Stocks Around the World Are Breaking Out

Dow 20,000 is here… The U.S. is not alone… Stocks around the world are breaking out… Congratulations to Sjug… A look at Steve's incredible bull market calls…

"Dow 20,000" is here...

After several weeks of unsuccessful attempts, the Dow Jones Industrial Average finally broke above the 20,000 level yesterday. As you can see in the chart below, the index of 30 of the "bluest" blue-chip stocks closed at a new all-time high of 20,068 on Wednesday...

But yesterday's breakout wasn't limited to the Dow. The blue-chip S&P 500 Index also closed at a new all-time high...

The tech-heavy Nasdaq Composite Index closed at a new high...

And even the Wilshire 5000 Index – considered the benchmark of the entire U.S. equity market – jumped to a record high...

Perhaps most notably, the rally hasn't been limited to U.S. stocks alone...

The MSCI World Ex-U.S. Index – which tracks stocks across all 23 of the world's developed markets, excluding the United States – broke out to a new 52-week high as well (hat tip to financial blog The Reformed Broker)...

As we've discussed, U.S. stocks have been moving higher following Donald Trump's unexpected election victory in November.

But this chart shows that stocks around the world are moving higher. And it suggests the recent rally has been driven by fundamental changes in the economy, rather than the election alone.

Contrary to conventional wisdom, our colleague Steve Sjuggerud says seeing stocks break out to new all-time highs tends to be an incredibly bullish sign...

He last explained this idea in November, as all four major U.S. indexes were setting new highs. As he wrote in the November 25 issue of our free DailyWealth e-letter...

It was all over the news... "For the first time since 1999, all four major stock indexes hit all-time highs on the same day." I got calls from coworkers, family members, and good friends. They were all worried. "This feels like a bubble," they all said. "Is it time to sell?" NO. It's not...

Stocks perform fantastically after hitting new 12-month highs. We crunched the numbers. And the results were amazing.

You REALLY want to own stocks after a new 12-month high... And you really DON'T want to buy stocks after a new 12-month low. This table sums it up best. It shows the return 12 months after a new 12-month high or low. Take a look...

Steve's call is exactly right so far...

Stocks are already up more than 4% since he wrote those words. But this is nothing new...

We know of no other analysts anywhere – and this means anywhere – who have been as steadfastly bullish (and absolutely correct) about U.S. stocks since the bull market began. Time and again over the past eight years, Steve has told readers, "Don't worry"... "Stay long"... "Stocks are headed higher."

Of course, if you've been with us for long, you've likely heard this before. But you may be surprised to learn just how prescient some of his calls have been...

For example, Steve first turned bullish on U.S. stocks in March 2009, just days after the bear market bottomed...

Of course, we didn't know this at the time. Stocks had fallen more than 50% over the previous 18 months, and most investors were panicking.

But Steve noticed the economy was quietly moving from "bad" to "less bad." And in the March 20, 2009 DailyWealth, he told readers unequivocally, "You want to own stocks, right now."

In late 2010, after stocks had already rallied 50% off their bear market bottom, Steve remained bullish...

In his October 9, 2010 DailyWealth, titled "Why EVERYTHING Is Up and Will Go Higher Still," he told his readers the bull market would continue.

In late 2011, after stocks had suffered their first major correction since the financial crisis, Steve again reassured readers the bull market would continue...

Writing in the October 10, 2011 DailyWealth, Steve said history suggested that a "major bottom" in stocks was near. Again, he was right... In fact, stocks had already bottomed just days before.

As stocks continued higher in 2012 and 2013, Steve reaffirmed his bullish stance time and again.

When stocks suffered another correction in late 2014, Steve again called the bottom, nearly to the day. In the October 2, 2014 DailyWealth, Steve predicted the "eighth inning" of the bull market was about to begin... And stocks continued higher through the following spring.

