“Should I sell?” asked my friend Megan.
“Did you see what happened on Friday?” asked my friend Justin.
After two months of going up, the stock market is going down.
My friends want to know, is this “the end”?
“The end” for them means that the stock market will crash.
As it happened in the stock market crash of 2008.
Everyone now wishes they had sold in October 2007, when the markets peaked.
However, an even greater number now wish they had done otherwise.
Because after the markets crashed, they bottomed out in March 2009.
Then they started up … and they never stopped.
This stock market behavior was so unexpected that it left most investors out of the market. Every time the market reaches new highs, these people feel anxiety about the “fear of missing out” (FOMO).
This includes many wealthy and even sophisticated investors.
In fact, whenever the stock market goes through a period of decline, most investors expect it to crash because they have missed it.
Is this the moment that vindicates these investors who have been lost and have been left out?
A recipe for a huge bull market
No. There is little chance of an accident at this time.
The reason is because the things that sustain the market point higher.
Those things are future sales and earnings.
According to FactSet, earnings estimates reached their highest level of positive reviews in 16 years this quarter.
Broken down by sector, 10 of the 11 sectors saw their upward earnings estimates rise in January.
That means analysts covering almost every sector of the market say that trading conditions are incredibly strong right now for companies.
When you look at interest rates, they are still low. When you consider how strong trading conditions are, inflation remains subdued. Globally, all the world’s major economies are growing.
Trading conditions around the world have not been this good in decades.
Strong earnings, low interest rates, subdued inflation, and global growth are a recipe for a huge bull market.
Is this the next stock market crash?
This is what I think is going to happen.
If you are a regular reader of my articles, you know that I think the Dow Jones Industrial Average will hit 50,000 and then go higher.
I have been saying this since early 2016.
Now, the stock market may go down a bit more. However, it will go back up and then keep going up.
In short, a stock market crash is not coming.
Yes, there is no question, watching your stocks fall is painful.
However, here’s what I know from 25 years of investing experience: You will never make a lot of money, hundreds of percent in profit, and even thousands of percent in profit, unless you go through times like this.
Time to buy
Now if you have cash and want to avoid FOMO when the market keeps going up … you should go ahead and start buying.
Focus on the actions connected to the great megatrends of our time: Internet of things, precision medicine, new energies, fintech and the rise of the millennial generation.
These are the stocks that I focus on because these stocks have the highest growth potential. And I think they will give you the biggest gains as this bull market for stocks continues.
