Your 4 Best Sectors For This Old Bull
Today the market makes history.
In a few short hours, and barring a massive meltdown, we will all be witness to the longest bull run in U.S. history.
CNBC reports: “The bull market turns 3,453 days old on Wednesday, which would make it the longest on record by most definitions.”
According to the report, the S&P 500 is now up over 300% since the 2008 financial crisis ended in March 2009. And year to date the index is up more than 7%.
But that’s not the only major average performing well. The Dow, Nasdaq and Russell 2000 are also all up for the year.
Check out the chart below:
You can say what you will about this market, but there’s one thing it surely has going for it: longevity!
But considering the age of this market cycle, it’s only natural lots of investors are questioning how long the good times can keep rolling. And of course, there are no shortage of negative opinions and forecasts in the financial media these days.
Reuters for example reports: “As Wall Street prepares on Wednesday to celebrate the current U.S. bull stock market becoming the longest in history, some investors are keeping corks in their Champagne bottles.”
But you can’t put too much stock in what you hear from these talking heads.
Instead, I look to my own proprietary indicators. They give me the best idea as to exactly where we are in the current cycle, including how much longer the good times can last.
The good news?
We could have up to two more years of this bull run left.
But here’s the kicker…
As the bull gets older the money in the markets will shift considerably. Today’s leaders will be tomorrow’s laggards and vice versa until we start the whole cycle again.
The tricky part is knowing exactly when this shift will occur. And while we can’t know exactly, we can narrow this window down significantly using the right data.
Here’s how I expect the rest of this bull run to play out.
As it stands today we’re currently nearing the end of the mid-phase of the cycle. This means we could have up to two years left before this bull run ends.
And as we move toward that end these are the sectors with the best upside potential:
- Technology, because that’s where the strongest sales and profit growth are.
- Energy and basic materials, because they’re both undervalued and offer a great inflation hedge.
- Health care, because sales and earnings continue to surprise to the upside yet the sector is undervalued.
Another surprise sector that catches my eye is financial stocks.
Banks are a prime beneficiary of rising interest rates and lower taxes, plus they’re attractively valued after underperforming in the market recently.
I’m on watch for financial shares to break out this fall.
And they could be the No. 1 sector by 2019.
Here’s to growing your wealth,
Chief Income Expert, Mike Burnick’s Wealth Watch