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One Reason I'm Confident There's More Upside in StocksBy
Wednesday, April 22, 2015
If you're sitting on big gains in stocks today, I have good news for you... There's more to come.
The current bull market in stocks is now more than six years old... and stocks have already tripled in value. This has many experts and investors worried that we're long overdue for a crash.
But there's something unique about this bull market... and it's indicating to us that stocks have plenty of upside left.
Let me explain...
Markets have been rising... but in an unusual way.
Remember what happens in a bubble... Greed takes control of investors. They forget about safety and value. They plow their money into the opportunities they think have the biggest payoffs. They can't let a hot investment get past them.
That's what happened with tech stocks in the dot-com boom. And with houses in the 2006 boom.
That's not happening now in stocks...
Rather, the best-performing investments have been the safest ones. Blue-chip dividend-payers have outperformed the market drastically. The thing is, it's strange to have the old, stodgy, and boring companies lead the way.
 Of course, we love blue-chip dividend-payers. We love their safety and ability to compound wealth over time. We were among the first to talk about this coming trend years ago... and we built our Retirement Millionaire portfolio around them. But it's rare that they outperform the market over this long of a term. It's a clear sign that investors aren't taking risks. They are buying the safest stocks.
Some are even still buying U.S. Treasury securities at extraordinarily low yields. That's a terrible decision. Even worse are the people buying German, Swiss, and Japanese bonds at negative yields. I don't know about you... but I'm not investing in anything that's guaranteed to lose me money.
The point is, investors are not going bubble-wild. They're trying to go super-safe. And bull markets don't end until investors bid up prices too far and speculate on a future unlikely to ever happen.
That's not to say that we won't see corrections in the coming months. We never try to predict such things. But we feel confident that a major bear market is still not a threat in the immediate future.
That makes us feel safe, but it doesn't change our investing strategy all that much. In my Retirement Millionaire newsletter, I'm still recommending strong businesses that produce things that consumers want... or better yet... need. We also look out for assets that are available at cheap prices.
Higher valuations mean it's a good idea to be a little more cautious than we were just a few years ago... but there's no reason to fear a big crash in the near future. Folks still aren't taking big risks. And that tells us this bull market still has plenty of room to run.
Here's to our health, wealth, and a great retirement,
Dr. David Eifrig, Jr.
Further Reading:
Doc recently took a hard look at various economic statistics to see if they were telling the whole story. Here's what he found:
Measuring the economy is difficult. Very difficult. And in a sense, there are no "real" numbers...
Consumer Price Index (CPI) is one of the most controversial government statistics. Here's what it's really telling us...
The official unemployment rate shows that we're down to 5.5%. So what about the claims that this is smoke and mirrors?
Market NotesA BIG 'PICKS-AND-SHOVELS' WINNER IN DIGITAL PAYMENTS Today's chart looks at a big "picks-and-shovels" winner in the massive digital payments trend.
Regular readers know we're proponents of investing in picks-and-shovels companies to profit from sector and commodity booms. Picks-and-shovels providers don't bet the company on one project... They sell vital goods and services to an industry (read our educational interview about it here).
A great example is Global Payments (GPN), a company that you've likely never heard of. But if you have used a debit or credit card – or made an online purchase – chances are you've used the company's services. The Fortune 1000 business offers electronic transaction processing and merchant services worldwide for all of the major credit-card companies. Therefore, Global Payments directly benefits from the growth in digital payments.
As you can see below, GPN is growing rapidly. Over the past two years, shares are up more than 100%. Just last week, the company reported double-digit growth in earnings and raised its guidance for the rest of this year. Yesterday, shares reached a new all-time high. It's a bull market in digital payments.
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