These are historic times for the economy.
And these are historic times for the market.
One day, people will look back at this period in time, and marvel at the historic opportunities of both.
As an investor, that means the opportunity for historic profits.
So make sure you’re taking full advantage of it.
And don’t worry if you think you’ve missed the move. Sure, the past 10.3 years and 352% returns have been fantastic. But there’s a lot more upside to go!
And you’d be wise to tune out the doomsayers who have been predicting the end of this bull market for years -- even as recently as December of last year when they were screaming the loudest.
But, of course, it wasn’t the end. It was the beginning of a whole new leg higher, with even more bullish records in store.
The markets just put in their best June performance in years (Dow’s best in 81 years, S&P’s best in 64 years), and their best first half in years as well (Dow’s best in 20 years, S&P’s best in 22 years).
(So much for the end of the world.)
And the records keep coming.
July has so far seen all of the major indexes make new all-time highs, with the S&P and Nasdaq both doing it again, just last week.
Year-to-date, the Dow is up 16.7%, the S&P is up 19.8%, and the Nasdaq is up 24.2%.
Don’t listen to the know-nothing doom and gloomers.
The market looks great.
And the opportunity for more historic gains is now!
More . . .
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1) Niche food company-turned tech giant
2) Unique infrastructure with a brand new Zacks Rank #1 listing
3) Biotech firm set to double revenue as it aims to become the Amazon of genetic testing
4) A growth stock, value stock and income stock… all rolled into one
5) Cybersecurity provider with 5G defensive capabilities
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New Highs Lead To Even Higher Highs
Statistics have shown that stocks making new highs have a tendency of making even higher highs.
In fact, using S&P price data going all the way back to the 1950's, shows that stocks typically go up in the subsequent six months following new all-time highs.
This means that stocks making new highs aren’t at any greater risk of going down.
Quite the contrary, there’s a higher probability of stocks going up even further!
I know some people are reluctant to buy stocks after making new highs. I suppose they may feel like they’ve missed the move, or that now stocks have more room to fall.
But again, stocks making new highs are a good thing. Not a bad thing.
Just think about your portfolio. If someone were to ask you what your best stocks were, you would likely name the stocks going up the most in your portfolio.
And your worst stocks? Those would be the ones going down the most.
And I’m pretty sure the person who dislikes buying stocks making new highs, wouldn’t be too upset if the stock he or she already owned broke out to new highs. And why should they? These are the stocks we all dream about. Getting in and watching it go up.
And just think for a minute -- can you imagine all the money you would’ve left on the table if you were afraid of being in stocks every time they made a new high?
You wouldn’t own any of your best performing stocks right now.
You would’ve gotten out of the S&P back in April 2013 (6+ years ago), when it made its first new high of this bull market, leaving 88% of the S&P’s price gains on the table, not to mention its dividends.
And you would’ve missed out on tons of other stocks and their double-digit, triple-digit, and even quadruple-digit gainn.
So don’t be afraid of stocks making new highs. It’s an irrational fear, not supported by fact. And it will cost you a fortune in missed profits.
But Aren’t We Headed For a Recession?
We are not headed for a recession anytime soon.
While it’s true this is one of the longest economic expansions we’ve seen in history, the economy now is actually better than it was at the beginning of this recovery.
In fact, over the first 8 years of this recovery, the GDP averaged 1.48% annually. Granted, it was one of the weakest recoveries on record, but it was a fine enough recovery nonetheless, and the stock market picked up over a 240% return during that time.
But in spite of the expansion being one of the longest, the economy is actually gaining steam, not losing it. And that is almost unheard of at this late stage.
And that’s because of the historic deregulation we saw in 2017, and the historic corporate tax cuts we saw in 2018 (lowest corporate tax rate in 70 years), which has made the U.S. one of the most business friendly countries in the world.
These aren’t one-time stimulus packages that provide only temporary and modest economic benefits.
Instead, we’re talking about transformational growth due to long-term structural changes in how companies do business in America.
For example, in 2017, the annual GDP was 2.2% -- that was more than a 48.6% increase vs. the average GDP that preceded it.
2018 came in at 2.9%, nearly doubling (95.9%) that 1.48% average.
And so far in 2019, Q1, which is typically the weakest quarter of the year, grew at 3.1%. And Q2 just came in at 2.1%, beating expectations. That puts full year GDP on track for 2.6%.
Now remember, a recession is defined as 2 quarters in a row of negative GDP.
The robust GDP growth listed above is not the hallmark of an impending recession. Quite the opposite.
And I cannot imagine a scenario that would cause our GDP to suddenly contract into negative territory.
Simply put, our economy is strong. And you can see that in virtually every economic metric from an increasing GDP, to historic employment, to record consumer confidence, and surging corporate profits.
What About China?
The U.S. and China are now closer than ever to an historic trade agreement.
And it looks like that’s going to happen sooner rather than later.
When it does, that will usher in a whole new cycle of growth and prosperity for years to come.
But what if there isn’t a deal?
Will the U.S. suddenly fall into a recession?
