This Bull Market Is Just Getting Started
Editor's note: Don't play it safe in today's market...
Various headwinds are weighing on stocks right now – from high inflation to rampant geopolitical turmoil.
And while some investors believe keeping their money on the sidelines is the wise move, Marc Chaikin – founder of our corporate affiliate Chaikin Analytics – says the current market setup tells a different story.
In today's Masters Series, adapted from the February 12 and January 3 issues of the free Chaikin PowerFeed e-letter, Marc explains why he's remaining bullish on stocks amid ongoing volatility...
This Bull Market Is Just Getting Started
On the window sign of an iconic luxury-retail store on Madison Avenue, the message was loud and clear...
"EVERYTHING MUST BE SOLD! GOODBUYS, THEN GOODBYE!"
For decades, Barneys New York had been the premier fashion store in the city. The company's Madison Avenue headquarters boasted nine floors and about 275,000 square feet of retail space.
Barneys started out as a men's discount clothing store in Manhattan in 1923. Over the following decades, it transformed and grew into a luxury-retail powerhouse.
By the 1980s, the company had developed a reputation for introducing the best global luxury brands to an increasingly wealthy American consumer market.
Its flagship New York store featured wall-to-wall designer labels – from Giorgio Armani to Balenciaga. If it was expensive, Barneys had it.
In short, it was a traditional luxury shopper's paradise.
The store was even prominently featured in the hit TV series Sex and the City. Its fashionista lead character, Carrie Bradshaw (played by Sarah Jessica Parker), considered Barneys one of her favorite places to shop.
But on February 23, 2020, Barneys New York closed...
And so did the company's two other stores in New York, along with those in San Francisco and Beverly Hills, California. All branches closed, all on the same day.
Fashion-industry figures called it the end of an era.
But it was ultimately a failure to adapt to changing times...
When Barneys opened its gigantic store on Madison Avenue in 1993, it set the bar for luxury shopping in New York.
But that came at a price – in the form of costly rent.
You see, Barneys didn't own the property it did business on. Most of the company's money was tied up in expensive goods kept in inventory. Barneys sold those goods at huge markups to store customers.
The company's annual revenue reached nearly $1 billion at its height. One-third of that figure came from Madison Avenue alone.
This allowed Barneys to make good on millions of dollars of rent – including $16 million a year just for the Madison Avenue store.
The business model worked... as long as people kept going into the stores to buy goods.
But then the Internet came along – and took off. It gave rise to e-commerce and a strategy called direct to consumer ("DTC").
Brand manufacturers could now use the Internet to sell products directly to their customers. This allowed them to cut out the middlemen – typically, owners of retail establishments.
It didn't take long for consumers to realize they could buy luxury goods – the same ones found on Barneys' store shelves – from authorized online retailers.
These online retailers often displayed more designs and models than what physical stores like Barneys could keep in stock. And of course, customers could shop right from home.
Foot traffic to Barneys declined. And then, the landlord doubled the rent at the flagship Madison Avenue store. It was too much for Barneys to bear.
In mid-2019, the company filed for bankruptcy. And the Madison Avenue location wound down... until shuttering in February 2020.
Barneys became a cautionary tale in the $1.8 trillion global fashion industry. Even a nearly century-old business institution could end up in the trash bin of history if it failed to adapt to changing times.
Of course, the fashion industry didn't go anywhere. It's still a big business.
Folks, my point with this story is simple...
The world around us is always changing. It was true when the iconic Barneys closed in 2020. And it'll be true in 2025.
The investment decisions we make this year will determine whether we keep up with the changes.
But over the past month, some unsettling developments have caused big volatility in stocks...
One was the turmoil surrounding Chinese artificial-intelligence ("AI") startup DeepSeek. The company announced breakthrough speed and cost advances in AI.
Another development was a series of tariff announcements from President Donald Trump...
And another was the arrival of Elon Musk and his Department of Government Efficiency ("DOGE") cost cutters inside the federal government.
Looking ahead, there are still plenty of uncertainties regarding the economic impact of Trump's tariff initiatives and their effect on inflation rates.
The next few months will see a tug-of-war between a strong economy and the shifting sands of U.S. monetary, fiscal, and tariff policies. That will challenge the resolve of this bull market.
Put simply, we're in a time of what I call "headline risk." And I expect to see continued big swings in the market as a result.
But I'm still "bullish" on stocks.
In fact, despite all this uncertainty, the market has performed well...
The broad market S&P 500 Index is right around all-time highs. And it has gained roughly 3% so far in 2025.
Meanwhile, recent data from the Institute for Supply Management ("ISM") is a big story...
The ISM Manufacturing Index rose to 50.9 in January. That's the first expansion in the factory sector after 26 months of contraction.
Even more "bullish" for stock prices is the ISM New Orders Index spiking above 55. This is the highest level in almost three years.
An expanding manufacturing sector is "bullish" across the board for stocks.
Historically, this has been a great sign for the S&P 500. According to SentimenTrader.com, looking out six and 12 months, the index has posted median gains of 6% and 12%, respectively... with 80% positive results.
And it's particularly "bullish" for mid- and small-cap stocks.
Keep in mind that corporate buybacks totaled more than $900 billion in 2024. And they're expected to exceed $1 trillion this year. That's a big demand tailwind for stocks.
Putting it all together, I remain "bullish" on the stock market...
I'm looking for the S&P 500 to approach 6,800 in 2025. That's roughly 12% above current levels.
The extreme volatility over the past two months has created numerous "buy the dip" opportunities... but only if you ignore the headlines.
Good investing,
Marc Chaikin
Editor's note: In today's roller-coaster market, one small group of stocks recently flashed "bullish" in Marc's Power Gauge system... But many investors likely aren't paying attention to this looming development.
So he recently stepped forward to share his No. 1 most lucrative strategy to capitalize on this unique setup... revealing how you can position yourself to profit from what could be some of the market's biggest winners. Click here to get the details...