Whether you're a fence-sitter on stocks, unsure of which way to go, or one of those tired, cranky old bears, I've got an invitation for you: Come on over to the bull side. For one thing, it's a lot more fun to be optimistic (in case you hadn't noticed). For another, I'm betting this party is just getting started.
Not only are we making a little bit of profit -- as you can see if you take a look at my Top 10 lists -- but we're doing it the right way. Instead of hiding out in cash or bonds, we're involved, we're participating, and we're proud owners of some really cool business models.
What's Next for This Bull Market?
One surprising aspect of this cycle is that nobody gets it. This is a secular bull market -- or, I should say, I'm making bets based on that assumption -- and nobody seems to be able to recognize it. Not the experts, not the commentators, not the average man on the street. And Wall Street -- are you guys serious? You couldn't trot out a single authentic bull last December. Not one in the whole bunch. Embarrassing.
My December forecast was useful enough (I could've been bolder): "We're going higher, maybe a lot higher." By the way, don't take the word "forecast" literally. I make bets. I'm paid to figure out where we can get the best odds, to handicap the action, then bet accordingly. Now, since I won't be writing as frequently in the coming months, let me be as clear as possible as to how I'm placing my bets. The opportunity for the next 12-18 months looks roughly comparable to the last 12-18 months, which is really good (harvest time).
What's especially surprising, in my view: The outlier risk is not to the downside, it's to the upside. It would be lovely if the market marched 10%-15% higher each year through 2020 (as I think it should, based on the fundamentals). But we have to be open to the possibility of a parabolic move higher. Trillions of envious dollars are on the sidelines, and much of it wants in.
As I discussed in my last column, I'm betting the two best investing areas through the end of the decade are real estate and stocks. There multiple tailwinds in place, but a simple case of the cycles gets you there. Real estate moves in elongated, linear cycles; it has just come off six in a row to the downside, so to bet that the next several years are going to be good looks like a smart wager to me (supply/demand imbalances help, too).
And stocks -- come on, this one is easy. If you want liquidity, stocks are the place to be. You couldn't have imagined a more profound bear market cycle than the one that preceded this bull run. The bear cycle began with a bursting Nasdaq bubble and ended with the greatest washout since 1932. What more do you scare-bears want? Nine years of torture is enough. The cycle has turned. Like a rubber band, the market rebounds to its long-term trend, as I suggested several months ago: Up, up, and away!