The Federal Open Market Committee (FOMC) shook markets last week with its policy statement for June, as the specter of inflation seemed to rouse the central bank’s hawks.
St. Louis Federal Reserve President James Bullard, though he’s not a sitting member of the FOMC, followed up on Friday with comments that sent stocks spiraling lower.
Look, they’re just talking about tapering asset purchases, folks, and the next interest rate hike is still far out — in 2023 — though it’s been pushed up from 2024.
The Federal Reserve is in a tight spot that only makes the market environment murkier. Alas, it’s likely Fed officials will “walk back” elements of not just the June FOMC statement but Bullard’s remarks as well.
In the meantime, Sean Brodrick, ahead of the release of the FOMC statement, offered a solid take on how to approach this market.
Here’s Sean:
They call it the fisherman’s prayer …
“Dear Lord, be good to me. Thy sea is so great, and my boat is so small.”
But they might as well call it the investor’s prayer.
Because in the global economy, even a large portfolio is a tiny boat on a storm-tossed sea.
And not only that, but the “K-Wave” is headed our way … towering 50, 75, 100 feet in the air … bearing down on us with frightening speed.
Do you confront it … or outrun it?
Make the wrong decision and you could be one of millions of Americans who will watch their nest egg vanish faster than you can say, “Goodbye, Sweetheart!”
And whether or not we see a strong correction first — the undertow …
… the CREST of the wave — when it comes — means staggering opportunities for you, the investor.
You see, the European Union is much farther down the road to ruin than the U.S. … and that means rampant inflation and devaluation of the euro is just around the corner.
So wealthy Europeans will be looking for a place to put their money where it will be safe and has a chance to grow.
As the legendary banker Walter Wriston of Citicorp — now known as Citigroup Inc. (NYSE: C) — once said, “Capital always goes where it’s welcome and stays where it’s well treated.”
This means foreign investors will likely go on a feeding frenzy on the New York Stock Exchange (NYSE).
We know this can happen because we’ve seen it before.
It’s the 400% bull market nobody remembers …
I’m talking about 1932 — the depth of the Great Depression.
Everybody knows what happened in 1929 …
Investors jumping out of windows on Wall Street. The soup lines. The Dust Bowl.
But nobody remembers that the four-year period between 1932 and 1936 was one of the greatest bull markets in history.
During this time, the Dow Jones rose by nearly 400%!
Why were some people getting rich inside the New York Stock Exchange when so many people outside were standing in line for soup?
Flight capital from Europe.
Because in 1932, just like today, Europe was in even worse shape than the United States.
Germany was bankrupt. France, Italy and even England were facing dire financial problems of their own.
Yet there were still plenty of rich Europeans sitting on family fortunes dating back hundreds of years … needing a place to stash their money where it would be safe, secure and have a chance to grow.
And they found it in the American stock market.
So the Dow Jones soared.
And some people got very, very rich.
Now think about what would happen if the K-Wave had the same effect today as it did in 1932 …
If you have $500,000 invested in the stock market, for example …
And the Dow has the same kind of run-up it did in 1932 …
You could be sitting on a nest egg worth a whopping $2,500,000 in four years.
But it’s likely to be even more than that.
Because nowadays, we also have giant multinational corporations sitting on huge stockpiles of cash … and wondering where to invest it.
Apple, Inc. (Nasdaq: AAPL), for example, has more than $195 billion in cash on its books right now.
Microsoft Corp. (Nasdaq: MSFT) is sitting on nearly $137 billion in cash and cash equivalents.
So is Alphabet, Inc. (Nasdaq: GOOGL). It also has $137 billion burning a hole in its pocket.
Amazon.com, Inc. (Nasdaq: AMZN), Facebook, Inc. (Nasdaq: FB) and many others are facing the same cash-rich quandary.
And don’t forget about the latest round of stimulus checks!
Some people will need the stimulus to pay their rent and buy food.
But many others will simply put it in the stock market, like nearly one out of ten Americans did with GameStop Corp. (NYSE: GME).
If you include other viral stocks like AMC Entertainment Holdings, Inc. (NYSE: AMC), Nokia Corp. (NYSE: NOK) and BlackBerry Ltd. (NYSE: BB), nearly one out of three Americans have taken part in this feeding frenzy.
With all this money flooding into the stock market, I believe we could see the Dow reach 100,000 over the next few years.
Yes, you heard me right!
The Dow Jones could hit 100,000 relatively soon.
But let me give you an important warning:
You can’t simply sit around and wait for it to happen.
Because we’re already in transition to a BUBBLE as the K-Wave crests with wild speculation.
Then comes the BUST, when the K-Wave crashes ashore as the worst economic catastrophe the world has ever seen.
Where will your little boat be when that happens?
In my special report, “BOOM, BUBBLE, BUST! … I explain SEVEN simple steps you should take right now to ride the K-Wave to the top …
Get out in time to protect your assets from the coming currency crash …
And then put your money in a place where it can grow rapidly — in what is certain to be a long and painful aftermath.
That special report is only available to subscribers of Sean’s monthly letter, Wealth Megatrends. If you haven’t joined yet, I suggest you start your risk-free trial membership now.
Best,
David Dittman
