Nine and a half years into this great boom in stocks – and there's still opportunity, nearly everywhere I look...
I'm serious!
I can't remember a moment in my entire career when I saw this much opportunity this late into a stock market boom.
I know that sounds outrageous... but I'll share one reason why today. I think you'll agree that giving up on this boom now is a bad idea.
Let me explain...
How can I be bullish today?
It seems like the end should come any minute, with the benchmark S&P 500 Index nearing new highs once again. And it's even crazier when you consider that U.S. stocks have gone up every single calendar year since 2008.
That's nine straight years so far... a crazy achievement. And stocks are up so far in 2018 too.
If this continues for about four more months, then stocks will set a record – 10 straight "up" years. (These numbers are based on the S&P 500, and they include dividends.)
Ten straight years? This can't go on much longer – right?
The story gets even crazier...
Before the global financial crisis in 2008, stocks had gone up for five straight calendar years. That's five "up" years before 2008... and 10 "up" years after 2008... which means:
If this continues for the rest of the year, then U.S. stocks will have been "up" in 15 of the past 16 years.
Any rational person would think, "This is crazy. This has to end – soon!"
I'm sure you've heard that stocks are supposed to be a "random walk" – a bit up, and a bit down – with a bit more up than down over the long run. That means the occasional big fall will happen now and then. Stocks are supposed to come with some risk.
So when I say, "There's still opportunity out there, nearly everywhere I look," your reasonable response should be something like this:
"Steve, how can you possibly see opportunity everywhere – when U.S. stocks have gone up for so many years now?"
I get it. I know what you are saying. But consider this...
Despite nearing new all-time highs, stocks aren't expensive.
Just take a look at the stock market's forward P/E ratio. This is one of the most common measures of value, based on earnings estimates 12 months from now.
The S&P 500 is barely above its 25-year average forward P/E right now. Take a look...
The S&P 500 trades for a forward P/E of 17.5. That's dramatically lower than it was this time last year, thanks to a big boost in earnings from the tax cuts. More important, it's barely above the 25-year average.
Stocks are not expensive today. That means we still have plenty of opportunities right now.
You need to realize something important...
Bull markets don't die of old age. They don't end simply because it is "time" for them to end.
It is hard to get past this way of thinking. It seems rational... After all, stocks go up – and then they go down.
But in fact, the markets (and investors) are not always rational. They can always get more extreme... And we can take advantage of it.
In short, we're almost 10 years into a stock market boom – and nearing all-time highs – and the opportunity from here is still fantastic.
Keep in mind, I am not your financial adviser... I do not earn more in fees if you have more money invested in the market. I don't have anything to gain if you raise or lower the amount of money you have invested.
What I am concerned about is this: I don't want your rational thinking about U.S. stocks to make you miss out on what could be some of the biggest investing gains of your life.
I look around and I see huge opportunity. You want to be long stocks now.
Good investing,
Steve
Further Reading
"I can't tell you the exact day the market will peak," Steve says. "But I will give you the latest update on my 'bear market predictor.'" Learn what this indicator could mean for the "Melt Up" over the next several months right here.
"Some of the biggest gains of this bull market could still be ahead of us," Steve writes. In this essay, he shares the two charts that show a dramatic change in the markets – one that means the Melt Up officially starts now... Read more here.
The bull market in U.S. stocks isn't dead yet. And Dr. David Eifrig believes this private-equity business is a great way to invest with the pros...
A 'PICKS AND SHOVELS' COMPANY BEHIND AMERICA'S WORKFORCE
Today's chart highlights a leading provider of business-management software...
Regular DailyWealth readers know that "picks and shovels" companies provide the tools and services that support entire sectors. Investing in a business that fuels a whole industry or trend is safer than betting on a single player. Today, one software company is fueling the engine of working life...
Paycom Software (PAYC) provides cloud-based "human capital management" software to its business clients. It can help with tasks like talent acquisition, human resources, and payroll services. These are tools that most businesses need to succeed and grow – and Paycom is great at supplying them. In its most recent earnings report, the company showed 31% growth in year-over-year revenue... bringing in nearly $130 million in the second quarter.
And as you can see below, this stock is on a tear. After nearly doubling in price over the past year, PAYC recently hit a new all-time high. Businesses will always need to manage their employees – and clearly, more of them are using Paycom to do the job...
