It's nearly impossible to make an accurate stock market crash prediction, which is why investors should always be prepared for a pullback or even a crash...
While a stock market crash might not seem very likely right now - the Dow is up over 10% this year alone - there are signs that stock prices are overvalued.
That doesn't mean a market crash in 2017 is going to happen, but it means investors have reason to prepare for one in case.
First, here are the stock market crash warning signs we've found, and then we'll tell you how to protect your money if the market falls...
Two Stock Market Crash Prediction Warning Signs
We've found two major signs that stock prices are overinflated right now, and these could lead to a market correction soon...
First, low interest rates helped push stock prices higher, and the era of low interest rates is coming to an end.
Must See: This Great Depression-Era "Secret" Helped Transform Two Teachers into Millionaires. Read More...
After the stock market crash in 2008, the U.S. Federal Reserve cut interest rates from over 5% in 2007 to under 1%, then all the way down to 0.25% by December 2008.
The Fed slashed rates in an effort to boost the economy by making it cheaper to borrow money. But the Fed's plan helped the stock market the most.
Between 2009 and 2016, publicly traded companies bought back $2.1 trillion in shares of their own stock while borrowing $1.9 trillion in cheap money. The debt-fueled spending surge helped boost share prices during that time. Between 2009 and 2016, the Dow rocketed 104.6% higher, more than doubling.
But the Fed has raised rates three times since 2015, and they're planning one more rate hike this year. That means cheap borrowing costs are ending, and companies won't be able to easily borrow money to repurchase their own stock.
And that could lead to stock prices dropping.
Second, measures of stock market valuations are showing stocks are at historically high levels.
The Shiller price/earnings (P/E) ratio, one of the most famous measures of stock market valuation, is showing stocks have reached historically high valuations.
Today, the Shiller P/E ratio is 29.6, which is 76% above the historical average. For comparison, it's even higher now than it was before the 2008 stock market crash, when it rose all the way up to 27.4 in 2007.
These market crash warning signs don't mean we're predicting a stock market crash or that one is on the way. But it means there's reason to believe stocks could tumble.
Fortunately, prepared investors can protect their money from crashes and corrections by owning resilient stocks that can maintain their value. And these stocks have even gained during past stock market crashes.
Here are our two best stocks to buy to protect your money...
The 2 Stocks to Buy Before a Market Correction
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The two stocks we like are Raytheon Co. (NYSE: RTN) and Becton, Dickinson and Co. (NYSE: BDX), because these companies are well-run leaders in their "Unstoppable Trend" industries.
These stocks have not only beat the market during downturns, but they are projected to grow by double-digits this year.
The trick to making huge profits is to find "must-have" companies that fall into what Money Morning Chief Investment Strategist Keith Fitz-Gerald calls the six "Unstoppable Trends": medicine, technology, demographics, scarcity & allocation, energy, and war, terrorism & ugliness (also known 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, and 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.
For example, as tensions rise abroad, the United States is more likely to need more weapons and equipment. When the United States launched a missile strike on a Syrian airbase on April 7, Raytheon's stock jumped more than 2%, since its missiles were used. 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 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-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 too, 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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