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The 3 Rules of a Bull Market

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When I talk to investors about the stock market, I still hear all the reasons that it's time to be cautious and the end is near.

But all my experience tells me differently. And while I have often thought this year that the market must be in its 6th or 7th inning, I have few fundamental reasons to believe that it couldn't keep making new highs for another two to three years.

So as I look back at the portfolios and the body of content I've created over the years to help investors profit, I wondered if I could simplify the message even further.

I often prefer not to over-simplify, leaning instead toward parsing out the complexities and nuances of economic matters.

But my work does have the same persistent themes. And so I realized, I could very easily crystallize them into 3 rules, and just ten words total.

In the video that accompanies this article, I go back over some of those messages from the past nine years of this bull market.

Then I summarize them all with my "3 Rules."

My hope is that this video becomes teaching tool for investors age 8 to 88 because its lessons will certainly stand the test of time in the next bull market, and the one after that too.

In the video, I also promise some useful links...

For a review of my latest fundamental update on BABA in case you missed it, here was my May ZU Strategy Session presentation. It's the last clip at minute 44:20...

May ZUSS: Top Stock Pick BABA at 44:20

Even then after awesome earnings and growth guidance, I reminded investors "If you can get in under $200, do it!"

The Moral of the Bull's Story

Got a minute?

I can think of no better way to sum up the moral of this story than with a 1-minute video I recorded last year over at the CBOE. TV host Angela Miles asked me for my favorite "trader's tip" and I knew instantly that if I only had a minute to share with thousands of investors, I would choose this one core idea...

Follow the Smart Money

Finally, here was the message I offered on Tracey Ryniec's MarketEdge podcast back in January...

Cooker’s Melt-Up Recipe

Three ingredients for a "melt-up recipe" that investors can profit from.

1. Multiple Expansion Is Under Control: We may be in the 6th inning of this bull market, but multiple expansion isn’t yet as high as it was at the peak of other bull rallies like 1999-2000. There could still be more upside to go.

2. Competition: There’s less stock and more investors. Additionally, Wall Street, unlike most retail investors, has to buy, but doesn’t have to sell.

3. No global macro worries: Whatever happened to the Eurozone crisis or China having a hard landing? For the first time in a decade, the global economy is in sync and growing at the same time with virtually no economic crises looming.

(end of excerpt from MarketEdge podcast)

Granted, the market headed into a 10% correction right after that. But I also warned Zacks Ultimate members about that 2 weeks prior.

Despite my long-term bullishness, I'm always ready with "dry powder" for a pullback to buy more of my favorite stocks.

Disclosure: I own shares of NVDA, LRCX, and BABA for the Zacks TAZR Trader portfolio.

Kevin Cook is a Senior Stock Strategist for Zacks Investment Research where he runs the TAZR Trader and Healthcare Innovators services. Click Follow Author above to receive his latest stock research and macro analysis.

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