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We could see a market pullback in the next 81 days.
That's according to Money Morning Chief Investment Strategist Keith Fitz-Gerald, a 35-year financial expert who correctly predicted both the dot-com bubble crisis and the 2008 financial crash.
"To be frank, I'm looking at the highest probability of a market pullback in Q1 2018," Keith told Neil Cavuto last week on "Cavuto: Coast to Coast."
Keith's warning comes as we're seeing a spectacular year of growth in the U.S. stock market.
In January 2017, the Dow Jones Industrial Average was at 19,885.73. Today, we're seeing the Dow around 25,273.98 – a 27.09% increase.
The Dow has jumped over 1,000 points in the last five weeks – the fastest 1,000-point move in history.
Keith Discusses a Market Pullback on "Cavuto: Coast to Coast"
There's no doubt this market run-up has been fueled by impressive earnings growth and positive sentiment about the new administration's proposed policies. But even justifiable run-ups have to endure pauses.
Here's why he's issuing this warning – and what you need to do (and not do) to prepare for a pullback.
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There are three main reasons we're due for a pullback, according to Keith.
First, "quantitatively, we're due. Long overdue, actually," said Keith. Indeed, the bull market in stocks started in March 2009, near the end of the Great Recession. This market upswing is now 105 months old, making it the second-longest on record.
The average bull market is 57 months old, according to Fortune.
Not only is the market overdue, but traders are also feeling the stretch. The contacts Keith gained throughout his long career on Wall Street are telling him exactly what they're thinking right now.
"It's logical traders will want to take a breather," said Keith. "Many I'm talking to, in fact, want to just so they can reset for another run higher."
And lastly, according to Keith, the market is likely to see a pullback as the political discord continues to mount. "That speaks to something jarring the uncertainty level, despite the fact that it's been a sideshow to date, financially speaking," said Keith.
Most investors recoil when they hear of a market pullback – but they shouldn't. A pullback doesn't necessarily disturb the longer-term picture associated with profits.
"The single biggest danger for individual investors right now is that they try to second-guess this," said Keith.
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"They let their emotions get in the way. If you take those out of the equation – as hard as that is – and you focus on the companies that are growing, the money that is moving, and the profits that are being created, longer term, you're going to be just fine."
One growing company that Keith recommends is Japanese robotics company Fanuc Corp. (OTCMKTS: FANUY).
Most investors have never heard of Fanuc, but it's likely that you have something they've made in your house or even your pocket right now.
The company's robots sort, paint, fill, and count everything from trucks, to medicine, to ketchup for big-name customers like General Motors Co. (NYSE: GM). The company is also a key Apple Inc. (Nasdaq: AAPL) supplier.
And Fanuc is experiencing unprecedented growth right now.
"I've looked at robotics companies over the years, and Fanuc is very different," said Keith. "Fanuc just may be the single most important robotics company on earth."
FY2017 Q2 sales for the company reached 179.1 billion yen ($1.59 billion) – up a jaw-dropping 38.3% from the same period a year prior – and more than 6.3% from the immediate quarter prior.
Another example of a high-growth opportunity is Alibaba Group Holding Ltd. (Nasdaq: BABA).
Alibaba was founded less than 20 years ago in China, yet it's grown to be the world's sixth-largest Internet company by revenue – and climbing.
The Chinese conglomerate's shares have doubled this year, which means BABA added more value to its market cap in 2017 than any company apart from Apple, according to a November 2017 report from Bloomberg.
Keith has long been bullish on BABA, even going as far as to suggest it could one day take on e-commerce leviathan Amazon Inc. (Nasdaq: AMZN).
"Alibaba is the only company that can take on Team Bezos and may actually – dare I say it – win," Keith told his Total Wealth subscribers in December.
Look to invest in companies like these both before and after a market pullback occurs. They will continue to experience growth for years to come – regardless of a pullback.
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