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.
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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.
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.
Consider the last 35 years. The investor who simply bought stocks regardless of whether they were in a bull or bear market experienced a 17 year period in which he or she made NO money from their investments.
The reason?
The bear markets from 2000-2003 and 2007-2009. The losses generated by those five years’ worth of bear markets resulted in 17 years of ZERO gains from the markets.
See for yourself… from 1996 through 2013/2014, stocks went nowhere. Anyone who invested during this time grew his or her portfolio via contributions NOT market gains.
Again, as an individual investor you can’t just ride bull markets. You also need to avoid bear markets.
If you did that over the last 35 years, you achieved the gains from the green rectangles, and didn’t give back those gains during the bear markets in between. And you got rich in the process.
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.
If you’re looking for a reason why the U.S. hasn’t slipped into recession yet, the answer is simple…
Uncle Sam is propping up the economy. And it’s working… for now
Some items of note:
Since, mid-2021, public sector job growth has outpaced private sector job growth.
Government transfers (social spending) accounted for 40% of the growth in income in 1Q24 and was the single largest contributor to personal income growth in 20 states.
In June, the government accounted for 1/3rd of all job gains.
When you add private sector jobs that are funded indirectly by the government, (healthcare, education) Uncle Sam accounted for 74% of ALL jobs created in June!
As I mentioned earlier, the government is propping up the economy via hiring and social spending. This is why the U.S. economy refuses to break down into a recession despite weakness in the private sector.
Small wonder then that stocks keep ripping higher. The S&P 500 has hit new all-time highs in each of the last five weeks!
Put simply, this is a raging bull market courtesy of an economy that is being propped up abject government spending that is funded by the largest deficit as a percentage of GDP in the history of the U.S. (outside of WWII).
At some point this situation will end… BADLY. But in the meantime, we need to ignore all the doom and gloom and ride this bull market for as long as possible.
Think about the raging bull market that occurred in the early ’00s. The first signs of the Great Financial Crisis appeared in mid-2006. Those who panicked based on this, had to wait another 20 months as the market rose another ~30% before stocks finally began to break down.
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.
Over the last week, I’ve noted that Uncle Sam is the economy now.
What I mean by this, is that the U.S. government is spending so much money, and hiring so many people, that the economy is refusing to fall into recession despite weakness in the private sector.
By quick way of review…
Since, mid-2021, public sector job growth has outpaced private sector job growth.
Government transfers (social spending) accounted for 40% of the growth in income in 1Q24 and was the single largest contributor to personal income growth in 20 states.
Put simply, the “fix” is in as far as the economy is concerned. And it’s Uncle Sam, NOT the Fed, sitting in the economic driver’s seat.
The most powerful financial insider in the world, Fed Chair Jerome Powell, confirmed this in a speech at the ECB Forum on Central Banking yesterday.
Some highlights from Fed Chair Powell’s comments.
The budget deficit is very large, and the deficit path is unsustainable.
Debt sustainability should be a real focus going forward, should be tackled sooner or later.
Fiscal policy is a job for elected officials.
The Fed has been told to stay out of politics and they do.
(h/t Bill King)
This is a MAJOR tell from the most powerful financial insider in the world: the Federal Government is the one running the “economic” show right now. And it is issuing a truly jaw dropping amount of debt to accomplish this: the Biden administration is on pace to add $9 trillion in debt in just four years.
See for yourself… the U.S.’s debt load is going parabolic.
At some point, this is going to be a REAL problem. But for those of us focusing on making money from the markets, the important thing to note right now is that the economic “fix” is in. And the Fed’s not going to get in the way.
Small wonder then that stocks keep ripping higher. By the look of things, the S&P 500 will hit a new all-time highs later today.
After all, 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.
Yesterday, I noted that Uncle Sam effectively is the economy… for now.
What I meant by this is that the government is hiring so many people and spending so much money, that it is stopping the economy from rolling over into a recession.
By quick way of review…
Since, mid-2021, public sector job growth has outpaced private sector job growth.
