The markets reached yet another milestone just a few days ago -- putting in their best first 3-quarter performance in years.
That fact may have gotten lost after the modest pullback this past week, but the S&P for example, is still only 2.50% away from its all-time record high.
And it looks like there’s a lot more upside to go.
Our economy is strong with this year’s annual GDP pacing at 2.6% (which is faster than the average annual GDP of this entire expansion). Unemployment is near record lows (50-year low to be specific). Consumer confidence is near record highs. Corporate earnings continue to impress. And household income is at the highest level in 20 years.
We are clearly in historic times. And historic times often produce record results.
We’re now 10½ years, and more than 342% into this bull market.
The longest bull market on record was 12.3 years for a 582% return.
Given all of the above, I believe these historic times will lead to a record breaking bull market in both length and magnitude.
The current economic backdrop is more than enough to accomplish that.
But with an historic trade deal between the U.S. and China potentially less than one week away, the markets could be ready to soar.
And that means an historic opportunity for record profits.
So make sure you’re taking full advantage of it.
More . . .
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1) Repositioning and a world-class celebrity could generate the mother of all turnarounds for this health company.
2) Financial giant just closed a multibillion dollar acquisition that puts it on both sides of transactions.
3) Small big-data source is set to acquire a billion dollar startup and become a leader in the 4th technological revolution.
4) Saudi oilfield attacks and rampant product demand could ignite explosive growth for this solar powerhouse.
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But Aren’t We Headed For a Recession?
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 stronger now. 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. And that’s why the U.S. economy is the envy of the world right now.
These weren’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 came in at 2.0%. That puts full year GDP on track for 2.6%, well above the average that preceded it.
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 trade talks between the U.S. and China are set to resume in Washington, DC next week on October 10th.
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, in all fairness, it’s a complicated matter.
And while a full-blown trade deal next week is far from certain (some might even say unlikely), there’s plenty of optimism that a lessening of tensions or a ‘trade truce’ can be seen. And that alone could send the market soaring.
If/when there finally is a trade deal, that should usher in years of additional growth and prosperity, and years of additional gains in the market.
But even if there wasn’t a deal, the numbers show the U.S. would be just fine.
It’s been estimated that if all of the tariffs went on, including the first $200 billion that are already in place, and the remaining $300 billion (which have all been postponed), it would only shave off four tenths to a half percent off of our GDP.
Again, with our economy on pace to grow at 2.6% this year, a half percent reduction is not going to hurt us. And as I said before, we’d still be growing at a faster pace than the average annual GDP of this entire 10½ year expansion.
The Fed’s Got Our Back
Let’s also not forget the Fed.
They just cut interest rates last month by quarter point. That was the second rate cut this year with the previous one (also a quarter point cut) taking place on July 31st.
The Fed also left the door open for another rate cut in by year’s end. And the odds are steadily increasing that we’ll get another one when the Fed meets again on October 30th.
In the Fed's last policy statement, they reiterated that they would "act as appropriate to sustain the expansion" (i.e., cut rates further), echoing the same language as they did prior to the last rate cut.
Fed Chair Jerome Powell expanded on that sentiment at his press conference by saying "if the economy does turn down, a more extensive series of rate cuts could be warranted."
But he maintained his positive outlook for the economy, and specifically noted that "the consumer part of it is in strong shape."
And all of this is bullish for the economy and stocks.
History In The Making
This truly is an historic time for 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 25.1% 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.
And 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.
For example, if your strategy did nothing but lose money year after year, trade after trade, over and over again, there’s no way you'd want to use that strategy to pick stocks with. Why? Because it's proven to pick bad stocks.
On the other hand, if your strategy did great year after year, trade after trade, over and over again, you'd of course want to use that strategy to pick stocks with. Why? Because it's proven to pick winning stocks.
Of course, this won't preclude you from ever having another losing trade. But if your stock picking strategy picks winners more often than losers, you can feel confident that your next trade will have a high probability of success.
Stock Picking Secrets of the Pros
One of the best ways to begin outperforming the market is to see what the pros are doing.
There’s no one perfect way to beat the market. Some traders prefer high flying growth stocks, while others prefer deeply discounted value stocks. Some may prefer fast-paced momentum stocks, whereas others are more comfortable with mature, dividend producing income stocks.
Yet others may want to focus on more specialized strategies like insider trading (the legal kind), institutional buying and selling, large-caps, small-caps, stocks about to surprise, or cheap stocks under $10.
Still others may want to turn their attention to specific sectors or industries like healthcare innovators, biotech stocks, high-tech companies, or the burgeoning marijuana-related investment opportunities.
Or even incorporate options into their portfolio.
Regardless of which one fits your personal style of trade, just be sure you’re getting the best advice from experts who have demonstrated their ability to beat the market.
The best part about these strategies is that all of the hard work is done for you. There’s no guesswork involved. Just follow the experts and start trading like a pro.
Where to Start
Speaking of our experts, they’ve just hand-picked 4 stocks to have the greatest upside in this quarter. I invite you to consider them today.
Download our just-released Ultimate Four Special Report.
Besides their exceptional growth potential, these 4 have strong fundamentals and are set to ride tailwinds of a power-charged economy with strong GDP, record employment, near record consumer confidence, record corporate profits, low interest rates and more.
Stock #1: World-class health company is expected to generate the mother of all turnarounds thanks to repositioning, redoubling on product quality, and a mega-celebrity.
Stock #2: Financial giant just closed a multibillion dollar acquisition that puts it on both sides of millions of transactions. Its shares continue to skyrocket.
Stock #3: Small company looks to grow into a big-data whale. It has a deal on the table to acquire a recent billion dollar startup and be a leader of the 4th technological revolution.
Stock #4: Boosted by the Saudi oilfield attacks and rampant product demand, this solar company's most explosive growth is yet to come.
I suggest you download this Special Report today and beat other investors to the punch when the market opens Monday morning. Opportunity to download ends midnight Sunday, October 6.
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Thanks and good trading,
Kevin Matras serves as Executive Vice President of Zacks.com and is responsible for all of its leading products for individual investors. He invites you to download Zacks’ newly released Ultimate Four Special Report.