I don’t do this very often, but what we have in front of us is so important that I feel it is absolutely necessary.
I want to repeat what I wrote about last week:
I am “all in” on stocks right now, and given the data I came across, you should be, too.
I can’t overstate the importance of this right now — as market and economic conditions are converging in a way that has pushed stocks higher the last 17 times this has happened.
Every week, I sift through hundreds (if not thousands) of charts and data points as part of my investment analysis.
Like many people, I feel most of the information I come across is forgettable. While it might be interesting or notable, it’s ultimately not important.
And then, you have unforgettable data. You have REALLY important information.
That’s the kind of information I want to make sure you know about. It’s the #1 reason I’m all in on stocks. It’s the #1 reason I believe we’re in for a major market rally over the next 12 months … one that could set you up to multiply your money many times over.
In fact, this data caught my eye so strongly that I sent it to my CEO, Brian Hunt, in the middle of the night.
The next day, Brian told me at lunch that he moved $368,000 into the stock market right after seeing the chart I sent. Naturally, I laughed and assumed he was joking. But, he wasn’t.
This is a guy who has lived and breathed the stock market for the last 20 years. This is not some amateur investor who is new to the game. Brian is also a deliberate guy who typically doesn’t make major financial decisions at the drop of a hat. But after seeing what I have to show you, that’s just what he did.
But then again, I should not be surprised because I also have been busy buying stocks since that chart popped up on my screen.
This “super bullish” information comes to us from financial advisor LPL Financial. It’s a study that shows what happens after the Federal Reserve cuts interest rates when the stock market is near all-time highs. It has happened 17 times since 1980.
This, by the way, is the situation we’re likely to be in soon. Very soon. The Fed meets again next week and will announce its decision one week from today, on July 31 (which also happens to be the day of my free 10X Innovation Summit).
Low interest rates stimulate the economy and the stock market. Low interest rates make people happy. President Donald Trump wants people so happy that he wins the 2020 presidential election. Trump knows finance … and he knows low interest rates will boost the economy and stocks. I believe he’ll get his rate cuts … and he’ll give the economy a shot of adrenaline.
As I mentioned, the Fed has cut interest rates with stocks near all-time highs 17 times since 1980.
Here’s why I’m so passionate about getting this information in front of you: In all 17 instances, the S&P 500 was higher one year later.
Even more impressive, stocks gained an average of 15% in the year following the rate cut. Here’s the breakdown of annual returns:
Much of the time, making an investment decision is difficult and complicated. This isn’t one of them. It’s very simple. Trump knows lower rates will boost the market. He knows a strong market will help him get re-elected. Trump wants to get re-elected. He’ll get low interest rates.
If you are not yet convinced that you need to be in stocks after seeing the chart above, here is another …
Research firm Fundstrat looked at instances when the Fed cut interest rates during an expansionary period for the U.S. economy, going back to 1971. Every single time, the market was higher three, six, nine, and 12 months later. And the returns were impressive:
One year later, the average gain was 16.5%.
A 16.5% return from today would push the S&P 500 above 3,500.
For context, the average 12-month return for the S&P over the last 50 years is about 8%. So, in this particular situation of a rate cut near market highs, we see nearly twice the average returns.
Right now, the S&P 500 is sitting near an all-time high — and the rate cut is highly likely to happen soon. According to the Federal Reserve Bank of Atlanta, the probability of a 25 basis point rate cut by mid-September is 95.6%. Both Citigroup and JPMorgan are predicting a 25 basis point rate cut next week — and Morgan Stanley and UBS are going even further. They expect a rate cut of 50 basis points next Wednesday.
Now, while a one-year gain of 16.5% is impressive for the S&P 500, keep in mind that it’s a broad index. Broad indexes by nature contain lots of average and weak companies. I believe high-quality growth stocks in the midst of emerging mega-trends will do much better than the broad market.
These emerging mega-trends include the 5G infrastructure buildout, self-driving vehicles, advanced batteries, the Internet of Things, gene therapy, and cannabis.
These hyper-growth mega-trends are set to create stock market winners that gain many times more than the broad market.
But mark my words: Stocks are in a bull market. Low interest rates will act as an accelerant on that bull market.
If you’re not yet long stocks, get long soon. If you’re already long stocks, get longer.
Matthew McCall is the founder and president of Penn Financial Group, an investment advisory firm, as well as the editor of Investment Opportunities and Early Stage Investor. He has dedicated his career to getting investors into the world’s biggest, most revolutionary trends BEFORE anyone else. The power of being “first” gave Matt’s readers the chance to bank +2,438% in Stamps.com (STMP), +1,523% in Ulta Beauty (ULTA), +1,044% in Tesla (TSLA), +611% in Liquefied Natural Gas Limited (LNGLY), +324% in Bitcoin Services (BTSC), just to name a few. If you’re interested in making triple-digit gains from the world’s biggest investment trends BEFORE anyone else, click here to learn more about Matt McCall and his investments strategy today.