Government transfers (social spending) accounted for 40% of the growth in income in 1Q24 and was the single largest contributor to personal income growth in 20 states.
It is VERY difficult for the U.S. economy to roll over into a recession with this going on. But this economic “prop” is coming at a cost.
The U.S. is issuing a staggering amount of debt to hire all these people and pay out all this money. The Biden administration has already added $7 trillion in new debt and is adding a new $1 trillion in debt every 100 days.
Put simply, assuming President Biden completes his first term, he will have presided over the largest debt expansion in U.S. history: a jaw dropping $9 trillion.
At some point, this is going to be a REAL problem, particularly when you consider that a massive amount of debt that was issued when rates were around zero will come due in the next 24 months.
With rates now over 5%, the U.S. will be forced to pay a lot more money in interest payments when it goes to roll over this old debt.
How much more money?
Interest payments on the national debt are expected to clear $870 billion this year and $1 trillion in 2025. That would make interest payments the single largest government outlay.
In very simple terms, starting next year, Uncle Sam’s will be paying his debtors MORE than he pays Americans via social security.
How will this play out? That remains to be seen. But one thing is clear: all this money printing is stopping the U.S. from rolling over into recession. And this is boosting stocks.
To whit, the stock market has hit a new all-time highs in four of the last five weeks. This is a RAGING BULL of a market, and investors NEED to ride it for as long as possible until the music stops.
Why?
Because when the next recession hits, the market will lose 20%-30% and be DEAD money for at least nine months.
After all, 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 most important thing for investors to understand about the economy is that “it is different this time.”
We’ve already assessed how multiple previously accurate recession indicators (yield curve inversion, Sahm Rule trigger, etc.) have registered false positives in this cycle.
Why is this happening?
For one thing, the U.S. has never voluntarily shut down its economy. It’s also never pumped $11 TRILLION (an amount equal to over 50% of GDP at the time) into its financial system in the span of 20 months.
But surely both of those items have been factored into the data by now, right?
Sure, but you also have to consider that the money printing/ spending, hasn’t stopped! The U.S. is currently running the largest deficit as a percentage of GDP outside of WWII.
It is VERY difficult for the economy to roll over into recession with this going on. Indeed, in many ways, the government IS the economy right now.
Since mid-2021, job growth in the public sector/ government (red line in the chart below) has outpaced that in the private sector (blue line in the chart below).
The government isn’t just hiring, either. It’s also putting out gargantuan amounts of money via social spending. As E.J. Antoni notes, 40% of the growth in income in 1Q24 was from government transfers (read: spending). Indeed, government transfers were the SINGLE largest contributor to personal income growth in 20 states!
So Uncle Sam isn’t just hiring… he’s also handing out money by the tens of billions of dollars!
Again, it’s VERY difficult for the economy to roll over into recession with this going on. I’m not saying this will work forever. But we need to see the private sector absolutely collapse to overcome all these government interventions in order for the economy to roll over into a REAL recession.
After all, 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.
I keep warning that “this time really is different” when it comes to the economy.
Everyone knows this on some level… but most analysts are refusing to acknowledge it.
Remember, never before has the U.S. shut down its economy voluntarily. Not during WWII, not during the Spanish flu, NEVER. So that alone was a game-changer as far as how our economy functions (and is measured).
Moreover, never before has the Fed and the Federal Government pumped $11 TRILLION into the financial system in the span of 20 months. Consider that the U.S. economy was ~$20 trillion at the time… so we’re talking about policymakers putting an amount greater that 50% of GDP into the financial system.
Again, this has never happened before. In fact, if you add up all the money ever printed in the history of the U.S., over 40% of it was printed in 2020 alone.
So again, it is “different” this time. Both the downturn, and the policy response were unprecedented. And that has rendered many traditional economic metrics useless at predicting the next move in the cycle.
We’ve already assessed the yield curve inversion, as well as the coming Sahm Rule trigger which we expect later this summer. Today’s lets assess the Money Supply or M2.
