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.
So make sure you’re taking full advantage of it.
And don’t let the pullback over the last handful of days spook you out of the market.
Everybody feared the worst after the administration last week announced that the U.S. will be putting 10% tariffs on an additional $300 billion of Chinese goods on September 1st. This is ahead their next scheduled trade meeting with China later that month.
If those tariffs are postponed, like they were ahead of President Trump and President Xi’s June meeting, nobody knows. But even if the tariffs do go on, it will have only a modest impact (one half percent or less) on our economy.
In the meantime, the U.S. GDP is tracking at an annual pace of 2.6%. Unemployment is near record lows, while consumer confidence is near record highs. Corporate earnings continue to impress. The Fed just cut interest rates, with a high probability they’ll cut again in September, and maybe even a third time after that. And the ‘whole world’ is also lowering interest rates and pumping stimulus into their economies to support growth.
None of that says recession.
On the contrary, it says historic times for our economy, historic times for our market, and historic opportunity for record profits.
We’re now 10½ years and 341% into this bull market.
The longest bull market on record was 12.3 years for a 582% return.
Historic events often produce record results. And we are clearly in historic times right now. And I believe these historic times will lead to a record breaking bull market in both length and magnitude.
And that means we have a lot more upside to go.
Continued…
------------------------------------------------------------------------------------------------------
Get Zacks' Top Stocks FREE (Sunday Deadline)
Starting now, you can get instant access to the latest picks from our hottest market-beating strategies. From 2017 through 2018 they gained +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
Access them now for free without a cent of obligation.
Do this by midnight Sunday, August 11 and you can also download Top 5 Valuation Secrets free. This Special Report shows how to quickly spot the best stocks for making money in today’s market.
See Stocks Free >>
-----------------------------------------------------------------------------------------------------
New Highs Lead To Even Higher Highs
Just a few short weeks ago in July, we saw all of the major indexes make new all-time highs.
And in spite of all the hand-wringing over the past week, we’re only about -3% off those highs, and within striking distance of doing it again.
This is important to note because 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, it shows that stocks typically go up in the subsequent six months following new all-time highs.
That means there’s a higher probability of stocks going up even further!
And the recent pullback is the perfect opportunity to build on your portfolio, add to your favorite stocks, and pick even better stocks for the next leg up.
But Aren’t We Headed For a Recession?
No.
As I said earlier, 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. That includes the tariffs on China.
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?
High-level talks between the U.S. and China resumed and concluded the other week, with more talks scheduled for September. And while they were considered constructive, there was no new breakthrough.
True, the U.S. threatened more tariffs on China afterwards; China devalued their currency to offset the impact on the tariffs already in place, and for more tariffs to come; and then the Treasury Department officially branded China a currency manipulator. (Although, that official designation means virtually nothing right now as all it does is formally start the clock on a year’s long wait/negotiation to rectify the situation or face punitive measures like sanctions.)
In spite of that, there’s still hope for a deal.
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., as China’s economy this year is growing at the slowest pace in nearly 30 years. But 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/when the U.S. levies tariffs on the additional $300 billion it announced. And that would likely shave more than one full percentage point off of China’s GDP.
But again, 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 just cut interest rates by a quarter point on July 31st.
And they have repeatedly said they would “act as appropriate” (cut rates), to “sustain the expansion” if needed.
And odds are already at 60% and climbing that the Fed will cut rates again in September, and likely again in October or December.
And that could send stocks even higher.
Remember, the main reason why we even got a rate cut in the first place was because the Fed wanted to be proactive in regard to global growth concerns and trade. And now with the White House announcing further tariffs on China, that dramatically increases the odds that we’ll get another rate cut (or few) very, very soon.
And with virtually all of the other Central Banks around the world cutting rates and pumping stimulus into their economies, this pretty much means the Fed needs to keep cutting rates just to keep up.
And that’s bullish for the economy and stocks.
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 have traded the surge to new highs better than you did, 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 24.8% 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.
Proven Profitable Strategies
Picking the best stocks is a lot easier when there’s a proven, profitable method to do it.
Don’t squander this historic period with preventable mistakes.
By concentrating on what has proven to work in the past, you’ll have a better idea as to what your probability of success will be now and in the future.
Here are a few of my favorite strategies that have regularly crushed the market year after year.
New Highs: As mentioned earlier, studies have shown that stocks making new highs have a tendency of making even higher highs. And this strategy proves it. The alignment of positive price action and strong fundamentals creates all the necessary conditions to see these stocks soar to even greater heights. Over the last 19 years (2000 thru 2018), using a 1-week rebalance, the average annual return has been 48.8% vs. the S&P’s 4.8%, which is 10.2 x the market.
