There’s Still Money To Be Made In This Market
For the last few years, there’s been lots of talk about how this bull market is getting long in the tooth and is ripe for a major correction. After all, this run began in 2009 — eight long years ago.
But the truth is stock-market booms don’t die of old age. And the bull market in the 1990s is proof of this.
#-ad_banner-#Stocks went up — without a losing year — for nearly the entire decade of the 1990s. As the bull market got older, it didn’t waver or falter. Instead, it ramped up… the S&P 500 returned 33%, 28% and 21% in 1997, 1998 and 1999, respectively. The Nasdaq went up 40% in 1998 and then 86% in 1999.
If you got out of the market in 1997, or even earlier, on the simple premise that the boom was getting long in the tooth… you missed out on the best profits.
I’m sure there are people thinking this bull market is getting old and that it is therefore a good time to start avoiding stocks. Of course, they could be correct. But the simple fact is that there’s always a reason to avoid the stock market. Pick your favorite:
– The Fed will continue to raise interest rates, which will hurt corporate profits.
– The Dow Jones Industrial Average just went over 21,000, following a string of 12 consecutive new highs — a record.
– This (insert favorite financial metric here) says the market is overvalued.
– Trump’s protectionist policies are bad for business.
– And the classic: The U.S. is $20 trillion in debt and printing money every day.
Sure, pick any one of these as an excuse to avoid the markets. They’re all true.
But here’s the funny thing. A variety of these reasons will always be around. In fact, I was rereading the classic Peter Lynch book, “Beating the Street” — published in May 1994 in the midst of the roaring bull market — and I kid you not, he listed some of these exact reasons for why he felt the bull market could be coming to an end, which it didn’t for another six years.
While these concerns may contribute to the end of a bull market, they don’t cause market peaks. Stock market booms typically end when euphoria hits an all-time high. When optimism is everywhere. When everyone seems to be doing great.
But that’s not the case today…
Sure, many people are more optimistic today than they’ve been in the last eight years. You can see this by simply going out to a restaurant or shopping center. They’re bustling with consumers looking to buy something new or have a cocktail with a friend.
But when you talk to these very people about the stock market, in particular, they are still wary. I hear it all the time. Of course, one of the first questions I get asked after people learn I am a financial analyst is, “What should I invest in?” My typical response is, “Well, where are you currently invested?”
The response is either a blank stare or that they’re only investing in “whatever” is in their 401(k). In other words, most folks are still fearful of stocks. They are NOT fully invested, or even invested at all. According to Gallup, as of last April only 52% of Americans said they had money invested in the stock market, a record low level of participation.
This is a far cry from the old Wall Street adage, which says that peaks typically come shortly after you begin receiving investment tips from your cab driver.
To be sure, I’m not saying that this bull market will keep going for years, as I don’t know how long it will last — and neither does anyone else. What I am saying is that I still believe there are some good investments to be had. And I don’t plan to sit on my hands in fear that the next crash will happen tomorrow… and neither should you.
That’s why in my premium newsletter, Top Stock Advisor, I decided to put my cash to work in two new stocks.
The first comes from the playbook of Warren Buffett. In fact, it’s one of his favorite banking plays. The other is an income idea that dishes out an incredible 10% yield.
Of course, it wouldn’t be fair to my premium subscribers if I gave those picks away. But if you’re curious to learn more about these picks, you can click here to learn more about my newsletter.
Either way, remember that while we’re closer to the end than the beginning, there are still profits to be had in this market.