In its simplest rendering, M2 measures the amount of money in the financial system (savings accounts, money market funds, etc.) Historically, analysts have looked at M2 to assess whether a recession was coming or not. If M2 goes negative, it usually precedes a recession.
I bring all of this up because in 2023, M2 went negative, resulting in countless analysts and commentators shouting that a recession was about to hit.
The big problem with this is that they forgot to note that M2 had GROWN by 40% during the pandemic… so of course it’s going to decline a bit! Heck even a significant decline is likely to occur after a 40% jump!
Today, M2 is turning back up again. And all the folks who were screaming about its decline indicating a recession was about to hit are silent. And all the investors who sold the farm based on the gurus/ analysts screaming about M2 have missed out on one of the greatest bull runs in stock market history.
Again… it really is different this time. Most historical economic measures are so warped by the pandemic and subsequent policy-response that obsessing over them is only going to lead to missing out on market gains.
After all, 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.
In the coming weeks, you’re going to hear a LOT about the Sahm Rule.
The Sahm Rule is an indicator that has accurately predicted every recession since the 1960s. In its simplest form, the Sahm Rule compares 3-Month Moving Average for the unemployment rate to the lowest unemployment rate in the prior 12 months.
If the difference between the two numbers is 0.5% or greater, it indicates a recession has begun.
As I mentioned a moment ago, this indicator has predicted every recession since 1960. The below chart shows the Sahm Rule measure (blue line) as well as historic recessions (gray bars). You can see its accuracy for yourself.
I bring all of this up, because the current Sahm Rule reading is 0.37%. And it is HIGHLY likely this metric will hit 0.4%, if not 0.5% some time this summer.
When this happens nearly every guru and strategist on the planet is going to start proclaiming that a recession is here. And they are going to start telling their clients to “sell the farm” on their stock portfolios.
However, for those of us who are interested in making REAL MONEY from our portfolios, it’s important to note that there is a BIG difference between the U.S. today and the U.S. during prior periods in which the Sahm Rule triggered a recession warning.
That difference?
Claudia Sahm, the creator of the Sahm Rule, notes that the U.S. has added 3.3 million people in net immigration in 2023. To provide some context, the U.S. added just 900,000 on average every year from 2010-2019.
As Sahm noted to Business Insider, the immigration process is time consuming. As a result, many immigrants are unable to legally find work after entering the labor force.
The end result?
The number of unemployed people jumps rapidly, resulting in a higher unemployment rate, which will trigger a Sahm Rule recession warning. But this jump in unemployment rate is due to immigration not people who were working losing their jobs.
Put simply, the coming Sahm Rule signal (or at the very least warning) is likely to be a false positive, meaning that it is NOT actually signaling a recession has arrived.
This will make it the EIGHTH false positive for a recession indicator during this business cycle. You’d think after seven false positives that people would begin to catch on that things are different this time.
After all, 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.
Stocks hit new all-time highs last week… but you wouldn’t know it from the mood on social media and financial TV!
It’s truly incredible to watch… the markets have been on a historic run, with the S&P 500 rallying 1,400 points since the November 2023 lows. And yet, throughout this period, the overall mood amongst market participants seems anxious if not outright worried.
Everywhere you look, there’s talk of a potential recession… or concerns about geopolitics… or claims that Artificial Intelligence (AI) stocks are in a massive bubble that is about to burst.
And yet, the markets keeps charging higher, with every dip being bought. Those who fretted about the countless number of things that could go wrong have made nothing. Those who focused on making money and stayed invested in stocks have seen their entire portfolios increase by over 33%!
Which brings us to #2: trying to calling a top.
Please understand, I’m not trying to make fun of people who are cautious or conservative with their investments. But at some point, if you’re looking to make real money with your investing, you need to focus on what works and ignore feelings/ worries that don’t contribute anything to your net worth.
I’m talking about thoughts like…
1) This stock has gone up a lot, so it must be in a bubble.
2) This is the top!
