and panic about something bad happening. And as I’ve outlined in recent articles, this means riding bull markets for as long as possible, and then side-stepping bear markets when they eventually hit.
In the very simplest of terms, you need to be invested in stocks, until an objective, verifiable tool (not your feelings or limiting beliefs) tells you it’s time to “get out.”
I’ve developed a tool that takes ALL of the guessing work out of this problem. With just one look at this tool, you can tell whether it’s a good time to buy stocks or not. I detail it, along with what it’s currently saying about the market today in a Special Investment Report How to Predict a Crash.