For one, it’s clear both countries want a deal. And it could be argued that China wants/needs a deal more than the U.S.
But regardless, the numbers show the U.S. would be just fine even if there wasn’t a deal.
The first round of U.S. tariffs on $200 billion of Chinese goods, and the Chinese tariffs on $60 billion of U.S. goods, would only shave two tenths to three tenths of a percent off of our GDP. Although, it would likely knock a half percent off of China’s.
That number climbs to four tenths to a half percent off of our GDP if the U.S. levies tariffs on the additional $325 billion it once threatened. And that would likely shave more than one full percentage point off of China’s GDP.
But with our GDP expected to be around 2.6%, we’re starting from a great place. And it would take a lot more than a half percentage point reduction to cause a recession.
In fact, we’d still be growing at a faster pace than the first 8 years of this recovery, and faster than the average annual GDP of this whole expansion.
The Fed’s Got Our Back
Let’s also not forget the Fed.
They have already signaled they would step in if the economy slowed for any reason, including trade tensions.
Just last month, Fed Chairman, Jerome Powell, said they would cut rates to “sustain the expansion” if needed.
Traders cheered the news as it gave the market the reassurance it was looking for.
But we might see a rate cut even sooner. Expectations are running high that the Fed will cut rates at their next FOMC meeting in late July.
And that could send stocks even higher.
The market is in a sweet spot right now.
If we continue to get good news on the economy, that’s good for the market. But even if we get a little bad news on the economy, that too could still be good for the market, with the Fed ready to backstop it with rate cuts.
Either way, at this point, it looks all but certain a rate cut is coming next week. And that should be great for the market.
History In The Making
This is truly an historic time in the economy and the market.
Historic times present historic opportunities.
And that means the opportunity for historic profits.
If you wished you would’ve traded this market differently up to this point, now is your chance to do so on this next move up.
Don’t look back on this time and think about what you wished you would’ve done.
Do it now.
This is one for the ages.
And you’ll look back on this time with pride at what you’ve accomplished in your portfolio.
Do What Works
So how do you take advantage of this historic opportunity?
Just stick with tried and true methods that work.
That will help you find the stocks ready to go up the most.
For example, did you know that stocks with a Zacks Rank #1 Strong Buy have beaten the market in 26 of the last 31 years with an average annual return of 25.1% per year? That's nearly 2.5 x the S&P. But when doing this year after year, that can add up to a lot more than just two and a half times the returns.
And did you also know that stocks in the top 50% of Zacks Ranked Industries outperform those in the bottom 50% by a factor of 2 to 1? There's a reason why they say that half of a stock's price movement can be attributed to the group that it's in. Because it's true!
Those two things will give any investor a huge probability of success.
But you’re not there yet, as those two items alone will only narrow down a field of 10,000 stocks to the top 100 or so. Way too many to trade at once.
So the next step is to get that list down to the best 5-10 stocks that you can buy.
Stock Picking Secrets of the Pros
One of the best ways to do this is to see how the pros select their stocks, and utilize proven profitable strategies.
Don’t squander this historic period with preventable mistakes.
Whether you’re a value investor or growth investor; prefer fast-paced momentum stocks, or mature dividend producing income stocks, there are certain rules the experts follow to maximize their returns.
This applies to large-caps and small-caps, biotech and high-tech, blockchain stocks, pot stocks, institutional favorites, stocks under $10, stocks about to surprise, even options, and everything in between.
Regardless of which one fits your personal style of trade, just be sure you’re following proven profitable methods that work, from experts who have demonstrated their ability to beat the market.
Where to Look and How to Get Started
Today I’m inviting you to consider 5 stocks hand-picked by Zacks experts to have the greatest upside in this quarter.
Download our 5 Stocks Set to Double Report.
Each is the personal favorite of a Zacks expert to have the best chance to gain +100% and more in the months ahead:
Stock #1: Revenue at this trailblazing technology firm is already surging, and with several major acquisitions and powerful new partnerships, the stock is set to soar.
Stock #2: Analysts are steadily increasing estimates for this infrastructure company. The stock was just upgraded to Zacks Rank #1 Strong Buy and explosive gains could be just around the corner.
Stock #3: This small-cap biotech firm is setting itself up to be the Amazon of medical-grade genetic testing. The CEO expects revenue to more than double year-over-year... and the stock could follow suit.
Stock #4: With a forward P/E ratio of 8x, it's a value stock. With EPS estimates increasing in the 99th percentile, it's a growth stock. And with an 8.7% dividend, it's also an income stock. In short, this is a stock you don't want to miss.
Stock #5: This cybersecurity firm has developed hundreds of patents to protect its 400,000 customers from the looming threat. After a brief pullback, the stock is primed to blast higher.
The earlier you get into these stocks the higher their profit potential. Also, the opportunity to download 5 Stocks Set to Double free is ending early, Saturday, July 27.
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Thanks and good trading,
Kevin Matras serves as Executive Vice President of Zacks.com and is responsible for all of its leading products for individual investors. He invites you to download Zacks' 5 Stocks Set to Double.
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