Louis Navellier says we’re in a stock-buying window … but you need to act soon before it closes … the inverted yield curve has made Louis MORE bullish
September 16 … that’s when the “stock-buying window” will close.
Right now, famed growth investor, Louis Navellier believes we’re in a sweet spot for buying stocks — but it’s fleeting.
Simply put, we remain in an ideal environment for stock appreciation and every dip should be viewed as a buying opportunity …
And we can go along for the ride — as long as we get positioned by, say, September 16. You won’t want to let the clock run out on this.
So, what’s going on here?
We’ll answer that question in today’s Digest.
As we’ve been noting in recent Digests, we’re seeing increasing storm clouds out on the horizon. However, in the nearer-term, we believe there’s a strong case to be made for a significant push higher in U.S. stocks. And practically no one is more bullish on stocks now that Louis Navellier.
Today, we’ll get into why, and then we’ll reveal two additional, specific weeks in 2019 that Louis believes will be great times to put more money to work in the stock market.
Let’s jump in.
***The wealth of the world is flowing toward the U.S.
Louis Navellier is a Wall Street legend, having one of the best long-term records of any analyst in the business. This isn’t hyperbole. Here’s a snapshot of some of Louis’ top winners from his Breakthrough Stocks newsletter.
What’s behind much of Louis’ success is the fact that he’s a numbers guy. He ignores the market chatter and gossip, and focuses on cold, objective metrics — the ones that drive corporate profitability … which translates into rising stock prices.
Today, there’s plenty of market chatter and gossip, but Louis is still focusing on numbers, and he’s still seeing gains to come.
He just wrote to his subscribers, explaining why he’s so bullish at the moment. Here’s the top-line takeaway:
… the S&P 500 continues to yield more than the 10-year Treasury — and that remains a screaming buy signal.
If you’re less aware of why this is a screaming buy signal, first, remember that a great many investors are in the market not necessarily for capital gains through stocks, but for income — typically through bonds. Historically, bonds have provided income investors better yields than stock dividends.
But the markets have flipped upside down today.
Not only does the S&P yield more than the 10-year Treasury, but a few days ago it yielded more than the 30-year Treasury. You can see how rare this is in the chart below.
It’s the first time this has happened since March of 2009.
So, what does this really mean, and why is it bullish for stocks?
Well, if you can get an annual yield from a company that’s going to pay you more than the 30-year Treasury, and the company is strong with a history of raising its dividend, it’s more attractive to income investors than a bond would be. And that’s going to pull more money out of bonds, and into stocks, which will push stock prices higher.
Jonathan Golub, chief U.S. equity strategist at Credit Suisse put it this way:
Stocks are almost a no brainer here. You’ve got 70 percent of the S&P 500 trading with a higher yield than 10-year Treasury. That’s very rare. So now people are saying let’s go into stocks for income.
***But what about the yield curve inversion? Aren’t the low bond yields behind the inversion a sign of near-term danger?
First, as we’ve noted in the Digest, after an inversion, stocks historically rise before there’s fallout in the broader economy. So, while an inversion can signal trouble, it’s important to remember the timing involved.
Here’s Louis take on why the inversion is actually a bullish sign for stocks in the nearer-term:
Now, in the financial media, much is being made of these rate cuts … and particularly the “inverted yield curve,” in which you actually make more on short-term bonds vs. longer-term bonds.
On TV, the talking heads often make this seem like a doomsday omen for the stock market. But in fact, it’s just the opposite! It’s my number one reason to lock and load with the best U.S. stocks now.
Remember, if you can’t even get 2% from a 30-year U.S. Treasury, where are you going to turn for better yield? To U.S. stocks.
Don’t take my word for it; look at what happened in this situation 11-plus years ago. The S&P 500 has almost tripled since then!
You can look back to our chart from above to see what Louis is referencing — it’s that time in 2009 when the S&P yield and the 30-year Treasury yield flipped.
***Why we’re in a brief “buying” window that Louis suggests you take advantage of now
At the top of this Digest, we referenced “September 16” as a line-in-the-sand, after which this great time to buy stocks will close. What’s this all about?
Back to Louis:
There’s another trick Wall Street money managers have up their sleeves. It’s called “window dressing.” When we approach the end of a quarter, big money will often buy top-performing stocks to spruce up their returns when they report the performance of their current portfolio.
The influx of cash gives those stocks even BETTER returns. That’s what we’re about to see as the third quarter closes at month-end.
And we can go along for the ride — as long as we get positioned by, say, September 16.
You won’t want to let the clock run out on this. After September 16, the next buying window won’t really open until next earnings season.
If you’re not so sure about this, the Financial Industry Regulatory Authority (FINRA) did a study on institutional investors. It found that institutions are estimated to account for as much as 70% of stock trading volume. Here’s FINRA’s takeaway:
Because of their dominance, institutional buying or selling can lead to big price moves in individual stocks and in the market overall.
***A few days ago, Louis recorded a special podcast for his Growth Investor subscribers
In it, he noted a few specific windows over the coming months that should make for good buying opportunities.
What were they?
From the podcast:
We expect a lot of buying pressure in our stocks in the last 10 days of September … So, if someone has money to invest, Monday September 16th is a great day. Other great days to invest will be the week before mid-October, before the next round of earnings … And then you probably know that from Thanksgiving on is a seasonally strong time of year. You can invest the week before Thanksgiving. That’s usually a very wise thing to do.
As we wrap up, yes, there are many challenges facing the markets. But if we adopt Louis’ approach and look at cold, hard, quantifiable numbers, we see that historically-low bond yields — which are now lower than the S&P 500 dividend yield — are supportive of more money flowing into top-shelf U.S. stocks.
If you’re looking to be invested, make sure to put your money to work before September 16th if you want to take advantage of institutional rebalancing at the end of the quarter.
If you’re not sure which stocks are most likely to do well in this environment, you can get Louis’ help by clicking here.
Have a good evening,