And when stocks plunged in the summer and fall of 2015 – when many analysts were calling an end to the long bull market – Steve still remained bullish. As he wrote in the September 10, 2015 DailyWealth...

This bull market in stocks is not even close to over yet. Stock prices should have much higher highs ahead, based on the weight of the evidence. Both the short-term picture and the long-term picture are just about perfect for higher highs.

Most recently, when stocks plunged again early last year – and investors were as bearish as they had been in years – he told readers not to worry because stocks were likely to move higher in 2016. As he wrote in the January 14, 2016 DailyWealth...

We have some scary things happening right now in the financial markets. But you need to understand one thing: Fear is good...

You know the old saying... "Be fearful when others are greedy, and be greedy when others are fearful." (Warren Buffett said that... and Buffett is the greatest investor of all time.) Markets peak when investors are greedy – when nobody thinks you can lose money (like in real estate in 2006). And markets bottom out when fear rules – when everyone is scared.

So my question to you today is simple: Is everyone greedy right now, or is everyone fearful? The answer is obvious to me... Investors are more fearful than greedy today. And that means stocks can still move higher in 2016.

The S&P 500 then went on to gain more than 18% through year-end.

The following chart puts these calls and others in perspective...

If you had followed Steve's FREE advice to buy stocks in 2009...

And you had simply held on, you would've done incredibly well. The benchmark S&P 500 Index is up nearly 200% over that time.

And folks who followed his True Wealth recommendations have done even better.

So what does Steve recommend today as stocks are breaking out to new highs?

Again, you probably won't be surprised. In the January 9 DailyWealth, he shared two big reasons to expect stocks to move higher in 2017.

First, as we mentioned earlier, new highs are a bullish signal. Second, despite the rally we've seen, stocks are still not expensive today...

Investors are always choosing between earning safe interest (if they can) or taking a risk in the stock market. So to understand if stocks are a good deal, you have to consider whether they're a good deal relative to interest rates. Said another way: you must consider both stock valuations AND interest rates when sizing up the value in stocks.

A few years back, I built an indicator that considers both of these pieces for my True Wealth readers. I call it the True Wealth Value Indicator... As you can see from the chart below, stocks were incredibly cheap at the bottom in 2009... and they were extremely expensive at the top in 2000. This indicator works. Right now, we're about in the middle of the range... Stock valuations are not high compared with our indicator's history. Take a look...

As Steve noted, despite the fears that stocks are getting expensive, stocks could still easily go much higher from here. He believes more new highs are likely in 2017.

New 52-week highs (as of 1/25/17): Apple (AAPL), Boeing (BA), Bank of Montreal (BMO), First Trust Nasdaq Cybersecurity Fund (CIBR), Alphabet (GOOGL), PureFunds ISE Mobile Payments Fund (IPAY), Altria (MO), Microsoft (MSFT), iShares MSCI Global Metals & Mining Producers Fund (PICK), PNC Financial Warrants (PNC-WT), Shopify (SHOP), TransCanada (TRP), Turquoise Hill Resources (TRQ), TTM Technologies (TTMI), and Wabtec (WAB).

In today's mailbag, more feedback on Stansberry's Credit Opportunities... and one subscriber has a bone to pick with bestselling satirist and Digest contributing editor P.J. O'Rourke. Send your notes to feedback@stansberryresearch.com... Praise or vitriol, we read it all.

"I subscribed to the Credit Opportunities publication when it was announced. To date, I have purchased 9 bonds. I purchased 25 of the [first] bond, 5 of one bond, and 10 of each of the others. The [first] bond matured in June 2016, and I sold 3 other bonds when they were priced above $103. My total profits for the bonds that matured or were sold was $4785; the total amount invested for those sold was $46,175. That is a 10.4% return, but those bonds were all held for less than a year, so the annualized return is larger than that. But the bottom line for me is that I purchased a lifetime subscription to your advice on buying bonds and paid for that with a profit in less than a year. Even my accountant/wife was impressed so did not object too much when I wanted to purchase the portfolio subscription. I look forward to working with you and your team for many years to come." – Paid-up subscriber Bill H.

