The stock market has marched steadily higher over the last six weeks. Both the S&P 500 and the Nasdaq are now up over 22% for the year.
Since their recent lows in early September, the S&P has increased 8% and the Nasdaq has climbed 10%.
Economic data has been mostly positive over the last couple of months and the stock market reacted positively to the 50 basis point interest rate cut from the Fed in September.
Despite the positive trend in stock prices, we do expect more volatility going forward.
Our models indicate that the S&P 500 is overvalued by 16% right now.
The stock market is expecting a Goldilocks economy – not too hot and not too cold.
China’s economy is softening.
When markets are overvalued, any negative news can cause a steep drop in the markets. If you do not have a strategy to protect your money against losses like our Market Signals system, you need to be prepared.
On the other hand, some of the biggest gains in stock prices come at the end of bull market cycles. The biggest gains happen before the fall.
Despite these concerns, we remain 100% invested in the stock market at present. Because our Market Signals system has built-in protection against market collapses, our customers are fearlessly benefiting from the large gains this year and over the last month. Our customers win both ways. If the market keeps rising, they get the full gains and if the worst-case scenario happens, they are protected.
Now would be a good time to check out our Market Signals investment system.
Click Here to learn more.
Stay Disciplined My Friends,
Phil McAvoy
Disclaimers The Beyond Buy & Hold newsletter is published and provided for informational and entertainment purposes only. We are not advising, and will not advise you personally, concerning the nature, potential, value, or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. Beyond Buy & Hold recommends you consult a licensed or registered professional before making any investment decision.
Investing in the financial products discussed in the Newsletter involves risk. Trading in such securities can result in immediate and substantial losses of the capital invested. Past performance is not necessarily indicative of future results. Actual results will vary widely given a variety of factors such as experience, skill, risk mitigation practices, and market dynamics.
With stock market values hovering at all-time highs, you need to make sure that you have a proven strategy to protect your savings against large losses in the event of a bear market.
Most experts believe that the S&P 500 is currently overvalued by somewhere between 10% and 20%. My valuation model indicates that the S&P 500 is overvalued by 14% right now. The last time valuations were this high was January 2022, just before the 2022 market collapses.
You need a way to protect your life savings from getting crushed in stock market collapses.
The investment services industry has nothing to help you with this challenge.
Trying some half-baked approach on your own will only lead to disaster. There are literally millions of those sad stories.
We all want Growth and Safety. We have been told we can’t have both – that you can either have an investment strategy built for Growth, or one built for Safety. I simply couldn’t accept this. I thought we could use the markets irrational movements to our advantage.
I spent the better part of a decade using my “Mad Scientist” data skills working on a solution to this problem. It wasn’t easy. If it were, everyone would be doing it.
I toiled and toiled away at this thing until I had something that I could prove would work. I love this kind of challenge. It isn’t perfect, but it is better than anything I have seen or tried before. And perfect was not the goal, just better.
The other systems like this used by the professional investors are based on rolling averages and they are not very accurate, and they are too slow to react when they are wrong. They can’t even beat the S&P 500 in the long run. We beat the S&P 500 easily.
I must admit that there were months of sleepless nights trying to figure out this challenge. I enjoy reading Ryan Holiday’s books and in THE OBSTACLE IS THE WAY he talks about how obstacles always break apart under relentless pressure. This powerful investing system is proof of that.
In the chart below, I compare the value of a portfolio using the Market Signals system to one using a Target Date fund (the Fidelity 2050 fund). The blue line is the Market Signals account, and the Target Date fund is the orange line.
Notice how the Target Date fund was down about 25% in October of 2022 while the Market Signals portfolio only dropped by 10% at its low point. The Market Signals account was back to even by early 2023 while the Target Date portfolio was still down 20% in August of 2023. The Market Signals account was up by 10% by August of 2023.
The Market Signals account generated returns of roughly 30% higher than the Target Date portfolio over this time period.
The orange line in the graph is the "safe strategy" that was recommended to you by the professional advisors. How safe does the standard investment industry strategy look?
