"Kip's VRA financial newsletter is a MUST read for every saavy investor in this country. Disregard it at your own peril. His mantra is my mantra. Kip Herriage's newsletter is my financial Bible."

--Wayne Allyn Root
2008 Libertarian Vice Presidential candidate
Author, "The Conscience of a Libertarian"

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Twitter: @kherriage

« Earnings, Share Buybacks and M&A Will Continue to Power Forward. Investor Sentiment, Bulls Returning. Global Bull Market, Fully Intact. | Main | The Emotions of Investing…Nothing is More Important. VRA Approach to Crushing Mr. Market. »
Thursday
Apr042019

Bull Market of a Lifetime. Are You Ready?

If you’ve been here for any length of time at all you know we have been, and continue to be bullish…on the US economy, global economy, and most certainly US stocks.

I know no other way to say this but to say it as loudly as possible:

EVERY FIBER OF MY DNA IS TELLING ME THAT A MONSTER MOVE HIGHER IS DIRECTLY AHEAD.

Apologies for the screaming…but as Tyler and I discussed at length yesterday, our job is to make you money. We believe you need to know exactly how strongly we feel about this.

I helped pay my way through college betting on sports. Sports betting just always made sense to me. If you’re like me, when you get that “DNA level lock” you know that you go heavy. Stone cold locks don’t come around often…when they do, over time you learn to trust your instincts and go big. It was a surprise to no one that I found my way to Wall Street.

Know this; Today, I am not uncertain. Fortunes are about to be made for the smart money investor. It’s time to be locked and loaded. The VRA is about to get much more active…much more aggressive.

This market feels very much like 1998 to me. I remember it well. The DJ had just dropped 17% to 7500. We then had a yield curve inversion, just like today. Recession fears were high.

But the economists got it wrong…again. Economic growth came roaring back. Growth kicked in. And the IPO market began to get red hot. Investors (the public) came flooding back into stocks.

Over the next two years, the DJ spiked 54%. As dotcom mania kicked in, the Nasdaq would soar 3 x that amount.

In the event that trusting my instincts is not good enough for you (your mistake), let me add the following macro points:

1) When I first became a broker (1985), Reagans tax cuts were just kicking in fully. The DJ would more than double in less than 3 years. Sound familiar? Trump's tax reform, deregulation and pro-business optimism is about to have an even more positive impact.

2) Populism/nationalism is replacing globalism. It’s taking place all over the world. Few seem to understand how wildly bullish this is going to be for the global economy. But I do. 3 decades of the failure that is globalism, dying a slow death. Good riddance.

3) Trump has called China out on their economic criminality for at least 15 years. Google it…there's ample video evidence of Trump saying exactly what he's been saying, a position that played a major role in winning the election. Today, Trump is closing in on “actual” free trade with China and the world. Gone will be bogus trade tariffs. Tariffs that favored the rest of the world over the US. Wildly bullish for the US economy.

4) Investor sentiment. As we cover here often, the public has a great disdain for the stock market. Who could blame them? First the dotbom, then the great financial crisis, then this past December, the worst since the Great Depression.

But folks, bull markets do not end when the public hates stocks. Bull markets end in a euphoric bubble. Bull markets end when everyone and their mother believes that stocks cannot go lower.

We’re nowhere near this level today…but we’ll get there. It's the very psychology of human nature and the markets.

Historic Bull Market

We have entered what will one day be remembered as one of the greatest bull markets in history. We get (maybe) 1–2 bull markets like this in our lifetime. In addition to the many VRA Updates you’ve seen from us, forecasting a “super bull market” (yes, that's a thing) since Trump was elected, I have one primary reason to be bullish that only reinforces my research;

Almost no one is saying what I am saying. No one (that I know) has been predicting Dow Jones 50,000+ by the end of Trump's second term. And yes, Trump must first win. If not, we will NOT see DJ 50k. Maybe never in our lifetimes. Bull markets don’t fare well in socialism.

The VRA has been mega bullish while the overwhelming majority of Wall St gurus and CNBC sages were bearish, with many/most experts predicting that Trump would bring about the end of the world (only a slight exaggeration). But we saw it differently. We continue to see it differently.

As a life long contrarian, I know two things; the majority is almost never right. The minority is almost always right.

And folks, don’t think for a second that’s an accident. The media (print, tv, social) is owned by the elites (duh). The media wants the public (sheeple) believing exactly the wrong thing. Most everything we see and hear is propaganda. Propaganda designed to influence our decision making so that the elites profit from our group thing. Our wrong think.