3) The market is rigged!
NO ONE got rich from any of those three concepts. If your goal is to make money from your investments, you should remove all three of them from your investing vocabulary.
Let’s break down all three.
Regarding #1, since going public Apple (AAPL) has looked “bubbly” countless times. Heck, it was up 20,000% in 2018. And yet, if you focused on the fact AAPL had gone up so much, you missed out on the run to 200,000% gains!
Which brings us to #2: trying to calling a top.
No one… I repeat, NO ONE has ever gotten rich from calling a top. A small handful of people have gotten rich from crashes or bear markets… but most if not ALL of investors (including the legends) got rich from riding bull markets or bull moves in individual stocks.
Indeed, every bull market is nothing more than a series of “tops” which are then taken out by new highs. If you’re obsessed with calling a top and getting out of stocks, you’re guaranteeingyou won’t see future gains. Put another way, your obsession is limiting your profits.
Which brings us to #3 in our list: claiming that the market is rigged.
The reason people claim this is because time and again it looks as if stocks are going to break down only to reverse and ramp higher. But if you dig a little deeper into this way of thinking, you quickly realize that it means the person who is angry that the markets refuse to collapse secretly wants something bad to happen to the markets.
Understand, I’m not saying that the markets aren’t manipulated. Anything that involves a lot of money or power breeds corruption and manipulation. But getting angry because stocks refuse to break down badly is bad for your physical health, your mental health, and your portfolio.
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.
Everywhere you look, people are calling for a recession to hit. In fact, many big name investors and gurus have been calling for a recession for most of the last two years.
During that time, stocks have gone up 50%.
The primary reason people are calling for a recession is that a number of signals that have previously predicted recessions are once again flashing “danger.”
For instance, the yield curve has been inverted for nearly two years. Historically a yield curve inversion followed by a subsequent dis-inversion has predicted every recession since 1980.
You can see this clearly in the chart below. Anytime the blue line broke below 0, the yield curve was inverted. You’ll note that recessions (grey bars) hit soon after the yield curve became dis-inverted (the blue line broke back above 0).
Looking at that chart, many investors believe it’s time to dump their stocks and prepare for a recession and market crash. However, there are two problems with using this metric to invest in stocks today.
1) The pandemic and its economic impact messed up the usefulness of many metrics including the yield curve.
2) Stock returns vary dramatically during yield curve inversions.
Regarding #1, the pandemic/ economic shutdowns and subsequent Fed/ Federal Government interventions have never happened before. Never before in history has the economy been shut down. And never before has the Fed/ Federal Government pumped $11 TRILLION into the financial system in the span of 20 months.
Put simply, our current economic environment is completely different from every other environment in which the yield curve inverted. Case in point, today the Fed is talking about cutting rates while the economy is growing and inflation is falling.
That was not the case when the yield curve inverted in 1980, 1988, 2001, 2007, or 2019. So again, the pandemic messed up a lot of economic metrics that have been accurate in the past.
Which brings us to #2 in our list above: stock returns vary dramatically during yield curve inversions.
Stocks returned anywhere from -38% to +16% during the last five yield curve inversions. That is QUITE a range of returns. And it negates the usefulness of investing based on what the yield curve is doing.
Think of it this way… if someone approached you and said, “if you use this investing trick, you either lose 38% or make 16%,” you’d tell them to take a hike.
Well, that’s what stocks have returned during yield curve inversions.
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 an inaccurate economic metric) 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.
Being bearish is inherently problematic because historically stocks tend to go up… and quite a lot. Over the last 100 years, the Dow Jones Industrial Average has finished the year up 68% of the time. And as you can see in the chart below… they’ve gone up a LOT.
Investing is all about probabilities, and if there is a greater than two thirds odds that stocks will go up in any given year, betting on a collapse is generally going to be a losing bet.
Understand, I’m not suggesting you should be mindlessly optimistic about the markets. There are always risks. But from a big picture perspective, stocks tend to go up, and go up quite a lot.
