Back to top

The 3 Rules of a Bull Market

Read MoreHide Full Article

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.

Today's Stocks from Zacks' Hottest Strategies

It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.

And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.

See Them Free>>

More from Zacks Video Blog

You May Like