- “If you’re a trader…the struggle is real,” says Alan Knuckman
- Three convincing reasons for investor optimism in 2019
- Apropos of no recession in sight…
- Mike Burnick on Wall Street snobs and outperforming dividend stocks
- Facebook’s blockchain foray in India
- A pre-Christmas bank heist near the North Pole (hmm…)
“We’ve seen much more pain than gain lately,” says Alan Knuckman from the trading pits at the CBOE. “If you’re a trader… the struggle is real.
“But 2018 hasn’t been totally terrible.” Yep, he said it…
The way Alan sees it, the silver lining for investors this year has been the return of something that had been largely absent from the markets: volatility.
“From a valuation perspective,” he says, “equities are getting cheaper and more attractive by the day as the market churns.”
To that end, smart investors like Alan “took advantage of the drops to buy stocks on the cheap… and sell into strength.
“And as I’ve often said this year, despite trade war woes and talks of a global growth slowdown, stocks are STRONG.
“So… no, we aren’t heading toward a recession next year.
“I’m not crazy enough to pick a bottom,” Alan says, “but I see much more upside than downside for stocks in 2019.”
That’s because Alan doesn’t get it twisted — he separates the U.S. economy from the U.S. stock market.
While Alan concedes economic growth will slow next year — from an anticipated 4% GDP in 2018 to 2.5% forecast for 2019 — that’s still higher than the 10-year average GDP of 1.6%.
Not only that, but unemployment is under 4% and might drop even lower next year.
And did we mention December’s holiday retail rally?
Alan says: “Retail is expected to report big earnings beats next quarter, as this year’s wealth effect has culminated into a no-holds-barred spend-fest over this holiday season.”
On the subject of earnings, Santa Claus might not have come through for investors in December but earnings season is less than a month away.
“That’s when the market’s focus will shift back to fundamentals.”
So… “before you tar and feather me as a permabull that’s devoid of logic,” Alan says, “here are three HUGE reasons to stay in the game next year…
Stocks are CHEAP
“Earnings growth over the last two years has more than justified higher stock multiples,” says Alan. “The S&P still trades at just 14.7 times forward earnings after last week’s rout.
“That’s below the index’s five-year average, and right around its 10-year average.
“Better still,” Alan continues, “some big brand-name stocks are trading at incredible discounts…
- Netflix is trading at 95.6 times trailing earnings — its lowest P/E multiple since 2015
- Twitter trades at 26.6 trailing annual earning — its P/E has fallen 75% from its high on the year (46.8)
- Apple is trading at its lowest P/E valuation — 13.9 — since early 2017.”
Alan says: “The sharp sell-offs are giving you the chance to buy stocks at multiyear discounts — putting risk to reward squarely in YOUR favor.
“But don’t expect the sale on stocks to last long,” he warns.
Inflation has NOT exploded
Along with that, Alan says, “expect the Fed to significantly slow down the pace of its interest rate hikes.
“According to CME’s FedWatch,” he notes, “Fed fund futures are pricing just a single interest rate rise in 2019.
“Put simply, expect the slowdown in rate hikes to fuel a rally in stocks.”
There are (still) no better alternatives
“When you look at the alternatives,” says Alan, “you’ll quickly see why stocks are still the place to be.
“The U.S. 10-year Treasury — the market’s most popular risk-free instrument — is currently yielding a mere 2.75%. On a total return basis, the note’s investors have enjoyed a negative 1.6% for their troubles.
Think cash is king?
“Though the three-month LIBOR (a measure of short-term bank interest rates) has risen 77% over the last year, it’s still just a pathetic 2.8%.”
Granted, cash has outperformed during the market’s recent rout — and might do so for a short time to come — “but with another year of big growth expected in corporate America next year… that outperformance is not bound to last.
“Here’s the bottom line,” Alan says, “if you’re looking for maximum return on your hard-earned capital, stocks are where you want to be in 2019.
“And right now, you’re staring at one of the best buying opportunities you’ll get over the next 12 months.”
[Ed. note: While Alan wouldn’t pick a market bottom, he believes the S&P 500 will appreciate by a staggering 17.1% over the next 12 months.
That puts the S&P 500 index right above 3,100 — topping September’s all-time high by almost 200 points.
And Alan believes this is a fast-moving situation… if you want to get in while stocks are still a bargain.
To take full advantage of Alan’s wealth-building strategy, you’ve only got until this Monday, Dec. 31.
To the markets, where the Dow’s up 22 points, to 23,161.24…
The S&P 500’s up about 5 points, to 2,492.85, while the Nasdaq’s up 20 points, to 6,600.
A barrel of West Texas crude’s up 75 cents, to $45.36.
Gold’s down 40 cents, to $1,280.60 per ounce.
As for bitcoin, it’s rallying; the crypto’s up $269.29, to $3,915.61.
Speaking of no recession in sight… there’s the latest Philadelphia Fed State Coincident Index.
This obscure economic report crunches four job numbers across all 50 states. Only three states are backsliding in any way — North Dakota, Hawaii and Maine.
But even more revealing is the “diffusion index” that turns those 200 numbers into a single revealing composite on a scale of minus 100 to plus 100. When the composite dips below plus 50, that’s signaled the onset of every recession since the Carter administration.
The latest diffusion index? Plus 80.
(We’ll give you a moment to sigh with relief before moving on…)
“Volatility tanking your portfolio?” asks wealth and income specialist Mike Burnick.
“Not if you’re following my advice and are focusing on select, high-quality dividend-paying stocks,” he says.
While Wall Street snobs might have you believing dividend stocks are for the most unsophisticated investors, “they’re also some of the best performers during times of stock market weakness.”
In fact, “42 out of the 53 dividend aristocrats, stocks that have raised their dividends for 25 or more years, actually increased in share value during the month of November.”