This should be the foundation for your view of the markets.
So why not simply buy stocks any time you have any additional capital?
Because when stocks DON’T go up, they either:
1) Go nowhere for years, if not decades.
2) Can lose a LOT of money VERY quickly.
Regarding #1, take a look at the below chart of the Dow Jones Industrial Average since 1919. You’ll note that there were three periods in which stocks went nowhere for a considerable length of time.
They were:
1) 1923-1953 (30 years)
2) 1963-1982 (19 years)
3) 1993-2015 (22 years)
Anyone who loaded up on stocks automatically throughout these time periods didn’t make a cent for decades.
There are a lot of analysts who ignore these facts and tell their clients to simply buy stocks for the long-term at any time, but what are the odds that a real person, putting real money to work in the markets could sit through ~20 years of NO gains and not despair?
ZERO.
Put simply, if you’re looking to make REAL wealth from the markets, you need to focus on WHEN to buy stocks and when to avoid them.
You’re probably wondering how can I act so carefree about stocks today when there are clearly so many issues in the world?
The answer is simple: I have proprietary triggers that hit before any major market break-down. Until one of them goes off, the market is telling me that stocks aren’t concerned about the issues/ risks.
To figure that out, I rely on certain key signals that flash before every market crash.
I detail them, along with what they’re currently saying about the market today in a Special Investment Report How to Predict a Crash.
After all, there’s the prospect of a recession, the massive deficit ($1.6 trillion), conflict in the Middle East, the so-called AI bubble waiting to burst, and more.
However, despite all of these problems, stocks keep rising. In fact, they closed at new all-time highs just last week. Anyone who sold their holdings based on any of the above risks missed out on growing their portfolio. Anyone who panicked in April and sold their positions… or even worse DIDN’T take advantage of the drop to go long, has missed out on a LOT of money.
It’d be bad enough to do this once… but unfortunately many investors do this time and time again to the point of missing out on MILLIONS’ of dollars worth of gains.
It all stems from a lack of understanding about the stock market.
At any given time, the market’s action is determined by the decisions of millions of individuals, all of whom have “skin in the game” in the form of money. So, the market is processing literally billions, if not trillions, of pieces of information every day.
However, out of all these pieces of information, stocks usually only “care about” or focus on two or three items at any particular time. Sometimes it might be the economy. Other times it might be the Fed. Other times it might be a war, or a President’s actions (or tweets), or a hedge fund blowing up, or inflation, etc.
And until stocks start caring about a specific issue to the point of breaking down… all the hypothetical risks or issues that investors care about individually are unimportant (as far as stocks are concerned).
This is the single biggest mistake most investors make: worrying or panicking about risks to the point of missing out on bull markets. It’d be one thing if this was just a mistake… but it’s a costly mistake. As I mentioned earlier, investors miss out on MILLIONS of dollars’ worth of market gains when they don’t catch the big market rallies.
I realize the above words sound crazy coming from me. After all, two of the biggest calls of my career involved betting on bad things happening: the Great Financial Crisis of 2008 and the EU Debt Crisis of 2011-2012.
So how can I act so carefree about stocks today when there are clearly so many issues in the world?
The answer is simple: I have proprietary triggers that hit before any major market break-down. Until one of them goes off, the market is telling me that stocks aren’t concerned about the issues/ risks.
I’ll detail one of the them in tomorrow’s article… but in the meantime, if you’re looking for someone to guide your investing to make sure you’re NOT missing out on the biggest market gains, I can help.
Some quick facts about my track record.
I first recommended shares of Nvidia (NVDA) to clients in 2007 when it was trading at a split-adjusted price of $1 per share (it’s over $900 today).
I moved clients into Microsoft (MSFT) in 2014 when it was below $50 a share (it’s over $400 today).
We also bought AutoZone in 2012 when it was $422 a share (it’s over $2,700 today).
Simply put, when it comes to making BIG money from investing, I’ve done it time and again. Indeed, since 2015, subscribers of my Private Wealth Advisory have maintained a win rate of 74%.