Filtered Zacks Rank 5: This strategy leverages the Zacks Rank #1 Strong Buys, and adds two time-tested filters to narrow the list of stocks down to five high probability picks each week. Over the last 19 years (2000 thru 2018), using a 1-week rebalance, the average annual return has been 54.3%, which is 11.3 x the market.
Small-Cap Growth: Small-caps have historically outperformed the market time and time again. Often these are newer companies in the early part of their growth cycle, which is when they grow the fastest. This strategy combines the aggressive growth of small-caps with our special blend of growth and valuation metrics for explosive returns. Over the last 19 years (2000 thru 2018), using a 1-week rebalance, the average annual return has been 56.2%, beating the market by more than 11.7.x the returns.
The best part about these strategies (aside from the returns) is that all of the testing has already been done. There’s no guesswork involved. Just point and click and get your list of the best stocks for the week.
Where to Start
The first move to position yourself for historic gains is the easiest. And it doesn't cost a cent.
Try our Research Wizard stock-picking tool for the next 2 weeks free.
Choose from proven, portfolio-multiplying strategies that fit your trading style and get fresh buy lists from those strategies every day.
Since 2000, the Top 10 strategies inside the Research Wizard have soared past the S&P 500's average of +4.8% per year. These 10 average more than +40% per year.
How have they done lately? During 2017-2018, our strategies have more than doubled the market. One of them compounded to +98.3%.
Today I invite you to see the latest buy recommendations from these winners, absolutely free.
Or, if you prefer, you can use the Research Wizard to create and test your own stock-picking screens. It's easy to do. And you can start outperforming the market on your very next trade.
One more thing: If you start your free trial no later than midnight Sunday, August 11, you can download our Top 5 Valuation Secrets (also free). This Special Report shows how to quickly spot the best stocks for making money.
See today's Research Wizard stocks right now >>
Thanks and good trading,
Kevin
Zacks EVP Kevin Matras is responsible for all our trading and investing services. He is our chart patterns and stock screening expert, and he also developed many of Zacks' most powerful market-beating strategies that come with the Research Wizard.
Image: Bigstock
The Opportunity For Historic Gains Is Now
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.
So make sure you’re taking full advantage of it.
And don’t let the pullback over the last handful of days spook you out of the market.
Everybody feared the worst after the administration last week announced that the U.S. will be putting 10% tariffs on an additional $300 billion of Chinese goods on September 1st. This is ahead their next scheduled trade meeting with China later that month.
If those tariffs are postponed, like they were ahead of President Trump and President Xi’s June meeting, nobody knows. But even if the tariffs do go on, it will have only a modest impact (one half percent or less) on our economy.
In the meantime, the U.S. GDP is tracking at an annual pace of 2.6%. Unemployment is near record lows, while consumer confidence is near record highs. Corporate earnings continue to impress. The Fed just cut interest rates, with a high probability they’ll cut again in September, and maybe even a third time after that. And the ‘whole world’ is also lowering interest rates and pumping stimulus into their economies to support growth.
None of that says recession.
On the contrary, it says historic times for our economy, historic times for our market, and historic opportunity for record profits.
We’re now 10½ years and 341% into this bull market.
The longest bull market on record was 12.3 years for a 582% return.
Historic events often produce record results. And we are clearly in historic times right now. And I believe these historic times will lead to a record breaking bull market in both length and magnitude.
And that means we have a lot more upside to go.
Continued…
------------------------------------------------------------------------------------------------------
Get Zacks' Top Stocks FREE (Sunday Deadline)
Starting now, you can get instant access to the latest picks from our hottest market-beating strategies. From 2017 through 2018 they gained +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
Access them now for free without a cent of obligation.
Do this by midnight Sunday, August 11 and you can also download Top 5 Valuation Secrets free. This Special Report shows how to quickly spot the best stocks for making money in today’s market.
See Stocks Free >>
-----------------------------------------------------------------------------------------------------
New Highs Lead To Even Higher Highs
Just a few short weeks ago in July, we saw all of the major indexes make new all-time highs.
And in spite of all the hand-wringing over the past week, we’re only about -3% off those highs, and within striking distance of doing it again.
This is important to note because 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, it shows that stocks typically go up in the subsequent six months following new all-time highs.
That means there’s a higher probability of stocks going up even further!
And the recent pullback is the perfect opportunity to build on your portfolio, add to your favorite stocks, and pick even better stocks for the next leg up.
