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If you’re a regular reader of my Money and Markets columns, you know that I’ve been spot-on all year with my prediction that, as long as interest rates remain low, stocks are headed higher.
Early this year, I explained why the 10-year U.S. Treasury yield is my magic market metric for forecasting stock returns in this “New Abnormal” financial environment. An environment where the world’s central banks continue to pump an endless supply of money into the global financial system.
And now, I see that I have rarified company in my forecast that stocks will continue to march higher. And that a certain select group of high-quality growth stocks could skyrocket and provide shoot-the-moon returns …
On Tuesday, billionaire and iconic investor Warren Buffett said the following in an interview on CNBC’s “Squawk Box”:
“[Stock] valuations make sense with interest rates where they are. In the end, you measure laying out money for an asset in relation to what you’re going to get back, and the number one yardstick is U.S. government [bonds].”
“Everything in valuation gets back to interest rates,” and rates have been a “powerful factor” in setting equities values, he said.
Thank you, Warren, for confirming what I have been saying all along: Watch the 10-year U.S. Treasury like a hawk!
And with the yield on the 10-year currently hovering at around 2.3%, interest rates are in the sweet spot for higher stock market returns.
That’s why U.S. stocks hit record levels on Wednesday and continued their ascent Thursday. At the close yesterday, the Dow Industrials were up more than 113 points at 22,775. And the broader measure of U.S. stocks, the S&P 500, notched its first eight-day win streak since 2013. It closed Thursday’s trading session at 2,552.07.
However, no matter how much money we make in the markets, we can never afford to throw caution to the wind.
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Your personal roadmap to windfall profits is ONLINE NOW! The recording of Wednesday’s historic LIVE Q&A with Dr. Weiss and Sean Brodrick is online now! Click this link to hear the unhedged forecasts, strategies and the actual Supercycle investments designed to help you for gains of 2,150% in as few as 40 days. Plus, you will hear Martin and Sean’s specific answers on gold, silver, oil, the Dow, bonds and much more. This discussion is so thought-provoking and valuable to you as an investor, you need to watch this special recording immediately. |
We must always invest with a keen awareness of the risks around us. In doing so, we can protect our portfolios during the inevitable market declines. Which we could still see, even with stocks surging ever-higher.
Keeping a watchful eye on potential Black Swans …
We must stay vigilant in these times of experimental monetary policy and heightened geopolitical tensions. And we must keep an eye out for the low-probability, high-impact event or events that could cause the whole system to fall apart.
On Wall Street, we call these outlier and difficult-to-predict events black swans. This reflects the European belief that the mythical bird did not exist until it was actually observed by Dutch explorer Antoine Caen in Shark Bay, Australia, in 1636.
Here’s a chart that shows the potential black swans that I’m carefully watching …
Right at the top, you see the two events that pose the most risk are a potential central-bank mistake and a crash in the global bond markets.
And the chart below shows that stocks are trading at lofty valuation levels:
That’s why — with stocks priced high and a grab bag full of black-swan risks on the horizon — I recommend that my Safe Money Report subscribers keep a healthy dose of hedges in place. Indeed, by maintaining a healthy position in the iShares 20+ Year Treasury Bond ETF (TLT), they can protect their precious investment capital for when — not if — the next big black swan lands.
What’s more, if interest rates continue to stay low as I expect, they could earn a solid return on TLT as well.
So, with the growth-stock positions that I’ve previously told you about … combined with our stock-market hedges to protect against any potential black swan events … the Safe Money Report portfolio provides just the right blend of growth and safety that is key right now.
Subscribe now, so you too can target extraordinary returns in the “new abnormal” financial environment we are now experiencing.
Next week, I’ll reveal where there’s a second debt crisis brewing that could be much worse than the subprime debacle in 2009.
Best wishes,
Bill Hall
P.S. The 10-year Treasury yield is my go-to “magic metric” when it comes to seeing where the broader market is headed. But there are cycles at work right this very minute that are driving select stocks and sectors higher. And in this brand-new webinar, Martin Weiss and cycles expert Sean Brodrick reveal the actual investments that are already generating windfall profits of 114%, 719% and even up to 2,150% in as little as 40 days! This information is too timely to leave online for much longer, so don’t wait. Click here to listen to it now.
Bill Hall is the editor of the Safe Money Report. He is a Certified Public Accountant (CPA), Chartered Financial Analyst (CFA) and Certified Financial Planner (CFP). Besides his editorial duties with Weiss Research, Bill is the managing director of Plimsoll Mark Capital, a firm that provides financial, tax and investment advice to wealthy families all over the world.
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Are inverse etfs the basket of assets to get into. What about low risk securities issued by the us government in the form of t-bills or treasury bills. This boom that’s coming is gonna be even bigger than the last boom. Leveraged etfs, unleveraged etfs, mining stock, futures and options there is gonna be a bonanza in. The securities indices s and p 500, NASDAQ, and Dow Jones are gonna see a bull market in stocks. This economic cycle that we are in is a 40 month kitchin cycle, of prosperity, recession, depression and improvements cycle. We are not in a jugular 7 to 11 year cycle yet. Neither are we in a kondratieff cycle. The demand for Money has 3 motives, the speculative motive, the precautionary motive, and the transactions motive. The most risk sensitive of these motives is the precautionary motive. A bird in the hand is generally more attractive than two in the bush. What we do know is that we are in a boom, recession, depression, recovery and growth cycle. The boom that we are headed for is possibly a boom bigger than the 1930s. The Kuznets cycle says that we are living in the most blissfully peaceful times of human history since civilisation began. Let the boom begin.
EVERY DAY THE WORLD MARKET WAS RAISING AND BOOMING THE ECONOMICAL ZOONS
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” Let’s make Hay while the Sun is Shining!”