Yes, we made money on three out of every four trades we closed… for EIGHT YEARS STRAIGHT!
And I believe 2024 is going to be our best year yet! We’ve already locked in gains of 10%, 15%, 27%, 30% and 67%… and the year isn’t even half over!
I’d love to have you join us. And you can do this today, for just $3.99 with a 30-day trial to Private Wealth Advisory!
Before proceeding I must warn you that this offer will expire this coming Friday at midnight!
A six month subscription comes with:
Again, the doors close on this offer this Friday at midnight.
Ever since the S&P 500 bottomed in late October/ early November 2023, the 21-day exponential moving average (EMA) has served a major “trend line.” Put simply, whenever stocks fell to test this line, they “bounced” soon after and the rally continued.
Last week’s price action featured a different dynamic. Stocks fell to test the 21-EMA and struggled to reclaim it for two sessions (blue oval in the chart below). The only other time this happened was during the brief market pullback in early January 2024. At that time, the market rebounded sharply on the third trading session (purple oval in the chart below).
In this context, today’s price action is key. If the S&P 500 rallies hard and reclaims the 21-EMA, then it’s likely stocks will rally to new highs. However, if stocks cannot reclaim the 21-EMA with conviction today, then we’re likely to see more downside for stocks.
I’ve illustrated the S&P 500’s support lines in the chart below.
If you’re interested in taking advantage of a unique situation in the stock market today, the FREE copies of our Special Investment Report detailing three investments that can profit from inflation are rapidly being reserved. So if you want reserve one, you better move fast!
We’re picking up where we left off our A Deep Dive Into What AI Means For Corporate America investment series. If you missed the first two parts from this series, you can access them hereandhere.
By brief way of review:
Artificial Intelligence (AI) is the dominant theme in the investing world today.
Currently AI is capable of accessing vast swathes of available information and integrating it in such a way that AI appears to be creating something from scratch.
Current AI models are being deployed in practically every sector of the economy from entertainment to marketing, operations and more.
While the areas of the economy that AI is impacting are different, the implications are all the same:
Improving productivity (getting more results for less effort).
This is why AI is so exciting for the economy and investors. In a best-case scenario, AI will lead to a massive increase in profitability as revenues grow and costs decrease. And that is what has triggered a kind of mania for AI-related stocks.
The flipside of this is that AI is currently a kind of Wild West in which “anything goes.” There are no legal, legislative, or societal frameworks for this technology. As a result, advances are being made with few if any ethical considerations.
In this sense, AI is following a pattern we’ve seen with other technological revolutions in the past. That pattern consists of two phases is:
The initial breakthrough phase, which occurs before social/legal frameworks are in place.
The “normalization” phase during which social/legal frameworks are implemented, giving the technology a societal and financial legitimacy.
If you need a real-world example of this, think of the electronic music file or MP3 revolution.
The first phase was Napster in 1999, which featured the sharing of music in what was later deemed as illegal activity (the legal framework was not yet ready for the technology). During this initial phase Napster exploded in popularity particularly among young people. At its peak Napster had tens of millions of users. Then came the lawsuits, Napster went bankrupt, and social/ legal frameworks were introduced for this new technology. During this time Apple introduced iTunes: a version of MP3 technology in which MP3s could be bought and sold in a legally acceptable form.
Napster is still around. Its marketing promotes the fact it is “100% legal.” And it has about five million users. By way of contrast, at its peak, iTunes had 500+ million users and accounted for 63% of all digital music sales. It is now in the process of being converted over to Apple Music, a new service that also offers music streaming and other services in order to compete with Spotify which is the new market leader. So once again, the technology has changed and requires adaption.
AI as it stands today, is in its “Napster” phase. As investors we can profit from this by riding key players in the space, but we need to do so with our eyes open to risks, in particular the risk that at some point, the threat of a regulatory framework for AI will appear. And when it does, much of the “froth” in AI stocks will disappear as hot money/ momentum investors leave the space out of fear.
