Sure, the S&P 500 had a great first quarter. But it’s been trading all over the map early in Q2. Is the run over for now…or are more gains to be head? And what about precious metals? Gold and silver are off to the races, opening up new profit opportunities. Find out what to expect next – and how to capitalize – from this week’s lineup of MoneyShow expert contributors.
Nancy Tengler Laffer Tengler Investments
Does this Bull have room to run? If you watch too much financial news like I do, you may be concerned that the market has run too far, too fast and that valuations (particularly tech) are stretched. The market is always climbing a wall of worry which means there is always a bear case to be made. But bull markets can run for a long time – and this one is relatively young.
I heard one commentator recently quip: “The bears always sound smarter.” But they are rarely right. Stocks go up two-thirds of the years recorded back to the early 1900s. In good times and bad.
On average, stocks return an annualized 8%-9% (depending on the period measured) and fortunes have been lost by investors trying to market time. Getting out is one thing. Getting back in at the right time is another. Few, if any, have achieved that feat.
Below is a chart I featured in the second edition of my book The Women’s Guide to Successful Investing. It shows the effects of missing the five-best days (as well as the 10-, 20-, 30-, 40-, and 50-best days) to a portfolio invested in the S&P 500 over an almost 30-year period.
Fully invested investors received an annualized return of 8%. Missing the five-best days resulted in an annualized return of 6.2% — a meaningful cost compounded over the long-term!
composite
This is not to say that we cannot prepare for difficult times, though. We can and we do.
Yet despite strong returns, we have only recovered what was lost in the 2022 bear market and appreciated modestly above pre-bear market levels. So sure, we are due for a correction. But when we get one, we will be buying the dip.
Mark Skousen Forecasts & Strategies
I just returned from a 10-day Forbes cruise in Asia (Indonesia, Singapore, and Vietnam) and am suffering some jet lag. But I have to ask: Who would have thought that on April 1, 2024, following a two-year, tight-money policy, two major foreign wars, and reckless deficit spending, we would witness new highs in both stocks and gold? I like the SPDR Gold Shares (GLD) and Global X Uranium ETF (URA) here.
As for the economy, the federal government (the Bureau of Economic Analysis) released its third estimate of real gross domestic product (GDP) growth recently at 3.4% (annual rate) for the final quarter of 2023, and 2.5% for the full year.
But the Bureau of Economic Analysis also released gross output (GO), which is a much broader measure of total economic activity, including the all-important supply chain, and it tells a different story. Real GO was a full percentage point below GDP in the fourth quarter, 2.4%.
Worse, business-to-business spending actually fell slightly, by 0.3%…and has been virtually flat since the start of 2022, as this chart shows.
Spending
GO and business spending are leading indicators, suggesting a slowdown and perhaps even a recession in 2024.
Meanwhile, several of our other positions are moving in the right direction. Gold is one of them, now over $2,200 an ounce. GLD is up more than 8% year to date, and this despite a strengthening dollar!
Uranium prices are also starting to move back up, recently at around $88 a pound. The correction seems to be over. I recommend the URA. It’s ahead 7% so far this year.
Recommended Action: Buy GLD and URA.
As I was reviewing the economic and performance numbers recently, a hit song from my teenage years came to mind. Simply put, as The Cars sang in 1978, let the good times roll. We believe there are at least three solid reasons that the gains we saw in the first quarter are sustainable, and that the equity markets still have additional upside potential.
First is the steady, but not dazzling, economic growth. There is an underlying economic momentum that seems to have put the “hard landing” scenario out of sight. Q4 2023 Gross Domestic Product (GDP) was just revised upward to +3.4% after a 3Q reading of +4.9%. Both numbers represented positive surprises and were well ahead of the pace set in the first half of 2023.
While the economy is undoubtedly slowing after 11 interest rate hikes by the Federal Reserve, the central bank projects growth to be stronger in 2024 than they thought just a few months ago (+2.1% for the year). Steady, but not dazzling.
Economic Snapshot
Strong corporate earnings are the second positive factor. Earnings for S&P 500 companies grew 9.8% year-over-year in the fourth quarter, according to data from LSEG and Capital Group. Although results in Q1 2024 may be a bit lower, consensus estimates for 2024 as a whole suggest a sustained earnings rebound.
Third, the excitement and momentum surrounding Artificial Intelligence (AI) will continue to drive big tech and should spread to smaller tech companies as they figure out how to monetize it. And while the tech sector is looking expensive on a historical basis, it is nowhere near the Dot-Com Bubble levels seen in 2000.
Right now, tech stocks are priced at about 27 times forward 12-month earnings. During the Dot-Com Bubble, it was closer to 60x. If AI continues to drive growth (and we believe it will), then the sector will be okay.
Cody Willard tradingwithcody.com
Cody Willard is a hedge fund manager, former Fox Business anchor, and publisher of TradingWithCody.com.
In this MoneyShow MoneyMasters Podcast episode, which you can watch here, Cody explains that his goal is to invest in the “most revolutionary companies in the world” – BEFORE they become trillion-dollar behemoths that everyone owns. He recounts why and how he has invested in Alphabet Inc. (GOOGL) since its IPO, Apple Inc. (AAPL) since 2003, Nvidia Corp. (NVDA) since 2016, and more, as well as which technology firms hold the most promise today.
Tesla Inc. (TSLA) is one at the top of the list. In fact, Cody thinks it COULD be worth $28 TRILLION by 2040 if current and future investments and technological initiatives pan out. He also thinks many private companies at the forefront of the Artificial Intelligence (AI) and robotics revolutions today could be the next big winners of tomorrow for investors after they go public, even as he feels valuations are stretched right now.
We also discuss the “silliness” going on in the cryptocurrency space now (despite the fact he has been a Bitcoin investor and proponent since 2013). Finally, Cody gives a sneak peek at what he’ll cover at the Investment Masters Symposium Silicon Valley, set for May 7-9, 2024 at the Hyatt Regency San Francisco Airport.