If you think there’s been a lot of action in the financial markets over the past two weeks, you’re right!
Indeed, U.S. stocks on the S&P 500 have been on a bumpy ride.
Consider these facts from BTN Research:
The S&P 500 has had as much daily price volatility in the most recent 12 trading days (as of Aug. 28) as it experienced in the first 152 trading days of 2017.
Plus, both the first 152 trading days and the past 12 trading days have each produced four days that closed with at least a 1% total return gain or loss.
What’s going on and what should you do?
Well, what you DON’T DO is follow the advice of the popular financial press and bail on the stock market. That’s because mainstream media is wrong — as usual — about the demise of the current bull market.
The reason stock market volatility has spiked over the past few weeks is because of several non-market related events.
These events include the nuclear showdown between the U.S. and North Korea … social unrest in Charlottesville, Va. … terrorist attacks in Barcelona and Finland … a natural disaster in Houston … and more turmoil in the Trump administration.
All of these factors — taken together — have caused stocks to swoon and volatility to soar. You can see that in the chart below.
What’s more, as stock prices have fallen, there’s been “a flight to quality” in the bond market. This has caused the yield on the 10-year U.S. Treasury note — my Magic Metric — to dive as low as 2.13%.
But as I’ve explained to my Safe Money subscribers, a lower 10-year Treasury yield is the magic elixir for rising stock prices in the future.
And, despite all the bad news l listed above, U.S. stocks, as measured by the S&P 500, are resting at just 1.5% below their all-time high. Stocks simply don’t want to go down.
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That’s because as I explained in my Aug. 18 column, the financial environment of accommodative central-bank monetary policy and low interest rates is pure bliss for my Safe Money Report investors.
Here are three other key stats from BTN Research that suggest that the best is yet to come for stocks this year. I’ll also give you my comments about why you should stay invested.
- AT THE BACK END — The S&P 500’s highest closing value for a calendar year occurred from September through December in 11 of the past 14 years. Implication: Stay invested in stocks to get the 2017 high.
- THE LAST QUARTER — The last quarter of the year boasts three of the best-performing months on average for the S&P 500 Index. October ranks second-best, November third-best and December fifth-best. These three months have jointly gained 54% of the index’s total return over the past 25 years. Implication: There’s more room for the bull market to run.
- AUGUST vs. APRIL — The worst-performing month for the S&P 500 Index since 1992 has been August. The broader-market index has suffered an average loss of 0.7% (total return) during August over the past 25 years (1992 to 2016). The best-performing month since 1992 has been April, gaining an average of 1.9% (total return). Implication: Don’t sweat this year’s August doldrums.
The bottom line: As we begin the final stretch of the investment year — from Labor Day until year-end — consider loading your portfolio up on GROWTH to bag big profits.
Here’s an idea: If your risk tolerance allows, consider the iShares Morningstar Large-Cap Growth ETF (JKE).
Its largest holdings are Microsoft (MSFT), Facebook (FB), Amazon (AMZN), Alphabet (GOOGL) and Comcast Corp. (CMCSA) … all high-quality companies with excellent GROWTH profiles.
For more growth-oriented recommendations, subscribe to my Safe Money Report.
Then, you’ll get my Dependable Dozen top-rated-buy-list stocks. Plus, you’ll get Profit Accelerator positions that can turbocharge your portfolio. On top of that, I’ll reveal a perfect mix of market hedges for safety and downside protection.
Best of all, every one of the positions in the Safe Money Report Portfolio have logged gains so far this year … 100% winners, that’s clear sailing for the Safe Money ship.
Best wishes,
Bill Hall
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I thought Martin was going to warn us about doomsday. Better get on board with the boss’ official position.