You Can’t Afford to Miss This Cheap-Money Rally
- Investors banking on a coronavirus dip are going to be disappointed.
- Markets are rallying on the “silver lining” of the outbreak.
- Anthony Planas shares two ways to get in on the rally before it is too late.
The dip we saw at the end of January is as good as it’s going to get.
I told readers to buy — I certainly did.
Headlines about the coming pandemic cluttered every news site.
In response, I set a string of limit orders before market open. Every limit order I set was filled by lunchtime. I took my break to set even more limit orders. Again, every order was filled.
My daily account value was in the red. But I was a happy buyer.
I knew the shock from the coronavirus wouldn’t last.
But now, I see investors beside themselves over the sustained rally. They can’t believe that the stock market is shaking off the coronavirus threat.
The threat is real, after all. Apple Inc. (Nasdaq: AAPL) lowered its guidance due to disruptions in China.
Shares fell for a day — but now trade near all-time highs.
For investors who are spooked by the coronavirus, don’t be. Wall Street knows there will be disruptions. But it doesn’t care.
Let me tell you why you’ll regret sitting this one out.
Coronavirus in Context
The coronavirus death toll has surpassed 2,000.
News sites are eager to post any update on the virus. And while the loss of thousands is a tragedy, the flu kills an average of 41,000 Americans per year.
The 24-hour news cycle wants you to be scared. It’s good for business.
But it’s terrible investment advice.
The markets aren’t brushing off the coronavirus because it won’t have an effect.
Markets are rallying because of how governments are reacting.
Governments Promise More Cheap Money
The main driver of economic growth is money. That’s obvious.
But what really gets markets moving is cheap money.
And the coronavirus’ threat means more cheap money for longer.
China is dumping billions to prop up its economy. And it’s eyeing interest rate cuts.
The U.S. Federal Reserve is hinting at holding rates steady. But Wall Street is expecting a minor cut.
Either way, it’s a good sign that global interest rates will stay low. And the cheap-money train will keep rolling in 2020.
Businesses thrive when money is cheap. It’s why the government cuts interest rates during a recession. It’s a stimulus for growth.
And that means you’ll regret sitting this rally out.
2 Ways to Play
Investors looking for broad exposure should consider an index fund such as the SPDR S&P 500 ETF Trust (NYSE: SPY).
This carries a well-diversified basket of large U.S. stocks.
But for investors looking to amp up their returns, consider a leveraged fund.
In a recent video, I covered the risks and opportunities that leveraged funds hold. But I’ll warn you: They aren’t for everyone.
Managing Editorial Analyst, Winning Investor Daily
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