"I just finished the annual review of my portfolio yesterday. The best results for 2016 was in bonds, specifically, Credit Opportunities recommendations. I only was able to get 7 bonds to date... the rest I missed the window or there never was a window at or below the target price. Our annualized return on [two closed positions] was 44% and 33%... All [five open positions] are doing well, though too early on [the latest]. This is a great service. I have never invested in bonds before let alone worked thru individual bond purchases. The education alone was worth the cost. Though 95% of our portfolio is in equities, I could easily transition to a significant portion of our portfolio in bonds. All I can say is... Thank You!!" – Paid-up Stansberry Alliance member Carl S.

"Dear Porter, I read your report card and your invitation for feedback, and as a Credit Opportunities subscriber, I am responding. I have been very pleased with my subscription.

"I began buying individual issue bonds in 2009 after the government announced that certain banks were too big to fail. There were very good bargains in AIG, Citigroup, Bank of America, Morgan Stanley and others, that were selling at much too heavy of a discount. I also found bargains in blue chip bonds such as Steelcase, Staples, Alcoa, Dow Chemical, International Paper, Merrill Lynch and Xerox. I kept maturities short – under 5 to 7 years. Yields were about 7% with capital gains of 10 to 15%. I grew the portfolio to about 30 positions, and I kept rolling them over as bonds matured. I suffered no defaults.

"I found it more and more difficult to find bargains and to assess risk as time went by. I was getting little or no discount to par and yields were under 5%. Then I saw your new service and I bought it immediately. My bond performance has improved dramatically since then as I have purchased every one of your recommendations (except for 2 that I was never able to buy at the recommended price). I have over 30 positions again and my yield is over 6%. Capital gains assuming no defaults will be about 9%. Nine of my current bonds are Stansberry recommendations (one other is from your list, which I analyzed and bought for about 79% of par). My top 6 holdings are all from the Credit Opportunities list with a potential 25% capital gain assuming no defaults.

"Before buying any bond I analyze it from online data and from Value Line reports. Your analysis goes much further and deeper in analyzing debt structure, and I appreciate that... I use Etrade tax deferred accounts for all bond buying. Etrade charges a commission of only $1.00 per bond. Bond maturities are timed to provide all cash necessary for minimum required distributions beginning in 2018.

"One other note – as a result of my good experience with Credit Opportunities, I purchased a Flex Alliance membership, and I have had very good success with your Alpha options strategy and the Retirement Trader publication. While I had been writing puts and calls from time to time, I have increased my option premium income by about 5 times since using those services. I hope this feedback is helpful." – Paid-up subscriber Dennis L.

"To O'Rourke – come down from that high place you've become accustomed to inhabiting. There's nothing adolescent about our new President – as you say, watch him. The man's a genius. He's done more in five days than other presidents have done in 5 years. And he knows what he's doing with the use of direct communication, bypassing the unbelievably arrogant, stupid, and ignorant press. It's all part of the same play-book. Voter-fraud? We all know there's massive voter fraud whatever the geniuses on CNN & MSNBC say. Richard Nixon lost the 1960 election to J.F.Kennedy because of it, and those two jokers Gore and Kerry nearly won because of it. Just as President Trump says he's going to clean up the immigration mess, he's going to clean up the voting mess, too, along with the VA mess, the pipeline mess, the healthcare mess, and all the other messes as he gets round to them. But it would be really nice, very nice, if conservatives like O'Rourke would stop being so snooty about him. What have they got to be snooty about? Have they not noticed that for the first time in years and years we have a touch of stylishness and good taste back in the White house? That alone is one heck of a relief, and adolescence had nothing to do with putting it there." – Paid-up subscriber Frank Brownlow

Regards,

Justin Brill
Baltimore, Maryland
January 26, 2017