Sjug's Latest Thoughts on the Stock Market
A year for the record books... Investors are finally getting bullish again... Sjug's latest thoughts on the stock market...
It has never happened before...
Last Friday, the benchmark S&P 500 Index closed at 2,673.61. This was good for a gain of a little more than 1% in December. But it also marked an unprecedented feat...
You see, 2017 was the first year in history where U.S. stocks ended every single month in the green. Only three other years – 1958, 1995, and 2006, which each had 11 positive months – have even come close.
All told, the S&P 500 rallied 19.4% for the full year. Including dividends, U.S. stocks returned nearly 22% in 2017, among the best annual gains in history.
In short, Steve Sjuggerud was right again...
Longtime readers know "Sjug" has been one of the most outspoken bulls over the past nine years. He was among the first analysts anywhere to turn bullish on U.S. stocks back in 2009. And he's reaffirmed his bullish stance again and again as stocks have soared to new highs.
Around this time last year, many folks were worried that the end of the bull market was near. But Steve disagreed... He told readers 2017 was likely to be another great year for stocks. As he explained in the January 9, 2017 edition of our free DailyWealth e-letter...
"I remember when the Dow hit 1,000, and then 2,000," a friend in his 70s told me last month at lunch. "Now the Dow's near 20,000. That's scary."
This friend is no dummy... He founded a major corporation that traded on the stock market. He had tens of thousands of employees. His net worth hit nine figures.
And he's scared. I get that... We're in uncharted territory. But I have a positive message today: Stocks can go much higher this year.
In particular, Steve pointed to the recent all-time highs in the market. As he explained, despite fears to the contrary, his research shows new highs tend to be incredibly bullish for stocks going forward...
If prices hit a new all-time high, then they only have two potential places to go... somewhere they've already been, or somewhere they've never been.
Our brains tell us stocks are more likely to fall... to a place they've already been before. That feels comfortable. That has already happened, at least.
Our brains are wrong. And we have decades of data to prove it... Stocks tend to perform better after hitting new highs than after hitting new lows. Stocks have just hit new highs... And that tells me stocks could have another strong year in 2017.
So what is Steve thinking today?
He shared his latest thoughts on U.S. stocks with his True Wealth Systems subscribers just before the holidays...
I've remained bullish on U.S. stocks for years. Folks have found plenty of reasons to sell along the way. But my advice has been to stay long. The trend has consistently been up and investors haven't been excited to own stocks during this boom.
That second point is changing though. Today we're seeing extreme optimism from the National Association of Active Investment Managers (NAAIM) Exposure Index.
If you're not familiar, this index surveys hedge-fund and mutual-fund managers to see how they feel about the market. A rating of zero means managers own no stocks. And a rating of 100 means managers are fully invested. And today, they're as bullish as they've been in years. More from Steve...
Last week's reading was the highest since the survey started in 2006... a level of 109. That means investment managers have fully invested and then some – they're buying with leverage. Take a look...
The NAAIM Exposure Index hit a record level of 109 last week. Before that, this index had only broken above 100 five other times.
As Steve explained, this is a clear sign that investors are getting excited about stocks again...
And investment managers in particular are making a big bet on stocks today.
But he also noted that this isn't a reason to sell. In fact, history says the opposite... Buying after each of these other similar extremes would have led to double-digit gains in one year or less.
Of course, this is a relatively small sample size... And Steve would never recommend making investment decisions based on any single indicator alone. But alongside the other indicators he's following closely, it's one more sign that the long bull market has further to run...
My advice to stay long into 2018 isn't solely because of this extreme. But learning that similar bullish levels haven't killed this bull market is good to know.
The truth is that we're in the later innings of a historic bull market. And while extreme optimism seems like a reason to be cautious, history says it's not a reason to sell.
The trend is still firmly in place. And until that changes, my advice won't change. Stay long U.S. stocks into 2018.
Again, no one has 'called' this bull market in stocks like Steve...
So if you aren't already reading his research every month – whether it's his flagship True Wealth advisory, or his more exclusive True Wealth Systems or True Wealth China Opportunities services – we urge you to reconsider immediately.
As we noted last week, Steve just released his No. 1 investment idea for 2018. He believes it's the single best way to profit from the new "Global Melt Up" in stocks, and the perfect place for new money today. And you can get instant access with a 100% risk-free subscription to True Wealth. At just $199 for a full year, there is no better value in our industry. Click here to learn more.
New 52-week highs (as of 1/1/18): none (markets were closed for New Year's Day).
A slow week in the mailbag... We hope you were able to take some time off from money and the markets to enjoy the holidays with friends and family. As always, send your questions, comments, and concerns to feedback@stansberryresearch.com.
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"I was delighted to see 'The Jubilee' reprinted as the year ends, and a new one begins. I think it was the most important column Porter wrote this year – and perhaps in a generation. Or two... Thank you so much for all you do there and wish all a happy and healthy new year." – Paid-up Stansberry Alliance member Scott Beall
"[Regarding your 'Jubilee' warning], you're saying if we had elected Hillary, she would have forgiven all student debt, made college free, raised welfare benefits, eased home loan requirements, and gone to single payer health care... and we'd be ok, right?" – Paid-up subscriber Tom W.
Porter comment: No... we would have just gone to zero a lot faster. What folks who focus on politics don't get is that the economics drive the politics of both parties.
Regards,
Justin Brill
Baltimore, Maryland
January 2, 2018