The Simple Way Trump Could Push Stocks Higher
Subscribers are worried... Clearing up some confusion... The simple way Trump could push stocks higher... Sjug: Two reasons to expect new highs in 2017... Your last chance to get Steve's 'blueprint' for the market this year...
The e-mails are still rolling in...
As you'll see in the mailbag below, several folks responded to Porter's Friday Digest request for feedback on his team's 2016 recommendations. (If you haven't responded yet, please send us a note at feedback@stansberryresearch.com.)
But we also received several concerned e-mails about our new Stansberry Portfolio Solutions product, and we'd like to take a moment to clear up some confusion.
In short, it seems some of you are worried we'll no longer publish the research and recommendations you've already paid for. Rest assured, this is not the case.
We'll continue to publish our monthly research as usual... And we'll continue to serve our lifetime subscribers as promised.
Stansberry Portfolio Solutions will simply allow us to offer a new level of service we've never been able to offer before...
For the first time ever, it will make following our research completely foolproof. And if you're one of the hundreds of folks we've heard from who say they simply don't have the time, discipline, or interest to properly manage your portfolio, it could be life-changing...
No more sorting through dozens of e-mails each month... no more reading through stacks of research... no more having to choose which of our recommendations you like best... and no more having to figure out how to incorporate those recommendations into a properly diversified portfolio.
We'll do all the work for you... and allow you to see exactly how we recommend building a complete portfolio using our research.
But if you're an investment "junkie" like us and actually enjoy reading our research, you'll still have that option, too...
In fact, for many of our readers, Stansberry Portfolio Solutions will give you access to even more of our research than ever before... including our brand-new Stansberry Newswire service, offering around-the-clock coverage of the world's financial markets, with updates available (if you desire) in real time.
It's completely up to you... With Stansberry Portfolio Solutions, you'll be able to choose exactly how much – or how little – of our research you want to see each month.
Again, we're hosting a free, live event this Thursday, January 12 to share all the details on this exciting new service. We hope you'll join us. Click here to reserve your spot now.
Regular Digest readers know we've been following the "Trump Trade" rally...
Since the U.S. presidential election last November, stocks and interest rates have soared, while bonds have plunged.
While we continue to expect a short-term reversal, we have reasons to believe these trends could continue longer. And when it comes to the rally in U.S. stocks, there is perhaps no bigger reason than taxes.
President-elect Trump has pledged to slash the corporate tax rate from today's 39% level to as low as 15%.
Why is this important? Because it could dramatically boost corporate earnings, even if the slowdown in corporate sales persists. According to Barclays' analyst estimates, Trump's plan could boost S&P 500 company earnings by a massive $180 billion... leading to individual company earnings growth of up to 30% or more in 2017.
Of course, it's not yet certain if Trump will be successful. But a corporate tax cut is a relatively low-hanging fruit compared with many of Trump's other proposals... and it appears to be a high priority. As Steve Mnuchin – Trump's pick for Treasury Secretary – told CNBC last month...
By cutting corporate taxes, we're going to create huge economic growth and we'll have huge personal income... Our number one priority is tax reform. This will be the largest tax change since Reagan.
In other words, even if economic growth doesn't pick up, corporate earnings could be going much higher... meaning stocks may be cheaper than current valuations suggest. And if economic growth begins to pick up as well, stocks could be headed even higher still.
Our colleague Steve Sjuggerud agrees...
While he also thinks stocks could be due for a "breather" in the near term, he believes the seven-year bull market will continue this year.
In today's edition of our free DailyWealth e-letter, Steve shared two big reasons he thinks stocks are headed much higher in 2017.
First, contrary to popular opinion, his research shows the recent new all-time highs in U.S. stocks are actually an incredibly bullish sign...
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... I explained this idea in November. I urge you to read the full essay... but the simple explanation is this: 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.
Steve also says folks who think stocks are overvalued today are missing an important point...
"Stocks are too expensive. They can't continue higher from today's inflated prices."
That's what people have been saying. But think with me for a second... What's been a major driver of stock prices in recent years? It's ultra-low interest rates. Investors have a choice today – between earning no interest in the bank, or taking risks in stocks.
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.
As Steve explained, he built his proprietary True Wealth Value Indicator to track these relative values. It combines the stock market's valuation with short-term interest rates...