This doesn’t mean that AI will be “dead” at that time. Indeed, the BIG money will be made as market leaders emerge from the ashes of that collapse.
We’ll delve deeper into this in tomorrow’s article…
In the meantime, if you’re interested in profiting from this technological revolution, we are currently putting the finishing touches on a special investment reporting that outlines some of the larger implications for AI as well as several of the most likely market leaders.
To receive this special report when it’s published later this week, all you need to do is sign up for our FREE daily investment commentary Gains Pains & Capital.
We’re picking up where we left off our A Deep Dive Into What AI Means For Corporate America investment series. If you missed the first part from this series last week, you can access it here.
By brief way of review:
Artificial Intelligence (AI) is the dominant theme in the investing world today.
Currently AI is capable of accessing vast swathes of available information and integrating it in such a way that AI appears to be creating something from scratch.
We’ve already detailed the impact this technology will have on the entertainment industry: creating videos/ movies/ commercials used to require dozens of people (directors, actors, lighting technicians, sound technicians, editors, etc.) Courtesy of AI, ONE person can serve all of those functions.
Today, we’re going to assess the impact AI can have on other industries.
In the corporate world, AI can perform many tasks that previously required several people if not entire departments. AI can write an entire marketing piece and even create a visual advertisement for a product using a few words/ phrases entered by one user.
Interactive Investor recently used to AI to develop an entire online marketing campaign including thousands of ads and keywords. The results saw an increase in account creation and decrease in acquisition costs.
AI can do legal work as well, performing document review, analyzing contracts, and even preparing a deposition. There are now several examples of AI “legal assistants” located online.
AI can even alter business operations. Whole Foods has begun introducing “Just Walk Out” stores in which you simply walk in, take whatever you want from the shelves, and walk out. Sensors and cameras take care of the payment side of things.
The above examples of AI technology pertain to very different areas of the economy: making movies, performing legal diligence, shopping for groceries, etc. However, for investors, the implications of AI all boil down to just two items:
Improving productivity (getting more results for less effort).
This is why AI is so exciting for the economy and investors. In a best-case scenario, AI will lead to a massive increase in profitability as revenues grow and costs decrease. And that is what has triggered a kind of mania for AI-related stocks: Nvidia, Super Micro Computers, etc.
The flipside of this is that AI is currently a kind of Wild West in which “anything goes.” There are no legal, legislative, or societal frameworks for this technology. As a result, advances are being made with few if any ethical considerations.
We’ll be assessing those in tomorrow’s article.
In the meantime, if you’re interested in profiting from this technological revolution, we are currently putting the finishing touches on a special investment reporting that outlines some of the larger implications for AI as well as several of the most likely market leaders.
To receive this special report when it’s published later this week, all you need to do is sign up for our FREE daily investment commentary Gains Pains & Capital.
I’m about to share the single most important thing about investing in Artificial Intelligence (AI) today…
If you keep this in mind, you’ll avoid the basic mistake that 99% of investors are making when they put capital to work in AI.
Are you ready? Here it comes…
Over 99% of commentators have no idea what they’re talking about.
I’m not trying to be rude, nor facetious. There are plenty of brilliant, insightful people commenting about AI today. But investors often act as if strategists and analysts are psychic.
They’re not.
Human innovation is too messy, chaotic, and ever-changing for lots of people to accurately predict. This is especially true when it comes to technological revolutions with far-reaching implications.
If you don’t believe me, let’s consider what happened with search engines, one of the recent technological revolutions that produced incredible profits for investors who played it correctly.
Today, Alphabet (GOOGL) is THE search engine of the world, accounting for over 90% of global searches. At a market cap of $1.7 TRILLION company, it is one of the 10 largest companies in the world. It routinely produces tens of billions of dollars in profits. In fact, its 2023 profits were greater than the market capitalizations of Ford (F) and U.S. Steel (X) combined.
