Yesterday, Matt McCall and I wrote to you about the shift that’s taking place toward renewable energy. President-elect Biden has plans to spend $2 trillion in the sector in coming years, and we will see lots of opportunities to invest in that sector.
We will provide more thoughts about that opportunity on Thursday, December 17, at 7 p.m. ET, during the Early Warning Summit 2021.
Today I’d like to turn your attention to what’s on the horizon for the U.S. dollar, and the implications for the stock market.
In February and March, as a large swath of the global economy suddenly ground to a halt due to the pandemic, the U.S. dollar hit a three-year high. At the time, people around the world sought safety in the greenback.
Since then, however, the U.S. dollar has drifted down. On December 4, after falling 5.73% year-to-date, the dollar hit a low not seen since April 2018. It’s currently hovering slightly above that level.
A lot has happened since spring 2020 when the dollar began to fall. In response to the impact of the pandemic, the U.S. government borrowed trillions of dollars and sent stimulus checks to millions of Americans and businesses. That has led to inflation worries.
Government borrowing and spending has been chipping away at the value of the dollar for decades, and taken a hit on savings accounts. According to the Bureau of Labor Statistics’ consumer price index, you’d need $151.21 dollars today to equal the value $100 had just 20 years ago.
The bottom line is that if the current weak dollar environment persists, there’s no reason to worry, but it does have some specific implications and advantages to watch for.
A cheap dollar is a windfall for multinationals, as their products are cheaper overseas. Once the international currencies are converted back to dollars, it pads the multinationals’ sales.
You can see in the chart below how multinational stocks outperformed domestics when the dollar was down over four prior decades in this chart from Fortune…
Lately, multinational tech companies have been shining while the dollar has dropped. As you can see in the chart below, shares in S&P 500 Information Technology sector stocks have soared 77% since the bottom on March 23.
Superior stocks with strong sales and earnings, like those Matt McCall and I hand-picked for the Power Portfolio 2020, did even better.
Take Chinese e-commerce giant JD.com, Inc. (JD). Its shares climbed 107% over the same timeframe.
The stock closed out an outstanding 161% gain in the Power Portfolio 2020 and was the portfolio’s biggest winner.
Recently, the Dow climbed above the 30,000 level for the first time in its history. The S&P 500 hit its all-time high on December 4, while the NASDAQ soared to a record high on December 8.
But that’s just a glimpse of what’s to come. Matt McCall and I believe we are now on the cusp of an amazing technological revolution that will carry the stock market to incredible new highs.
One year ago, when we introduced Power Portfolio 2020, our goal was to offer our members a robust, diversified stock portfolio that would do well in all sorts of economic conditions.
We are proud to say we accomplished our goal. We closed the portfolio with massive gains of 35%, which blew away the Dow’s 6% return over the same timeframe.
We are now looking at multiple factors that could bring big upside in 2021.
The reality is the convergence of new technologies like artificial intelligence (AI), 5G, precision medicine, the Internet of Things (IoT), driverless cars, and the blockchain are re-creating the very framework of modern society.
Which is why we believe 2021 will be one of the greatest years in history to be an investor…
The early readings from my quant-based systems are off the charts.
And there are some obvious and not-so-obvious reasons for this.
We will let you know what’s taking place, and why we’re so bullish for 2021, in the upcoming Early Warning Summit 2021 scheduled for December 17, at 7 p.m. ET. Click here now to reserve your spot so you don’t miss out!
Note: The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:
JD.com, Inc. (JD)