Speculative investments had a fantastic run until spring.
Then things got ugly.
For the crypto community, it’s been a hard slog the past few months. After hitting new highs above $60,000, bitcoin’s price has fallen over 50% from its mid-April peak. It shed over $600 billion in market cap in seemingly no time at all.
SPACs (special purpose acquisition corporations) fared mildly better.
But after SPAC investing hit a fever pitch earlier this year, it too fell hard. The IPOX SPAC Index, which is designed to track the aftermarket of U.S. SPACs, experienced a significant 23% drop from the peak.
Seasoned investors in these two assets can handle this sort of volatility. They’ve seen it before, perhaps even several times.
But to the hopeful investors who just got in at the top, this can be very unsettling. For those who bet the farm, this could be cataclysmic. But I’d encourage investors not to panic…
The worst thing is to bail when fear is highest. I’ve learned from my own investing that fearful moments are often the best time to strike, not flee. So I urge you not to focus on the noise of a volatile market. True investors believe in the long-term viability of their investment. They are in it for the long haul.
And more importantly… If you’re incessantly focused on the uncomfortable price action of bitcoin and SPACs, then you might miss out on what I believe could be the opportunity of our lifetimes.
And if you can peel your eyes away from the chaos, there’s still time to take advantage of it…
As longtime readers of The Bleeding Edge know, my name is Jason Bodner. I’m the editor of Brownstone Research’s newest research service, Outlier Investor.
Earlier this year, we launched Outlier under the Brownstone Research banner. I’m excited to receive Jeff Brown’s endorsement and come alongside him to help our readers turn the tables on Wall Street and reach life-changing profits.
And that’s the kind of opportunity I see today in the U.S. stock market.
Now I know many people believe stocks are boring investments compared to things like cryptos and SPACs:
“Stocks are for 401ks.”
“Stocks were cool… Back in the ’80s.”
“My grandpa loved his stocks… And his suspenders for his socks.”
But here’s the secret, folks: Stocks are where it’s at right now. And the money is just starting to flood into the market.
In fact, I believe we’re on the cusp of the next Roaring ’20s in the stock markets…
Let me explain…
Following the Spanish flu pandemic in the late 1910s, the Roaring ’20s were born. Aviation, television, mass-production, and other industries exploded.
People had been pent up for the pandemic and suddenly couldn’t stop spending. The U.S. economy expanded 42% during the 1920s.
And all that money growing the economy went into U.S. businesses. Many were publicly traded companies.
Now we’re seeing the same kind of setup as we reopen following the COVID-19 pandemic. Money is gushing into the economy quickly. Vacations are getting sold out. Restaurants are booked with waiting lists. Movie ticket sales are starting to trend higher.
Once again, people who’ve been pent up for the past year and a half are eager to get out and spend.
We are at the beginning of a massive capital injection set to fuel economic growth on a level on par with the Roaring ’20s. And that means money will flow into the bottom lines of American businesses… Especially publicly listed ones: stocks.
Even better, we’re starting to see the turnaround in one of my favorite areas…
From February to May of this year, growth stocks got sold hard. Investors fled high-growth companies and sought out “cheap value stocks.”
But that was a mistake.
Today, I ran into a neighbor who knew it too. Earlier this year, he’d been worried about his growth stocks and sold… But now he frustratedly said, “Boy, did they have it wrong. All that talk of ‘sector rotations’ and ‘growth is dead.’ I honestly think it was all to generate more commissions!”
He’s right. Suddenly, we’re seeing a swift unwinding of the value-over-growth trade. Investors are now selling value and buying up growth stocks.
Why? For one, the Fed announced rates will stay low until at least 2023. The fears of the tax overhaul suddenly cooled off. And investors may just realize that the government is prepared to continually ease the economy… Even if that means printing more and more money. Inflation fears have died down some too.
And if you’re worried about how companies are actually performing in this environment – fear not. For the second quarter, 86% of S&P 500 companies beat earnings estimates, and 77% beat sales estimates, according to FactSet.
And oodles of pent-up disposable income looking for a home are just the cherry on top. Like I mentioned above, as people go on vacations, eat out at restaurants, and buy things like they used to, all that money will flow to the bottom lines of U.S. stocks.
This is why the next few months and years will be phenomenal for U.S. markets. My Outlier Investor portfolio [which members can access right here] has already surged 9% in June.
So don’t fret about sagging cryptos or SPACs. The next Roaring ’20s for stocks is dead ahead.
And if that’s the case, how can we get in position?
If you just want broad-based exposure, you could buy an ETF like the SPDR S&P 500 ETF Trust (SPY), which tracks the S&P 500.
Or if you’re willing to accept more volatility for a possibly higher return, then consider a more growth- and tech-focused option like the Nasdaq 100 tracking ETF Invesco QQQ Trust Series 1 (QQQ).
Those are two simple ways to profit from this coming surge.
Of course, if folks want real guidance on how to profit from the resurgence of growth, then please consider joining me with Outlier Investor, where I uncover the best growth stocks for my readers. I use my proprietary stock-picking system to identify key stocks that are on the cusp of rising higher. For more info on how it works, just go right here for the details.
But no matter what, please don’t miss out on the biggest opportunity of our lifetimes in U.S. stocks.
After all, the last time something like this came around, sock suspenders were the only way to go…
Hi Jason, I love reading your weekly Saturday post in The Bleeding Edge. As a Brownstone Unlimited member, I plan to gradually build a portfolio of outlier stocks that you recommend. I do have a question. How can your system tell whether there is more buying or selling? In my humble opinion, for every trade, there is an equal amount of stocks that are sold by someone and bought by someone else.
– Frank D.
Frank,
Thanks for the kind words! Building a portfolio of outlier stocks is how I have built and continue to build my wealth – so I’m confident that it’s the winning recipe for me over the long run.
As far as telling when there’s more buying than selling… That’s a great question. Your opinion is correct, but it’s only like a snapshot at any given moment.
What I mean is this: If 1,000 shares are offered at $100, and someone wishes to buy 1,000 shares, that is parity. Things are equal in terms of buying and selling.
However, if buyers want 1,500 shares and only 1,000 are for sale, only 1,000 still trade at $100. But there is a remaining bid of 500.
Imagine now if buyers want 10,000 shares, but there’s only 1,000 to sell. Only 1,000 trade, and the buyers must continually pay higher prices to trade more quantity.
The key here is when this takes place over the long run.
Look at PayPal (PYPL), for instance. I own it and have owned it since it was at $48.46. I paid that price. It went up and down, but what makes it continually go up – at this point over 505% since 2017 – is the fact that there are more buyers than sellers.
So you are right. At any given time of a trade, buyers and sellers are equal. But over time, supply versus demand displays itself quite nicely.
This is what it has looked like for PYPL:
Thanks to everyone who’s written in with questions and feedback. If anyone has a question you’d like answered in a future mailbag, please send it here.
Talk soon,
Jason Bodner
Editor, Outlier Investor
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The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
