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Equity markets are now entering a new bull market, the likes of which has not been seen since the 1932 to 1937 period, when the Dow Jones Industrials soared nearly 382 percent — rallying from a low of 40.56 in July 1932 to a high of 195.59 in March 1937 — even though the global economy continued to sink deeper into a depression.
And the thing is, only the savviest of investors will understand why this new bull market is forming, and how to profit from it.
They are investors who have open minds … who truly understand the lessons of the past … and they aren’t afraid to think dynamically. If you’ve been following my work in my Money and Markets columns and in my Real Wealth Report, then you’re one of those savvy investors.
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| In 1932, investors began taking their money out of Europe and buying U.S. stocks like crazy! Now the same thing is about to happen again. |
You see, back in 1932, three years after the Crash of ’29, 17 countries in Europe started to default on their sovereign debt. Investors yanked their money out of Europe and sent it, guess where?
To the U.S. equity markets. They didn’t buy U.S. bonds because they were afraid that Washington would also have debt problems, even though the U.S. was a creditor nation at the time.
So investors bought up stocks like crazy, sending the Dow into a rocket ride higher.
The same thing is about to happen, again. Only this time, I think the flood of capital that could go into equities could be much bigger than it was in the 1932 – 1937 period.
That’s because, this time around, it’s not just Europe’s sovereign debt that’s about to go under, it’s also the government debt markets in Japan and the United States.
Mind you, a 382 percent gain in the Dow, taken from its March 2009 low of 6,495 — the equivalent of the 1932 crash low — would put the Dow a tad north of 31,000 in the next few years …
And just like the mid-1930s …
It Could Happen Again Regardless
of What the Economy Does!
It’s a history lesson you need to heed, for two very important reasons:
1. Because it’s one of the major ways you can make money over the next few years.
2. Because it’s a lesson about the Great Depression that almost no one tells you about: That stocks can soar even when the economy stinks to high heaven. Even when governments are crumbling.
This is key to your future. Almost everyone will be refraining from buying stocks because the economy is not so hot, or because they’re waiting for the economy to drag down stocks, even precipitate a crash.
So they will miss the boat, entirely. Or worse, they will sell short stocks on the first pullback, thinking the markets are going to crash, and they will lose their shirts.
Not me, or my subscribers. As I said before, they’re in the camp of the open-minded … who heed the lessons of the past … and think dynamically. So they’re going to be ready to profit from it.
Right now, in the very short-term, stocks are indeed overbought and ripe for a pullback.
But based on January’s closing action and signals, all of my systems now confirm it: U.S. equity markets are in a new bull market, one that will be largely driven by capital flows out of sovereign bond markets.
Support in the Dow Industrials has risen to 13,860, followed by 13,450 to 13,622. Worst case pullback support lies at 12,497.
In other words …
It’s Time to Start Buying Stocks
Aggressively on Pullbacks
What will be the best performing sectors going forward? They will be …
- Natural resource stocks
- Multi-national companies and conglomerates
- Materials and energy companies
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| Miners are one sector likely to benefit from the next influx of investors. |
Basically, companies that will outlast governments!
My Real Wealth Report subscribers will get the inside skinny and new recommendations with the coming February issue, which publishes on Friday.
What about gold now?
It’s still stuck in the mud, with a bias to the downside. Ditto for most other commodities. Natural resource stocks, which have been hit hard, may be very close to bottoming, and soon turning into buys. But the underlying commodities need more time before I can truly say they’ve bottomed and are preparing for their next leg up.
Real Wealth Report will keep you up to date, with many flash alerts expected over the next several weeks and months, in addition to the regularly scheduled main issues. If you’re not a member, consider joining now by clicking here.
For now, I would consider staking out a nice, general long position in the Dow Industrials by purchasing the SPDR DJ Industrial Average ETF (DIA) when it pulls back to the $134 level.
If and when filled, place a stop to reduce risk at $105, on a good till cancelled basis.
One last thing, entirely separate from the above. Something that irks me to no end …
The U.S. vs. S&P
The Feds have filed their first-ever civil suit against a ratings agency, Standard & Poor’s, for the company’s role in the financial crisis and meltdown in 2008/2009. They are seeking a $5 billion fine from the company.
Sounds great, right? Heck no! Standard & Poor’s should be facing criminal charges, not civil charges. So should the other big ratings agencies. They almost destroyed the entire financial system and cost innocent investors all over the world hundreds-of-billions of dollars.
Their business model is corrupt: The big ratings agencies were, and still are, bought and paid for by underwriters. Their ratings were — and still largely are — biased and even fraudulent. The CMOs and CDOs they rated AAA just before the financial crisis were junk. They gave them AAA ratings because they were paid to.
