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We're coming up on the fourth anniversary of a very important conversation we had regarding the direction of the markets.
Back in late June 2014, I wrote to tell you not to cash out of the market just because it had hit new highs. I quite clearly said I thought we were in the midst of a generational bull market – and the last thing you'd want to do is sit on the sidelines.
Well, what was true then is even truer now. And I can prove why…
See, while the mainstream media has been blasting you with negative headlines about scandals and wars, I've been drilling down – looking into the details about what's really going on.
And here's something very important I found.
Despite a 10% drop in the markets (a correction), all the volatility we've seen since then, rising interest rates, scandals surrounding Facebook Inc. (Nasdaq: FB) and Amazon.com Inc. (Nasdaq: AMZN), and worries about a possible trade war with China, first-quarter initial public offerings (IPOs) had their best performance since 2015.
That's just not something you hear much about amid the general doom and gloom.
But it's crucial.
See, nothing keeps a bull market on a long-term uptrend better than fresh cash flowing in. And IPOs are Wall Street's best lure for attracting new money from investors.
With that in mind, let's look at why we need to look at these setbacks not as roadblocks – but as great buying opportunities…
The Two-Decade Bull
With the S&P 500 still roughly 7.5% off its recent all-time highs, a lot of investors are getting jumpy.
That makes sense.
We're getting bombarded with negative news daily.
But we have to understand, that's in part because bad news sells.
The mainstream media wants to make money just as much as we do.
But all that noise makes it hard for the average retail investor to do the two things that will really build their net worth…
- Focus on the long haul.
- Make sure a good portion of your portfolio is in tech.
Granted, there will be periodic corrections and unpleasant events that will shock the markets into temporary downturns – like the one we're in the midst of now.
But I still very much believe the conditions in place now could foster a bull market that could last 18 to 20 years.
As you might imagine, generational bull markets are rare.
Most bull markets last about five years before a bear comes along. But with a generational bull market, stocks not only rebound to reach their previous high following a correction – but go on to set new records.
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To prove what I'm saying, let's go back to that chat we had on June 27, 2014. Had you sold all your stocks that day – when many folks were afraid that a new top meant a big decline was at hand – you would have left a lot of cash on the table.
Since then, the S&P 500 has gone from roughly 1,960 to a recent high of about 2,873. If all you had done was invest in an S&P indexed fund, you would have made 46.5% during the period.
But if you had followed my advice and invested in technology, you would have done far better. From that date to its recent high on March 12, the Nasdaq Composite Index gained 72%.
That's because Silicon Valley-style technology is the driving force for the entire U.S. economy.
If you thinking I'm gilding the lily here, let's look at another example. The current bull market dates back to March 2009, when the S&P 500 hit an intraday low of 666.79. Since then, it's gone on to peak gains of 195.1%.
But there's still plenty of cash out there to keep this generational bull market alive.
About the Author
Michael A. Robinson is one of the top financial analysts working today. His book "Overdrawn: The Bailout of American Savings" was a prescient look at the anatomy of the nation's S&L crisis, long before the word "bailout" became part of our daily lexicon. He's a Pulitzer Prize-nominated writer and reporter, lauded by the Columbia Journalism Review for his aggressive style. His 30-year track record as a leading tech analyst has garnered him rave reviews, too. Today he is the editor of the monthly tech investing newsletter Nova-X Report as well as Radical Technology Profits, where he covers truly radical technologies – ones that have the power to sweep across the globe and change the very fabric of our lives – and profit opportunities they give rise to. He also explores "what's next" in the tech investing world at Strategic Tech Investor.