Wall Street’s Newest Stock Market Crash Warning Is Premature

Some Wall Street analysts are issuing a new stock market crash warning, but we think it’s way too early to make that call…

Business Insider reported that a “growing chorus of strategists and investors across Wall Street” see the stock market heading for a “rude awakening.”

Stock market crash warningWhy?

They say volatility is too low.

The CBOE Volatility Index (VIX) – also known as Wall Street’s fear gauge – hit its all-time intraday low on July 26 when it fell to 8.84. Even after rising from 9.5 Tuesday to 14.8 today, following U.S. President Donald Trump’s threat of “fire and fury” to North Korea over its nuclear weapons program, volatility is still 22% below its historical average.

This might not mean the next stock market crash is imminent, but JPMorgan’s Marko Kolanovic told Business Insider it “indicates we may be very close to the turning point.”

Don’t Miss: How to Make a Killing…When Everyone Else Is Panicking

While we believe this warning is premature, it underscores why it’s a good idea to plan ahead and invest in some of the most resilient stocks on the market in case there is a downturn…

Why This Stock Market Crash Warning Is So Premature

A low VIX score is a sign investors are confident about the status of the market. Because the VIX is calculated based on the amount of options being traded – and thus where traders expect the market to go in the future – a low VIX means traders aren’t expecting stocks to drop.

It sounds counterintuitive to think record-low volatility is a bearish sign, but there’s reason to pay attention to it.

A record-low VIX has some analysts concerned about a potential market crash in 2017, because with the VIX so low it has nowhere to go but up. In other words, because markets never stay the same forever, and since traders are at peak bullish sentiment, a reversal is more likely.

But we still think a market crash prediction is premature…

Must See: This Great Depression-Era “Secret” Helped Transform Two Teachers into Millionaires. Read more…

Money Morning Chief Investment Strategist Keith Fitz-Gerald says there’s some risk that the Fed’s unwinding of its $4.5 trillion balance sheet could slow the stock market down. That may lead to a small pullback in mid-2018.

But that’s no reason to leave the market.

A pullback of 10% or 15% is actually healthy for the market. Keith thinks we’ll see a small pullback of that nature starting in 2018, which will set up the S&P 500 for a run up to the 3,000 level one or two years afterward.

And investors tempted to time the pullback and take their profits before a market correction could be costing themselves money.

Investors make the most gains when they stay in the market and ride out the ups and downs instead of trying to exit and jump back in at the right time. “Timing the market never works,” Keith says.

It’s impossible to predict when the market has hit its peak or its bottom, and investors who try to guess the right time to enter or exit leave profits on the table.
Just look at how holding stocks could have racked up 22% gains compared to an investor trying to time the markets just right…

“Bottom line: Stay in to win,” says Keith.“Or you won't.”

stock market crash in 2017While we don’t believe in timing the market, you can be strategic with your investments.

Resilient stocks in must-have industries, especially stocks with well-paying dividends, are the best stocks to own during a stock marketcrash. You can even profit while the market slides…

Prepare for - and Profit from - a Market Correction

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Keith recommends Raytheon Co. (NYSE: RTN) and Becton, Dickinson and Co. (NYSE: BDX) because they are well-run leaders in their “Unstoppable Trend” industries.

These stocks have not only beat the market during downturns, but are projected to grow by double-digit numbers this year.

The trick to making huge profits is to find “must-have” companies that fall into what Keith calls the six “Unstoppable Trends”: medicine, technology, demographics, scarcity & allocation, energy; and war, terrorism & ugliness (known collectively as defense). The Unstoppable Trends are backed by trillions of dollars that Washington cannot derail, the Fed cannot meddle with, and Wall Street cannot hijack.

As you can see, these two stocks actually grew during the dot-com crash of 2000.

And they’re both still growing, doubling the gains of the Dow so far this year…

Raytheon Co. (NYSE: RTN) is a leader in the Unstoppable Trend of war, terrorism, & ugliness.

As one of the top five largest defense contractors, Raytheon has billions in contracts with the U.S. government and governments worldwide. International customers make up half of Raytheon’s portfolio. And because defense is a global necessity whether the stock market is up or down, Raytheon will always be in demand.

market crashFor example, as tensions rise abroad, the United States is more likely to need more weapons and equipment. On April 7, when the United States launched a missile strike on a Syrian airbase using Raytheon missiles, Raytheon’s stock jumped more than 2%. And RTN is up 4% this week as tensions between North Korea and the United States escalate, even as the threat of conflict has pushed the Dow down 1% in the same time.

RTN currently trades at $179.85 a share and pays a 1.77% dividend yield. RTN is up 26.8% this year, and Wall Street analysts are giving it one-year price targets as high as $212. That increase could bring owners a 12% gain.

Becton, Dickinson and Co. (NYSE: BDX) is our best play for the Unstoppable Trend of demographics.

BDX is a healthcare company specializing in one-time use medical products used in hospitals and long-term care facilities. But what makes this an Unstoppable Trend is an aging demographic in the United States. As the population gets older, more people will need medical care, especially long-term care. And because people need healthcare no matter what the stock market is doing, BDX’s demand will continue to grow.

BDX is also an exceptionally well-managed company as well, which means it’s turning that demand into profits for its investors.

Becton Dickinson has a 10.54% profit margin, even after a $12.2 billion takeover of CareFusion two years ago. That means the company’s capital management is sustainable and will easily survive a market downturn.  But most importantly, BDX transfers those profits to shareholders through its 1.5% dividend yield and growing share price.

BDX trades at $200.12 and is up 21.19% on the year. Wall Street analysts set one-year price targets for BDX as high as $230, a 15% jump.

This Stock Is Beating the Markets 16 to 1 – and It’s Just Getting Started

Investing should be profitable. But the average market index fund may hit 8% a year... if it's lucky.

A 401(k) or IRA may do 7%... if you've got good management. The average hedge fund... well, they've been clobbered lately.

Meanwhile, one of Keith Fitz-Gerald’s recent picks in his Money Map Report is beating the markets 16 to 1. It’s up more than 22% since June 20.

It’s just the latest winner from Keith, who regularly finds stocks set to rise on high-profit trends.

You can find out how to get that and all Keith’s Money Map Report recommendations here.

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