Stocks are on fire. September’s S&P 500 correction is in the rearview mirror. And many Safe Money-style stocks that pay generous yields and earn high Weiss Ratings are outperforming the market.
This was to be expected, though.
Only a few days into 2021, I shared one of my most important forecasts ever with Safe Money Report subscribers. President Biden had just been confirmed the winner of the election and Democrats took control of Congress.
My advice? Get ready for “enormous sums of cheap, easy money” to hit the markets:
It’ll be a “money flood” unlike anything we’ve seen in recorded history. From the Federal Reserve. From Congress. From every corner of Washington.
Would it eventually come with a high cost for both our country and the capital markets? Absolutely. Would it also make sense to ride the rising tide for maximum profits in the meantime? Absolutely.
The SPDR S&P 500 ETF Trust (NYSE: SPY) is now sporting year-to-date returns of around 26%.
Many Safe Money-style stocks that pay generous yields and earn high Weiss Ratings are doing even better.
And of course, part of the Money Flood environment is that interest rates remain pathetic ... especially relative to inflation.
What Might Change the Game?
Fiscal discipline in D.C. … Truly tighter monetary policy. An enormous, powerful “blow off” high in asset markets akin to what we saw in late 1999-early 2000.
Those are all things I’m watching for. But they’re all things that seem fanciful for now too, because:
1. Biden just got his $1 trillion infrastructure spending bill through Congress. That means money for everything from roads and bridges to electric vehicle (EV) charging stations and broadband internet pipelines will be forthcoming.
2. The Federal Reserve just announced the start of its bond-buying taper ... but reinforced the market’s view that rate increases won’t follow for many, many months. That means the inflation-adjusted funds rate won’t flip positive, signaling tighter money for approximately forever and a day.
3. The markets are rising ... but I’m still not seeing the kind of wild moves that signal we’ve reached the rally’s blow-off stage. Remember: In the last full year of the tech bubble (1999), the Nasdaq Composite soared 86%!
So my advice remains the same: Ride the rising tide while it lasts.
But do it using Safe Money investments and Safe Money strategies. Because when the Money Flood ebbs, you don’t want to be stuck holding the bag!
Until next time,
Mike Larson
P.S. I have a special report to share with you. Our friends at Long Live Your Wealth have shared this timely information, and I encourage you to check it out now by clicking here.
