Stocks have been on a tear this year.
Despite the market’s recent gyrations, the Dow, S&P 500 and NASDAQ are all hovering near record levels.
The trillions of dollars injected into the markets in response to the coronavirus pandemic and the boom in retail investing has helped push stocks to incredible highs.
In fact, a new report by Deutsche Bank Research found equity valuations for the S&P 500 are almost as high as they were in the tech bubble period in the late 1990s.
The report’s analysts also expect strong earnings growth and the market strength to continue in 2022.
So many of you may be asking if we’ve reached a top and where I see the market going from here.
Last week, I sat down with my InvestorPlace colleagues Luke Lango and Eric Fry to answer folks’ questions about a market correction, as well as other potential headwinds like inflation and mounting government debt in our Early Warning Summit 2022.
You can still view it here if you missed it.
Spotting Trouble Ahead of the Curve
Now, I’ve become well-known for my bullish market calls, like Apple Inc. (AAPL) at $1.49 (it’s now over $173 per share), Oracle Corporation (ORCL) when the software giant was trading for just $0.51 per share (it’s now at about $99 per share) and Amazon.com, Inc. (AMZN) when it was a $46 stock (it’s currently over $3,335 per share.)
But many folks don’t know is that I’ve also called some of the biggest market downturns of the past 40 years.
The bottom line is that I’m a numbers guy. I let my proprietary computer models guide me in my recommendations. And I’ve learned to spot the warning signs when trouble is brewing.
For example, back in September of 1987, my computer models started flashing early warning signs about the potential for a major market correction. I immediately sent a letter to my readers saying, “Some sharp sell-offs are likely ahead in the market.”
Not even a month later, the stock market experienced its single worst day in history: “Black Monday.”
Fast-forward to January of 2000, when my computer models tipped me off again about a massive move about to hit the markets. I predicted the bubble in tech stocks would burst and by May at the latest a major crash would grip the markets.
I’m most proud of the fact that my systems helped me correctly predict the market crash of ’08, warning that investors were “more likely to lose a fortune than make one” that year. But I’m even prouder that my systems helped me find a way for my readers to see over 200% gains amidst the crisis at a time when millions of Americans lost nearly half their retirement savings.
In other words, my forecasts aren’t based on gut feelings but rather raw data, logic and probability. It allows me to uncover the truth about any individual stock or even the entire market. If the numbers aren’t adding up, my algorithms will uncover it and alert me.
Interestingly, a recent survey by financial services company Allianz found 54% of respondents believe a massive market crash is just around the corner.
That’s not too surprising given that the markets have been on fire this year.
But if you “look under the hood” of the markets and see what’s really going on, the picture doesn’t look as bad as the media wants you to believe.
For instance, this table created from data back in mid-October is fascinating. Notice that all three of the major indices are all up, nothing shocking there.
But look at how many of the individual companies have experienced a 10% or greater decline this year. Over 90% of the companies in the S&P 500 fell at least 10% or more, with the average drawdown being 18%. It was even worse for the companies that make up the NASDAQ or Russell 2000.
A lot of this was caused by multiple sector rotations. But it also shows that the correction a lot of people are anticipating has likely already happened.
And it’s just one of the major reasons I’m still bullish for 2022 and think most worries about a major market correction are overexaggerated.
Earnings have been incredibly strong in 2021 and should carry over into the new year because of holiday spending. Analysts at FactSet expect record-high earnings growth of 45.1% in 2021. And even though the year-over-year comparisons will be difficult, 2022 should see high forecasted earnings growth of about 9%.
Also, S&P 500 profit margins hit a multidecade high earlier this year. And for the first time in over a decade, every company in the S&P 500 is projected to make money in 2022.
Consumer balance sheets are the strongest they’ve been in decades as American households have amassed trillions in savings.
The financial firm UBS Global Wealth Management expects the S&P 500 to jump 12% next year as corporate profits continue to surge.
So, even though the markets are rising to record levels right now, there are still many reasons to be bullish.
In fact, Luke, Eric and I believe 2022 will be a pivotal year for certain sectors of the market. You just need to know where to look.
In our Early Warning Summit 2022, we reveal not one or two, but four free stock picks for 2022.
Even more importantly, we assembled a portfolio of the eight best stocks for 2022. And yesterday, we added a brand-new recommendation to our 2022 lineup! The company is a leader in the semiconductor industry that has beaten Wall Street’s top- and bottom-line estimates for the past three quarters. Over the past 60 days, analysts have increased their earnings predictions for the company by 14%.
So click here to find out what Luke, Eric, and I see as the biggest and best profit opportunities for 2022.
P.S. 99% of the population is clueless about the major events about to rock the markets in early 2022. This is the #1 thing, Eric, and I believe you MUST do before January 1, 2022. Get the details here.
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:
Amazon.com, Inc. (AMZN)