But Aren’t We Headed For a Recession?
No.
As I said earlier, 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. That includes the tariffs on China.
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?
High-level talks between the U.S. and China resumed and concluded the other week, with more talks scheduled for September. And while they were considered constructive, there was no new breakthrough.
True, the U.S. threatened more tariffs on China afterwards; China devalued their currency to offset the impact on the tariffs already in place, and for more tariffs to come; and then the Treasury Department officially branded China a currency manipulator. (Although, that official designation means virtually nothing right now as all it does is formally start the clock on a year’s long wait/negotiation to rectify the situation or face punitive measures like sanctions.)
In spite of that, there’s still hope for a deal.
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., as China’s economy this year is growing at the slowest pace in nearly 30 years. But 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/when the U.S. levies tariffs on the additional $300 billion it announced. And that would likely shave more than one full percentage point off of China’s GDP.
But again, 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 just cut interest rates by a quarter point on July 31st.
And they have repeatedly said they would “act as appropriate” (cut rates), to “sustain the expansion” if needed.
And odds are already at 60% and climbing that the Fed will cut rates again in September, and likely again in October or December.
And that could send stocks even higher.
Remember, the main reason why we even got a rate cut in the first place was because the Fed wanted to be proactive in regard to global growth concerns and trade. And now with the White House announcing further tariffs on China, that dramatically increases the odds that we’ll get another rate cut (or few) very, very soon.
And with virtually all of the other Central Banks around the world cutting rates and pumping stimulus into their economies, this pretty much means the Fed needs to keep cutting rates just to keep up.
And that’s bullish for the economy and stocks.
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 have traded the surge to new highs better than you did, 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 24.8% 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.
Proven Profitable Strategies
Picking the best stocks is a lot easier when there’s a proven, profitable method to do it.
Don’t squander this historic period with preventable mistakes.
By concentrating on what has proven to work in the past, you’ll have a better idea as to what your probability of success will be now and in the future.
Here are a few of my favorite strategies that have regularly crushed the market year after year.
New Highs: As mentioned earlier, studies have shown that stocks making new highs have a tendency of making even higher highs. And this strategy proves it. The alignment of positive price action and strong fundamentals creates all the necessary conditions to see these stocks soar to even greater heights. Over the last 19 years (2000 thru 2018), using a 1-week rebalance, the average annual return has been 48.8% vs. the S&P’s 4.8%, which is 10.2 x the market.
Filtered Zacks Rank 5: This strategy leverages the Zacks Rank #1 Strong Buys, and adds two time-tested filters to narrow the list of stocks down to five high probability picks each week. Over the last 19 years (2000 thru 2018), using a 1-week rebalance, the average annual return has been 54.3%, which is 11.3 x the market.
Small-Cap Growth: Small-caps have historically outperformed the market time and time again. Often these are newer companies in the early part of their growth cycle, which is when they grow the fastest. This strategy combines the aggressive growth of small-caps with our special blend of growth and valuation metrics for explosive returns. Over the last 19 years (2000 thru 2018), using a 1-week rebalance, the average annual return has been 56.2%, beating the market by more than 11.7.x the returns.
The best part about these strategies (aside from the returns) is that all of the testing has already been done. There’s no guesswork involved. Just point and click and get your list of the best stocks for the week.
Where to Start
The first move to position yourself for historic gains is the easiest. And it doesn't cost a cent.
Try our Research Wizard stock-picking tool for the next 2 weeks free.
Choose from proven, portfolio-multiplying strategies that fit your trading style and get fresh buy lists from those strategies every day.
Since 2000, the Top 10 strategies inside the Research Wizard have soared past the S&P 500's average of +4.8% per year. These 10 average more than +40% per year.
How have they done lately? During 2017-2018, our strategies have more than doubled the market. One of them compounded to +98.3%.
Today I invite you to see the latest buy recommendations from these winners, absolutely free.
Or, if you prefer, you can use the Research Wizard to create and test your own stock-picking screens. It's easy to do. And you can start outperforming the market on your very next trade.
One more thing: If you start your free trial no later than midnight Sunday, August 11, you can download our Top 5 Valuation Secrets (also free). This Special Report shows how to quickly spot the best stocks for making money.
See today's Research Wizard stocks right now >>
Thanks and good trading,
Kevin
Zacks EVP Kevin Matras is responsible for all our trading and investing services. He is our chart patterns and stock screening expert, and he also developed many of Zacks' most powerful market-beating strategies that come with the Research Wizard.