The Dow opened November at its all-time high of 23,511.59, extending the record-breaking year of 19% growth. But the soaring highs have some investors asking, "Will the stock market crash in 2018?"
The Dow is up more than 254% since March 2009, making this the second-longest bull market in history. While this bull market run has been great for investors, it could come to an end sooner rather than later.
"Make no mistake, there's going to be a stock market crash," according to Money Morning Capital Wave Strategist Shah Gilani.
But Gilani says that's no reason to panic.
"That doesn't mean you shouldn't be in the market. You absolutely should be," Gilani said. "In fact, being fully invested makes sense."
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While Gilani's prediction sounds dire, it's actually quite normal. The stock market rises, and then it falls. After an eight-year bull market run, it's simply inevitable that we'll see a market correction, or even a market crash, at some point.
That's why we're going to show you the stock market crash warning signs we're seeing, so you can be fully informed on what's going on. Plus, we'll show you how to protect your money without ever leaving the stock market...
Our 2018 Stock Market Crash Warning Signs
Now, we aren't making a stock market crash prediction. Gilani simply observes that the market is cyclical. There will be booms and busts.
And as this boom extends, we want our readers to be completely informed about any 2018 market crash warning signs, especially those the media aren't telling you about...
First, the current stock market valuation is at a historically high level.
The Cyclically Adjusted Price Earnings (CAPE) ratio is known as one of the best measures of stock market valuation.
The ratio is currently at 31.30, which is 86.3% above its historical average. While trading 86% above its historical average, the CAPE ratio shows us even more cause for concern. The only times it has risen higher than its current 31.30 level was in 1929 and 1999, right before two stock market crashes.
That doesn't mean the next stock market crash is on its way, but it is reason for smart investors to consider how to protect their money from a stock market crash.
Second, the U.S. Federal Reserve is raising interest rates.
The Fed has hiked rates four times since December 2015, and market observers are expecting another hike in December 2017. A period of historically low interest rates helped boost stock prices, and now that the Fed is committed to higher interest rates, that boost may come to an end.
You see, when the financial crisis hit back in 2008, the Fed took drastic action to help boost the economy out of a recession. It slashed interest rates all the way down to 0.25% in 2008, down from over 5% in 2007.
The idea was to make borrowing money cheap. If corporations could borrow cheaply, then they could keep expanding even as the economy slowed, eventually stimulating the economy back into growing.
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However, corporations took advantage of the cheap borrowing costs to repurchase shares of their own stock, boosting stock prices.
Between 2009 and 2016, publicly traded companies borrowed $1.9 trillion, and they used the money to help buy $2.1 trillion of their own stock shares.
That's helped stocks rise to record heights over the last eight years.
But as the Fed raises rates and borrowing costs rise, share buybacks will be less likely. That could dampen stock market growth.
And with stocks at record highs and record-high valuations, a catalyst that starts a sell-off could end with the next stock market crash.
But savvy investors can stay in the stock market while protecting themselves from a market crash in 2018. Here's how to do it - and even profit...
Crash-Proof Investments for 2018
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Money Morning Chief Investment Strategist Keith Fitz-Gerald recommends Raytheon Co. (NYSE: RTN) and Becton, Dickinson and Co. (NYSE: BDX), because these companies are well-run leaders in the "Unstoppable Trends."
The trick to making huge profits is to find "must-have" companies that fall into what Keith Fitz-Gerald calls the six "Unstoppable Trends": medicine, technology, demographics, scarcity and allocation, energy, and war, terrorism, and 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.
Not only are these stocks resilient during downturns because they are in demand, but they are both sporting double-digit price targets over the next year...
Raytheon Co. 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.
RTN currently trades at $186.23 a share and pays a 1.71% dividend yield. RTN is up 31.13% this year, and Wall Street analysts are giving it one-year price targets as high as $212. That could bring owners a 13% gain.
Becton, Dickinson and Co. is our best play for the Unstoppable Trend of demographics.
BDX is a healthcare company specializing in single-usage medical products utilized 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, 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 $223.82 and is up 35.17% on the year.
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Keith Fitz-Gerald's Money Map Report subscribers who have followed along with his recommendations are now sitting on 17 triple-digit winners this year - including a 201.68% return and 132.35% gain that closed out in the same week.
Each week, Keith shows everyday Americans how to tap into the world's biggest high-profit trends, ahead of the crowd.
There's nothing complicated or overly risky - and no guesswork involved.
Right now he's looking at another double-your-money opportunity, and there's still time to get in on it. Find out how to subscribe and access all of Keith's recommendations by click here now...