Civil suit? No. The Feds should file a criminal suit and put those companies out of business, or at least force them to change their business model. Period.
That’s probably not going to happen. All the more reason for you to be an investor who has an open mind … who truly understands the lessons of the past … and can think dynamically, instead of listening — or worse, buying — all the garbage that’s out there.
Until next time,
Larry
I can’t find any other voice to listen to, other than You Larry…Please more info on Gold,,, I don’t have but a little money to save on. It’s in a bank and that’s scary, waiting…I don’t understand the Market or particulates so gold and natural gas I uderstand … I hang on your info
Thanks
Very good to hear Larry turn bullish. Although he has been slightly ambiquous for quite some time now, this is bullish. A flexible stance.
Good news.
Greetings Larry!—
You surprised me! Thought you were going to rap the gov for suing S&P. You did, but wanting more stringent legal action, not less! And I whole heartedly agree with you.
Yes, the ratings agencies business model stinks, as amply pointed out by Weiss Research in particular, for years. Yes, their actions, along with the mortgage banks, were criminal. And they almost did take down the world wide financial system in the process of filling their pockets—the executives did, if not the ratering companies and mortgage banks themselves, which were left blowing in the wind and probably would have collapsed themselves without the public bail out.
One thing which continues to irk me is that the investment houses become deposit banks too (they did it to qualify for public fed funds) got those truck loads of public money and voila, started manipulating the markets like never before. I saw it happening myself, in the tiny quantities (14 shares, 3 shares, for instance, but being done on a massive scale) offered to move the market up or down, or up and down, etc. Gold market was being manipulated too. The methods used were more apparent when comparing results you were predicting with what actually was happening in Gold. And comparing the action (scrutinizing offer prices and bid prices, for example) with the action before the 2008 crisis.
What place does the individual investor have in the market when faced with this indirectly public-financed massive manipulation of the markets? That’s what I’m wondering.
Glad to hear you recognizing that their are real legal limits (and other limits) to people’s actions having financial consequences.
Sincerely,
Orion Landden
Larry…why do the Canadian 1 oz gold Maple Leaf coins sell at such a discount to others …I can understand the American coins because of tax implications and other reasons but why the Krugerand and others?..I thought the Canadian coins were the purest of all of them ! Do you recommend any one over the others ?
Thanks for an insightful view; it is consistent with input received from sources out of Germany. I’m convinced and will take action.
Thom
Hi Larry,
Worried about your tip,Industrias Bacocho, in that it looks as tho they have been hit by bird flu.
I need to know if you manage money or just recommend stocks etc. with your newsletter.. Thankyou for responding.. If you manage money what are your fees?? Tkx Mike Stewart
How long do you think it will take unti the pull back in the Dow occurs?
Wow Larry, this is great. One of your best reports yet.
Never thought of comparing the 1930′s to the present, but it sure does fit when you thing
about it.
Thanks so much for all your information over hte years.
Jack
Do you expect a correction in the equities markets AND the treasury market?
It would appear that the main reason the markets are rising is that “paperhanger Ben” is key-stroking a trillion $ a year of monopoly money into existence and indirectly buying the markets. How can our economy stand, much less prosper, on a foundation of paper? Everyone seems to have forgotten why we have laws against counterfeiting.
PS A jobless recovery is not a recovery….
Larry,
Would there be any suit at all, if Treasurys haden’t been given a “tweet”?
Will China, India & Japan continue buying US govt debt?
If not, the ultimate collapse could occur: US stocks & bonds crash together, rachetting down in spirals…
One might say that the US has alreasy collapsed, that the multi-trilion debt is unpayable, un-refinanceable? Defacto default?
Larry: Do you have any thoughts about the collapse of the Euro? Thanks and regards Robert Calabro.
Thanks Larry for sticking to your guns in that you held Gold was still in correction mode.
larry what do you think about PGH
Hi Larry
I was wondering if you might go into a little more of an explanation on why you think Gold and silver will keep dropping. I see them bumping up on 1 year resistance right now but I’m not as clear on the lower points. Are you going off weekly and monthly resistance levels? Looks like silver has weekly resistance at 26. Sure would like to hear your explanation about this. Just purchased book on Elliot wave theory. Is there a “first look” recommendation you might suggest?
Thanks for your insights!
Hello Larry,
Thanks for the heads up with the equity market about to turn bull.. I’ve been ready your monthly report very carefully and I am willing to bet that your analysis is precisely accurate.. I am waiting for your signal to buy..