Short-term interest rates contain a lot of information about the investing environment. Inflation is part of short-term interest rates. And so are the actions of the Federal Reserve. So our True Wealth Value Indicator tells us a lot about how to value stocks with interest rates in mind.
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...
To Steve, the bottom line is simple...
Stocks are not expensive today... And they're breaking out to new highs. History suggests further gains are likely, and stocks could easily go much higher in 2017.
U.S. stocks are just one of six big opportunities Steve sees for 2017...
As we mentioned before the holiday, Steve recently released his investment "blueprint" for 2017, laying out exactly what he expects for stocks and other assets in the months ahead.
Because he knows many folks are trying to make sense of today's uncertain markets, Steve agreed to sit down for a brief interview to share his outlook – including his latest thoughts on stocks, interest rates, gold, and more – with all interested Stansberry Research readers, free of charge.
But if you still haven't seen it, be sure to check it out soon. It won't be available much longer. Click here to see it for yourself.
New 52-week highs (as of 1/6/17): Axis Capital (AXS), Boeing (BA), BlackRock Floating Rate Income Strategies Fund (FRA), PureFunds ISE Mobile Payments Fund (IPAY), PNC Financial Warrants (PNC-WT), and Tallgrass Energy GP (TEGP).
Several subscribers weigh in on Porter's 2016 recommendations. Let us know how you did at feedback@stansberryresearch.com.
"Porter, I am one who loved getting Jeff Clark's Direct Line and very much benefited from his service and timely market insight. I was really disappointed the day it was announced that it was going away and Jeff would no longer be with your firm. But I must say, true to your character you are committed to excellence and committed to friends. Your kind words about Jeff in Friday's Digest were truly heartfelt. Your offer for those who have loved his commentary to have a year of his work as he transitions to another publisher is a great gesture. Then as you explained that soon Stansberry Newswire will be commencing that would provide us a 'Direct Line' kind of experience, I began to see the picture more completely as you again move your business to the highest level of excellence. I look forward to being on-line on Thursday Jan 12 for Stansberry Portfolio Solutions. Thanks to you and your team." – Paid-up Stansberry Alliance member Craig S.
"Greetings Porter & Team Stansberry, Yes, I followed your Investment Advisory and your beliefs that the market (and some particular stocks) were headed for a fall. And yes, most of the short positions did not work out well in 2016. As a result, my short positions alone (almost exclusively from Investment Advisory) resulted in a portfolio loss of about minus 4.4% for the year (2016). I will also point out that my gains on very small position sizes in FMCC & FNMA have more than offset the entirety of the short losses.
"It seems to me that the major error on short positions in the Investment Advisory (over the past couple years) has been one of poor timing. You and your team are perfectly clear that it is difficult to short a stock in a surging market. Unless you have specific, credible evidence (such as that presented on multiple occasions regarding Tesla (TSLA)), shorting is often going against the trend...
"On the other hand, as an Alliance member, I also regularly implemented strategies & trades from Credit Opportunities, Stansberry Alpha, Pro Trader, Bear Market Survival, Retirement Millionaire, True Wealth Systems, Extreme Value and Stansberry Venture. And, as you have recommended, I have also become a TradeStops user and implemented most of those concepts into my investing program as well. While not perfect, I adhere closely to the concepts of position-sizing, asset allocation, and defined entry/exit strategies.
"Utilizing this evolving approach, my annualized return on my total portfolio was positive 12.4% overall for 2016. These results beat the S&P 500 by about three full percentage points. The 'World Dominating Dividend Growers,' 'Magic Stocks,' 'Insurance Values,' and 'Trophy Assets' are all long-term holdings at the core of the portfolio and are performing extremely well.
"Overall, my personal investing report card for 2016 is a solid 'B+' (up from a 'C' in 2015 and an 'F' in 2011 before I started with Stansberry Research)! I have learned a tremendous amount from the Stansberry Alliance program and I want to thank all of you for outstanding work and the excellent education you offer. 2017 will be outstanding!" – Paid-up Stansberry Alliance member Tom S.
"Agree with the positioning. More risk to the upside than downside at this point, so why not be hedged? And we still made money." – Paid-up subscriber Jim
Regards,
Justin Brill
Baltimore, Maryland
January 9, 2017