“Should I sell?” my friend Megan asked.
“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” to them means the stock market is going to crash.
Like what 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 something else.
Because after the markets crashed, they bottomed out in March 2009.
Then, they began to climb… and never stopped.
This stock market behavior was so unexpected that it put most investors out of the market. Every time the market hits new highs, these people feel “fear of missing out” anxiety.
This includes many wealthy and even sophisticated investors.
In fact, every time the stock market goes through a downturn, most investors expect it to crash because they’ve missed it.
Is this the moment that vindicates these investors who have been lost and left out?
A recipe for a huge bull market
No. There is little chance of a crash at this point.
The reason is because the things that support the market are aiming higher.
Those things are future sales and earnings.
According to FactSet, earnings estimates hit their highest level of positive revisions in 16 years this quarter.
Broken down by sector, 10 of the 11 sectors posted an increase in their bottom-up earnings estimates in January.
That means analysts covering nearly every sector of the market say trading conditions are incredibly strong right now for companies.
When you look at the interest rates, they are still low. When you consider how strong business conditions are, inflation is still subdued. Globally, every major economy in the world is growing.
Business conditions around the world have not been this good in decades.
Solid earnings, low interest rates, moderate inflation and global growth are a recipe for a huge bull market.
Is this the next stock market crash?
This is what I think will happen.
If you are a regular reader of my articles, you know that I believe the Dow Jones Industrial Average will hit 50,000 and then continue to rise.
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 in the offing.
Yes, there is no doubt, seeing their shares fall is painful.
However, here’s what I know from 25 years of investing experience: You’ll never make big money, hundreds of percent in profit and even thousands of percent in profit, unless you push at times like this.
it’s time to buy
Now, if you have the cash and want to avoid FOMO when the market keeps going up… you should go ahead and start buying.
Focus on stocks related to the great megatrends of our time: the Internet of Things, precision medicine, new energy, fintech, and the rise of the millennial generation.
These are the stocks I focus on because these stocks have the most growth potential. And I think they will give you the biggest gains as this stock bull market continues.
