3 Reasons to Buy During This Shifting Market
With the U.S. and China’s trade talks happening this week, it’s easy to understand why some investors are getting out of the market in anticipation of a downturn.
But I’m here to tell you that now is a great time to invest in stocks.
In today’s Bold Profits Daily update, I give three reasons why you should get into the stock market despite its current dip:
- The bogeyman of the market — interest rates — is holding steady.
- Productivity is rising in the United States to the highest it’s been in nine years.
- The stocks going down right now are part of old-world industries that are being eclipsed by newer, tech-based companies with enormous upside potential.
Check out my video below.
Bold Profits Daily
May 13, 2019
Hey. This is Paul with your Bold Profits Daily.
Today I want to give you an update on the stock market. As you know, if you are watching, the stock market it is down, down, down. Many of you are probably wondering what you should do. Should you panic? Should you sell everything? Should you hold on?
Or, if you’re one of these folks who keep a little cash on the side because you’ve seen there have been scare stories in 2011 about the euro, in 2014/5 about the China crash, in 2016 it was something else, last year it was something else. Since the stock market has been going up since 2009 there has always been a scary story to get you to sell.
Then, later on when markets are higher, you’re on the outside looking in thinking of all that money that could have been yours if you simply stayed in. Today I want to give you a market update and give you three reasons why you should stay in the market. And, if you have some money, you should go ahead and put some of that money in.
Here are my three reasons. Number one, the bogeyman of the stock market is always interest rates. If interest rates are rising and going to skyrocket higher, that’s a major problem for the stock market. Why? Just think, if your saving account is going to give 6%, 8%, 10% or 12% would you bother investing any money in the stock market?
A place where you have to deal with days like today where the stock market is down 2% and you’re worried if your 401(k) is going to zero, what will happen to the market tomorrow? Who needs that? No one needs that. If your savings account is going to give you even 6%, my guess is a lot of people will sell their stocks, put their money in a savings account and say, “Forget about this!”
When you look at interest rates, the person who sets interest rates in the United States is the chairman of the Federal Reserve. His name is Jerome Powell. He has gone on record to say he thinks interest rates where they are today are just right and that they are going to do nothing. That’s because they see little to no inflation and the economy is going on where even though there is low unemployment, there’s no real pressure on wages or costs, which are the ultimate drivers of inflation.
In other words, everything that really matters for interest rates to go up is calm and stable and setting up in such a way that it might stay this way for five, seven, 10 years, perhaps even longer. That leads me to reason number two. You’ve heard me talk about this if you watch our Bold Profits on Monday. Productivity is rising in the United States.
What’s productivity? You might be thinking productivity sounds like a made up thing. Nope. It’s a big, big, big deal. If you go back and read history books of any sort, productivity is the primary reason for the advancement of all human society. It is the critical reason for the advancement of this county and why we have leapfrogged over other countries and become one of the most prosperous countries in the world.
Essentially, we are able to do more with less — that’s what productivity is. In other words, before it might take you 20 hours to make something now because of some technique you invented or some machine you are able to use, what would take you 20 hours now takes you five. Where you could only make 20 in one hour, now you can make 50. We can do more with less and that’s productivity.
That hit the highest number since 2010. It’s almost 10 years. Even if you go back to the 1990s we’ve seen stagnant productivity for a long time. There was a little burst of it in the late 90s. Since then, it’s done nothing. However, productivity is now on a rising track.
That’s what is going to help keep inflation low. We can get more with less. That means even if employers have to pay more in wages, we can make more with less. As a result, you don’t get that money bidding up prices. Inflation stays low, interest rates stay low and it’s because of rising productivity.
Third reason, and this is more direct to what is going on today. The stocks that deserve to go down today are the stocks that I would tell you are associated with the last great boom which had nothing to do with the United States. It was a global boom driven by China and India and other global countries.
It was about them building their country out and exporting things to the United States and Europe. That’s how they built their countries up. These are companies like Caterpillar and commodities companies that make copper and iron ore. These are the companies that are going to be very affected if they way that we conduct trade in the future is different.
Where we have a much higher threshold for what we will allow into our country and also for reciprocating. We also want other countries to open up their markets so our companies can sell their stuff fairly without their intellectual property being stolen or any other unfair practices that have now developed over 15 or 20 years of the old boom.
Those companies are the companies of the old. It’s part of my complete old versus new thesis way of thinking of the world. You’ll see from this chart here, which is put out by FactSet, they cut the companies up in the S&P 500 by those that get more than 50% of their revenue from international and global sources and those that get less than 50%.
You can see that there is a big difference. Already just from about a year of this trade war stuff going on, there is a large and growing difference in terms of the companies’ sales growth that have large global exposure and those that don’t. I tell you all the time, sales growth is what matters because if you can’t sell then you have nothing.
You can’t have cash flow, you can’t have anything without sales growth. So, in other words, if you stick to the companies that have a lot less global exposure, you’re going to do great. Now, there’s a lot of companies in the S&P 500 and the overall stock market that have significant exposure to the United States, to disruptification, to the ways of the new that you can benefit by owning any of the major indices — the Nasdaq, S&P 500.
However, this is my shameless plug. If you want a laser focus on what is going on with the kind of thinking I’m telling you about where we’re vetting companies for the new, for disruptification, for the big megatrends that are really driving productivity — Internet of Things, block chain, artificial intelligence, robotics, precision medicine, new energy, the rise of the millennial generation — you really want to check into my Profits Unlimited service, Extreme Fortunes service or True Momentum service.
These are the base services where we go across the U.S. stock market. Large-cap stocks in Profits Unlimited, mid-cap stocks in True Momentum and small-cap stocks in Extreme Fortunes. There you can get this laser focus on the companies that are going to benefit from everything I am telling you about.
If you want to buy an ETF that will get you in, we’ve told you before to buy the ARK Innovation ETF (NYSE: ARKK). That will also give you a nice diversified exposure to many of the things and developments I’ve told you about in this Bold Profits Daily.
Before I go I want to tell you to subscribe to this channel, share it, like and comment. I’ll have another one next week. Until then, this is Paul saying bye.
What to Remember in Turbulent Times
When it comes to the stock market’s recent drop, there’s one question that comes up in every investor’s mind: Is it time to panic?
But almost every year, there’s a new scary story in the news that causes people to get out of the market quickly and avoid any further losses.
The U.S.-China tariff discussions are just the latest of these scary stories. And I want to let you know why you should actually buy into the stock market now.
First, interest rates are at a great, stable place in the U.S. due to low inflation rates and historically low unemployment rates.
Also, productivity is rising at an amazing rate, and its impact on the stock market is key to the advancement of our society. Basically, we’re able to do more with less, causing a rise in stocks that are all about improving productivity.
Finally, the stocks that deserve to go down with the market today are part of the old world of investing. Companies that are holding steady right now are those that are part of the new boom.
If you want to take advantage of the new boom, then I suggest you check out the Ark Innovation ETF (NYSE: ARKK).
This exchange-traded fund (ETF) will help you invest in all kinds of great stocks that could make a splash once the market swings back up.
Editor, Profits Unlimited