Stock Market Wealth

STOCKS: The End!

Jan 16, 2018 | Stock Market Wealth

Like mushrooms after the rain, closet bulls are appearing everywhere right now.

Between 2009 and 2013, you couldn’t convince a retail investor to touch stocks. There were so many world-class businesses selling for bargain valuations. I remember buying SYSCO (NYSE: SYY) shares, the no.1 distributor of food to the food service industry at $27 in 2011 (currently, shares trade for $61 and it is not a buying opportunity), and investors told me that the U.S. economy was dead and that they would never own shares again.

Today, investors are coming out of the woodworks and buying stocks at crazy-high valuations.

In 120 years, the stock market has never been this stretched and overbought – the mania is with U.S. equities, not with cryptocurrencies.

Even perma-bears, the commentators who believe that the Dollar will zero-out any second, are reciting this idea of a “Melt-Up.” Everyone is bullish.

Smart money, though, billionaire-type, is not tempted by the hype and is not piling in.

They’re being cautious at the moment.

Here’s how Wealth Research Group sees Q1 playing out: The GDP numbers for Q4 of 2017 and the annual 2017 report will be released next week. They will look astonishing, compared with what we’ve seen from the U.S. economy these past years – a 4% GDP growth is possible.

Sophisticated investors will see this as a signal that the stock market is priced in for maximum growth. No one believes, nor should he, that the U.S. economy can grow faster than 4%, without an infrastructure program.

Therefore, Wealth Research Group sees a correction approaching – in 2016, an 11% drop in the S&P 500 caused commodities stocks to soar and offer such a perfect hedge that the Swiss Central Bank and the monstrous Norwegian Sovereign Wealth fund bought billions of dollars worth of mining shares.

Take a close look at the above chart. Close to $1 trillion in cash is set aside right now and as inflationary pressures are causing much higher prices for oil, as well as gold and zinc (the metal is trading at a decade-high, up 90% in 2 years), these funds will diversify into commodities heavily.

Another important technical indicator is the January Impact. Historically, sectors that outperform in the 1st week of the year tend to be the best-performing sectors at the end of the year.

Mining and energy were the top ones for 2018.

After this coming correction, stocks will resume the rally, after shaking out and spitting like a laundry machine, all the newbies, who have dabbling in stocks for the 1st time in their lives.

But, contrary to rallies throughout the earlier parts of this 09′-17′ business cycle, commodities will lead this final party.

The economy is now functioning at close to full capacity, but the tax cuts will bring foreign investors to the U.S., and I see a continued boom in industry for the U.S., which will be good for the real economy.

Therefore, natural resources will be the ticket going forward.

The long, drawn-out churn that the mining sector has seen is over – takeovers are back and exploration budgets are getting approved again.

Yes, my target for the Dow-Jones remains around the 30,000-36,000 points, which is 38% higher than today, but for the resource sector, after it hit the lowest valuation in 73 years, my target is north of 500% for the safe plays and 1,000% for the juniors.

Take a close look at the above chart. Close to $1 trillion in cash is set aside right now and as inflationary pressures are causing much higher prices for oil, as well as gold and zinc (the metal is trading at a decade-high, up 90% in 2 years), these funds will diversify into commodities heavily.

Another important technical indicator is the January Impact. Historically, sectors that outperform in the 1st week of the year tend to be the best-performing sectors at the end of the year.

Mining and energy were the top ones for 2018.

After this coming correction, stocks will resume the rally, after shaking out and spitting like a laundry machine, all the newbies, who have dabbling in stocks for the 1st time in their lives.

But, contrary to rallies throughout the earlier parts of this 09′-17′ business cycle, commodities will lead this final party.

The economy is now functioning at close to full capacity, but the tax cuts will bring foreign investors to the U.S., and I see a continued boom in industry for the U.S., which will be good for the real economy.

Therefore, natural resources will be the ticket going forward.

The long, drawn-out churn that the mining sector has seen is over – takeovers are back and exploration budgets are getting approved again.

Yes, my target for the Dow-Jones remains around the 30,000-36,000 points, which is 38% higher than today, but for the resource sector, after it hit the lowest valuation in 73 years, my target is north of 500% for the safe plays and 1,000% for the juniors.

You’re about to position yourself on the launch pad – this is it!