And here is the hidden little secret about our Market Signals system. You will get higher returns and much more growth in your portfolio. When you lose less money when the stock market declines, you make more. It is simple math.
You need this kind of protection for your retirement account. You can get it by signing up for a Market Signals subscription. Click here to learn more and to sign up today.
And Market Signals comes with a 100% Satisfaction Guarantee. Because I am so confident that this system will improve your investing results and protect your savings, you can cancel at any time for any reason. No questions. No hassle.
Click here to sign up now.
Stay Disciplined My Friends,
Phil
Disclaimers The Beyond Buy & Hold newsletter is published and provided for informational and entertainment purposes only. We are not advising, and will not advise you personally, concerning the nature, potential, value, or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. Beyond Buy & Hold recommends you consult a licensed or registered professional before making any investment decision.
Investing in the financial products discussed in the Newsletter involves risk. Trading in such securities can result in immediate and substantial losses of the capital invested. Past performance is not necessarily indicative of future results. Actual results will vary widely given a variety of factors such as experience, skill, risk mitigation practices, and market dynamics.
Historically, the impact of Presidential elections is short lived.
So far, the markets have shown little reaction to any upcoming election uncertainties. Volatility typically increases in the run-up to election day but often diminishes quickly as investors refocus on the prevailing economic and market trends.
The preferred measure of stock market volatility is the VIX index. The VIX uses data from the options markets looking out about 30 days. When the VIX rises, it is usually a negative indicator for stocks. When the VIX declines, it is usually a bullish indicator for stocks.
Here is a chart showing how the VIX behaves leading up to and following Presidential elections. Notice the sharp runup in the VIX prior to the election and the rapid decline immediately after the election.
So there is a short period of volatility and uncertainty but things quickly return to normal. This is because markets have historically performed well under administrations from both political parties. A divided Congress will curtail the potential for extreme policy implementations, allowing the markets to draw guidance from economic data and corporate earnings. These factors have historically been the primary drivers of market performance.
Of greater importance, therefore, is how the market performs after November 5th.
Markets have historically performed well post-elections, irrespective of political party.
Over the past 80 years, the stock market has been positive in slightly more than half of the months leading up to presidential elections. More significantly, from the election through year-end, the market has been positive in all but three years. The most substantial post-election gains through year-end occurred in 1920, 1952, 1960, 2004, 1980, 1972, 2016, 1996, 1976, and 1992—spanning five Republican and five Democrat victories. This balance highlights that markets derive more consistent direction from broader fundamental conditions rather than the ruling political party. Therefore, investors should stay invested, as markets have generally thrived after elections.
In conclusion, the election will be a short-lived distraction from the most important market drivers – inflation, economic growth, the potential for a soft landing, etc.
I do expect continued volatility post-election for several reasons:
The broad stock market is overvalued by most measures. My Market Value gauge suggests that the S&P 500 is overvalued by 14% as of the end of September. We don’t base any of our trading on this indicator and nor should you. But it is obviously more comfortable to be owning stocks when they are undervalued.
A soft-landing has been priced into the stock market. If the forecasts are wrong and the economy tips into a recession, the stock market will take a big hit. We have already seen the market overreact to inflation readings and the many statistics that track economic activity.
Since inflations seems to have cooled to a point where the Fed is comfortable reducing interest rates, the market is now hyper-focused on jobs reports and GDP data. This week, we have some important readings on the manufacturing and services sectors. Any surprises there will influence the markets.
Stay Disciplined My Friends,
Phil
Disclaimers The Beyond Buy & Hold newsletter is published and provided for informational and entertainment purposes only. We are not advising, and will not advise you personally, concerning the nature, potential, value, or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. Beyond Buy & Hold recommends you consult a licensed or registered professional before making any investment decision.
Investing in the financial products discussed in the Newsletter involves risk. Trading in such securities can result in immediate and substantial losses of the capital invested. Past performance is not necessarily indicative of future results. Actual results will vary widely given a variety of factors such as experience, skill, risk mitigation practices, and market dynamics.
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