Yep, you read that correctly…
While the rest of the market was taken out to the woodshed, 79% of these dividend stocks actually went up.
Here are some impressive examples:
- AbbVie (NYSE: ABBV) up 18%
- Franklin Resources (NYSE: BEN) up 10%
- PepsiCo (NASDAQ: PEP) up 9%
- Kimberly Clark (NYSE: KMB) up 9%
- W.W. Grainger (NYSE: GWW) up 9.1%.
So while your friends were grousing about getting clobbered at the market, you could’ve been — humble bragging? — about your pre-Christmas bonus.
“The icing on the cake is U.S. companies are also returning money to shareholders in the form of stock buybacks,” Mike says.
“Buybacks by the 500 companies of the S&P 500 hit $200 billion in the third quarter, a 56% year-over-year increase.”
The only thing sweeter than a dividend showing up in your brokerage account is a bigger dividend.
“And American companies are giving out a mountain of ‘raises’ to their shareholders this year.
“In the third quarter of 2018 alone, U.S. companies paid out $120 billion in dividends, a 7.3% year-over-year increase,” Mike says.
Including the following companies…
- Nike (NYSE: NKE) increased by 10%
- Automatic Data Processing (NASDAQ: ADP) increased by 14%
- Snap-on tools (NYSE: SNA) increased by 15%
- Tyson Foods (NYSE: TSN) increased by 25%.
For even more generous dividend payouts, Mike says: “Expand… your horizons beyond the U.S. borders.”
That’s because the average global market dividend increased 9.2%; that’s 26% more than U.S. companies.
For example: “The Janus Henderson Global Dividend Index, the 1,200 largest companies in the world by market capitalization, paid out $354 billion of dividends in the third quarter.
“In short,” Mike says, “companies are making more money than ever and are passing on those profits to their investors.
“[Dividend stocks] are perfect for anybody who enjoys cashing fat checks and doesn’t want their portfolio to get slaughtered when the stock market is struggling.
“That’s the definition of a WIN-WIN!”
“While stock markets have taken a bit of a beating, cryptocurrency markets are up by more than 30% over the past five days,” says crypto expert James Altucher.
James attributes crypto’s bounceback to details about a blockchain project… sponsored by Facebook.
“In a report released by Bloomberg,” James says, “the company revealed ongoing discussions to develop a proprietary cryptocurrency for its WhatsApp messaging platform.
“Facebook is currently investigating the development of a stablecoin targeted at the $69 billion Indian remittance market.”
A stablecoin is a crypto that aims to duplicate the stability of fiat currency “while providing the convenience and security of digital currency,” says James.
And “the implications of Facebook’s launch could be massive,” James continues.
“For one thing, Facebook’s cryptocurrency initiative could motivate businesses to consider accepting cryptocurrencies as a payment method.”
An alternate payment method might be particularly welcome in India, where the government’s waging an aggressive war on cash. And WhatsApp has 200 million users in India alone.
“Although Facebook’s initial implementation focuses on the remittance market, if user adoption is robust, it’s likely we’ll see the expansion of this initiative into other payment use cases,” James says.
“Facebook’s efforts to educate its users on the benefits of the initiative could have a spillover effect onto other cryptocurrency projects.”
James concludes: “The launch could have a positive impact on adoption of all cryptocurrencies. Facebook’s product would help improve awareness, acceptance and trust of digital assets.”
“A suspected armed robber has been caught after a bank was held up in a remote archipelago near the North Pole,” says SkyNews.
Last Friday, a robber — described as a “foreign national” — reportedly used a gun to hold up a bank (only bank?) in the archipelago’s capital, Longyearbyen, population 2,000.
“The heist was a first for Svalbard, which is located in the Arctic Ocean halfway between Norway and the North Pole,” the article continues, “and is famous for its glaciers and polar bears, which outnumber the human population.”
Not to worry. The would-be robber was quickly apprehended — he might have forgotten that a getaway car simply wouldn’t do in Svalbard, where the primary mode of transportation is a plane.
Escaping on foot’s out of the question: Winter temperatures hover below -4 F and can drop below -40 F.
And did we mention the polar bears?
No word yet on the suspect’s identity; however… considering the proximity to the North Pole, we wouldn’t be surprised if the suspect wore a red and white suit and had “a little round belly/That shook when he laughed, like a bowl full of jelly.”
Then again… he could’ve absconded in a getaway sleigh.
The 5 Min. Forecast
P.S. Our customer care director, Brad Anderson, has all of the details on an urgent opportunity HERE.
This is a fast-moving situation…
You only have until Monday to decide if you’re in or not.
We know the property market in 2021 is a little nutso. And we know many prospective buyers and renters are snapping up their new dwellings sight unseen. But this story is on a whole other level. Read More
“How would we use our precious metals as money and stay outside of the government system?” asked a reader after our recent exploration of CBDCs. So here goes… Read More
There are at least five lawsuits pending after a federal trifecta raids U.S. Private Vaults in Beverly Hills. Read More
Much of the hot mess that’s “cybersecurity” in the United States can be laid at the feet of the U.S. government. Read More
Investing legend Jeremy Grantham says: “The thing about a bubble… it can keep going.” Read More
The Federal Reserve’s twice-yearly Financial Stability Report whistled past the graveyard where Archegos Capital Management will soon be interred. Read More
“While China may be the leader in the race to build central bank digital currency (CBDC),” says Jim Rickards, “the Fed has not been caught napping…” Read More
The Central Bank of Russia has been loading up on gold for years. “No one plays the gold market better,” observes Jim Rickards. Read More
If China forces Taiwan reunification, is the U.S. ready to go to war with China? Read More
The mainstream is finally recognizing that a new era of the mom and pop investor has arrived. Read More