However, back in the 1990s when search engine technology first came to market, Alphabet (then Google) wasn’t a market leader. Rather, the company was competing for market share with numerous other firms including Yahoo!, Hot Bot, Excite, Ask Jeeves, AltaVista, AOL Search, MSN Search and others.
Indeed, at that time, Yahoo! was the largest search engine company with a market capitalization of $125 billion. In fact, Yahoo! had a chance to buy the Alphabet for just $1 billion in 2002! Fast forward to 2017, and Yahoo! was sold to Verizon for less than $5 billion… by which point Alphabet was a $730 billion company.
Who saw that coming?
My point here is that, the internet, specifically search engines, represented an incredible revolution that changed the world. However, few if any people were able to accurately predict how it would play out.
And this didn’t just concern picking winners vs. losers… it also concerned the technology as a whole: many investors thought that the Tech Crash of the early ’00s meant that the opportunity for profiting from search engines was over. They couldn’t have been more wrong as the below chart illustrates.
The great news is that those who were able to navigate the markets to profit from search engines made truly STAGGERING amounts of money. And if you could pick the future market leaders in advance… while riding the booms and busts with proper risk management… well, the above chart of Alphabet shows you the kind of returns you could generate.
Thus, the key for investing in AI today is determining who the future leaders will be. That’s where the REAL money will be made.
We are currently putting the finishing touches on a special investment reporting that outlines some of the larger implications for AI as well as several of the most likely market leaders.
To receive this special report when it’s published, all you need to do is sign up for our FREE daily investment commentary Gains Pains & Capital.
Yesterday, I outlined how the Fed and the Treasury are actively working to juice the financial system to aid the Biden administration’s re-election bid.
By quick way of review:
1) The Fed will soon begin cutting interest rates while stocks are at all time highs, the economy is still growing, and financial conditions are in fact looser than they were before the Fed raised rates for the first time in March 2022.
2) The U.S. is running emergency levels of social spending at a time when the economy is still growing. It’s added $5 trillion in debt since President Biden took office. And the pace of debt issuance is speeding up, not slowing down: the U.S. has added $2 trillion in debt in the last 12 months alone. You can thank Treasury Secretary Janet Yellen for signing off on this insanity.
Today, I’d like to delve a bit more into one of the more nefarious schemes the Fed is using to juice stocks higher. To fully grasp this, we need to wind the clock back to March 2023, when the U.S. regional banking system was on the verge of collapse.
At that time, a number of large regional banks collapsed due to:
1) Bad risk management: their leadership teams failed to appropriately hedge their interest rate risk while the Fed was raising rates.
2) Banks were only paying 0.1% on deposits, while money market funds and short-term Treasuries were yielding 4% or more. As a result of this, depositors were pulling funds out of the banks, resulting in the banks having to sell large portions of their loan portfolios at a loss (banks must maintain certain capital requirements based on deposits).
The Fed took action to stop a crisis from unfolding, pumping $400 billion in liquidity into the financial system in just three weeks. Prior to that, the Fed’s balance sheet was falling due to its Quantitative Tightening (QT) program. The Fed reversed NINE months worth of that program in just three weeks!
That staved off a crisis from hitting. But the Fed then began a back-door bailout of the banks through which it gave them additional access to credit and liquidity. And not just a little… but a LOT.
The below chart shows this facility’s use running back to 2005. And no, you’re not imagining things: the Fed’s use of this facility to juice the financial system in 2023 was greater than what it did during the pandemic, and almost as great as that used during the Great Financial Crisis of 2008! In fact, today it’s higher than it was during the absolute depth of the pandemic in March 2020!
We’re now almost a year out from the regional banking issues and the Fed continues using this facility to the tune of over $200 BILLION. So again, the Fed is juicing the financial system for political purposes. It’s abhorrent and corrupt, but it’s reality. And well prepared investors can take steps to insure they profit from what’s happening with the right investments.
I’ll address how to profit from this in tomorrow’s article. If you’d like it delivered to your inbox, all you have to do is join our FREE daily investment commentary GAINS PAINS & CAPITAL.