My mentor Michael Metz (RIP my friend) would literally laugh out loud at news stories. Breaking news was like great comedy for Mike. He taught me to question everything about Wall Street, most especially the analysts and their cozy relationship with investment banking. That Chinese wall that's supposed to separate the two? HAHA, he would say.

Mike knew that the big profits were made by contrarians. By those that didn’t buy into the propaganda. Just a few months before the dot-bomb began (late ‘99), Mike had me re-read “Extraordinary Popular Delusions and the Madness of Crowds” written by Charles McKay in 1841. Like a lightning bolt I knew that dot-com mania would end just like tulip-mania. Shortly thereafter, I got my clients out of the market, saving them $20–30 million in losses they otherwise would have had.

My original copy sits on my desk…a reminder to ignore the herds. Trust your instincts. Question everything. A great read…highly recommended.

My primary point this morning is that the media elites, through their 24/7 “Fear Everything” media and paid permabear scammers, continues to scare investors into believing that the sky is falling. Keep your money in safe investments. Stay in money markets or CD’s. Do anything but trust the stock market.

WRONG.

Look, the move higher won’t be straight up. Our December aberration proved that. But its sell-offs just like that that scare the public that much more. As we’ve covered this week, fund managers have their lowest exposure to stocks in 2.5 years. The supposed smart money (they aren’t) is paralyzed. Now they’re being forced back in. This is when big moves higher occur. Exactly like this.

VRA BOTTOM LINE: stick with us here at the VRA. We are locked in. Locked and loaded. We want all of you here with us for the rocket ship move higher that's dead ahead.

This is the beginning of FOMO. Mutual funds, hedge funds, sovereign wealth funds and institutional money managers are on exactly the wrong side of this market. Their risk exposure sits at 2.5 year lows, meaning they are vastly underinvested in equities.

Now, they are forced to play catch up. The Fear of Missing Out is beginning to consume them. They want to keep their jobs and fat bonuses and they are lagging the broad markets badly.

This is the very nature of funds that run $1 billion+. Decembers like we just had scare the sh*t out of them…so they sell. As the market recovers and moves higher, fund managers remain stuck in their bond and money market positions…paralyzed.

Over my 34 years I’ve seen this movie play out more times than I can tell you. It always ends the same. Just as the markets have screamed higher…over the course of many months…fund managers have finally returned, fully invested and as bullish as ever.

And that’s when the rug gets pulled. Mr. Market loves crushing fund managers, which is why they rarely beat the market. Folks, once fund managers return aggressively on the long side, we will be taking profits. The VRA Investing System will have us prepared to act.

It’s my belief that Q1 earnings will beat their already lowered estimates. Handily. Regardless, its the action that matters, rather than the news. As we’ve seen this year, regardless of what the negative news has been, this market has powered higher. Few market tells are more bullish.

This morning I’ll leave you with a few charts.

 HGX (Housing Index). Housing plays a major role in the VRA Investing System. If you heard the CEO’s of Lennar and KB Homes this past week, talking about the strength that they see moving forward, then you know that the US economy is primed to surprise the naysayers, once again. This chart confirms what those CEO’s are seeing:

Well above the 200 dma. Golden cross just occurred. Housing is a leading indicator. Good times, directly ahead.

IWM (Russell 2000 ETF). Small caps have been the laggard, as each major index has surged higher. IWM remains beneath its 200 dma but appears ready to start playing catch up. Everyone and their brother is watching this chart. A move back above the descending line below should send IWM back up and through its 200 dma.

Everything else about this chart looks excellent. Once IWM breaks through the 200 dma it will be a quick trip back to the August highs.

FXI (China ETF). As we can see below, it’s been on a tear this year, but again, few fund managers own Chinese stocks…believing that a failed trade deal will doom their debt-ridden economy. We believe they are wrong. I like everything about this chart. Yes, there is resistance in the $46–48 range, but RSI, MFI and stochastics are flashing buy signals. Continue to buy.

GDX (mining ETF) continues in its bullish channel. In fact, it's now at the lower end and should move higher from here. It’s also reaching heavily oversold on stochastics. It’s important that volume appears on its next move higher…that's the one element that's been missing.

OIL. WTI is at a 5 month high, and while ST overbought, it looks to be breaking out from its bullish channel. Clear sailing to $70 as the global economy is recovering much quicker than the gurus have yet to discover. 

Until next time, thanks again for reading….

Kip

Since 2014 the VRA Portfolio has net profits of more than 2300% and we have beaten the S&P 500 in 15/16 years.

Learn more at VRAInsider.com

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