American Consequences - October 2018

(We use quarterly data in this analysis, using September 30 as “year end.” Based on that, we just entered the third year of President Trump’s first term.) Interestingly, these results hold up during both Democrat and Republican presidencies. It doesn’t matter what party is in office... The election-cycle year tends to determine how well stocks perform. Again, this is good news right now. We’re just weeks into the third year of Trump’s term. And based on this indicator, we could be in for two years of fantastic gains. The third year has historically been the strongest, by far. And year four has been the third-strongest. This is a great sign going forward. Of course, it’s not foolproof. The caveat here is that these data have plenty of variability. Stocks have soared as much as 39% during year three... But they’ve also fallen as much as 48%. Still, the message from this indicator is powerful: We’re now entering the absolute best period of time to own stocks. We could see two years of fantastic profits thanks to this odd election-cycle indicator. This works out well with another big theme I’ve been tracking too... The “Melt Up” in U.S. stocks. Let me quickly explain what that is... Why I’m sure it’s underway right now... And what it means for your money in months ahead...

THE MELT UP OFFICIALLY ARRIVES The Melt Up, if you don’t already know, is big news. It’s also a bit tough for some folks to get their heads around. The idea of a massive blow-off top in stocks, after the run we’ve already seen. After all, we’re nearly a decade into the U.S. bull market. But I assure you, you haven’t missed it. The biggest and most explosive gains of this bull market are yet to come. The opportunity is thanks to the Melt Up, which is based on a simple premise. Stocks often have their biggest, most explosive gains at the ends of major bull markets. In short, before the big “Melt Down” arrives, we have the big Melt Up. It’s the final push higher before the bear market kicks in. The most recent major example of this happened at the end of the 1990s bull market. The Nasdaq Composite Index soared more than 86% in 1999 alone. Now that was a Melt Up. Today, I believe we’re in a similar situation in the current bull market. The final stage of the Melt Up in U.S. stocks is here. It’s officially underway. I say that because today’s market is beginning to look a lot like the late 1990s...

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