Ignore the Impeachment Roadshow

I don’t know about you, but I’m sick of the 24/7 coverage of the Trump impeachment and so is the stock market.

The Dow Jones Industrial Average, S&P 500 and Nasdaq have all hit a series of new all-time highs since the impeachment process began in September, with the S&P 500 enjoying a brisk 7% gain

In fact, last week the Dow closed above the 29,000 mark and the S&P above the 3,300 level for the first time ever!

The reason for these big gains in spite of the televised impeachment soap opera is that Wall Street is convinced the impeachment process will be dead on arrival in the Senate and is priced as a nonevent for the stock market.

Politics vs. Investing

Investors are focused on economic growth, the jobs market, trade tariffs and corporate profits, not Mitch McConnell or Nancy Pelosi.

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In fact, history suggests that the stock market could move substantially higher once the impeachment issue is settled. The year after the failed attempt to remove Bill Clinton from office in 1998 the S&P shot up by a whopping 39%!

And 1999 delivered more of the same — the S&P 500 ended the year at 1,469, a 53% increase in the 16 months after the start of Clinton’s impeachment.

This means two things to us:

#1 Think Long Term: The conditions that have fueled the bull market — ultra-low interest rates, record-low unemployment, the Trump tax cuts, massive deregulation and strong economic growth — are still in place today.

That means the long-term path of the stock market is still higher.

#2 Be Opportunistic: When it comes to investing, I always keep the old song lyric “Don’t worry, be happy…” top of mind.

And if stocks do take an impeachment stumble, use the weakness as a chance to put more money into the stock market. If political worries, not economic ones, push the stock market lower… BUY!

Like Warren Buffett Said…

“Bad news is an investor’s best friend. It lets you buy a slice of America’s future at a marked-down price.”

That’s especially true today thanks to our friendly central bankers. The Federal Reserve has been aggressively expanding its balance sheet and pushing up stock prices in the process.

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The Fed has purchased over half a trillion dollars’ worth of Treasury securities since September 2019 and as you can see from the chart above, the stock market has moved higher in lockstep along with it.

There’s even more Fed buying to come. And higher stock prices, too. Continue to stay invested in this market.

Here’s to growing your wealth,

Mike Burnick

Mike Burnick
Chief Income Expert, Mike Burnick’s Wealth Watch

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It’s All in the Headlines…

So Gilead (GILD) surprises the markets – but first let’s consider what was happening yesterday morning in the pre-dawn hours… Asian markets had closed lower, European markets were lower and US futures were wobbling around the unchanged line… the negative mood from Friday was hanging over the markets.

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