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Dear Investors,
Itâs our goal at The Conservative Investor Daily to provide you with useful and insightful articles and investment ideas. Today, we have an original article from Global Macro Economist, Clifford Bennett. Iâve known Clifford for about 9 years now and he has been right for all 9 years about market direction. Heâs also super adept at selecting stocks and profitable trade ideas.
If you invest, you should take some time to read his letter that weâll be emailing you each week.
Also, if you donât mind, feedback on the content we are sending you would be appreciated! If you like, dislike, agree or disagree with his point of view, Iâd like to hear about it! [Please provide feedback here.](
Enjoy!
Michael Connors â Publisher
The Conservative Investor Daily.
This Is Your Time
Hello everyone,
Here we are at record highs in the Nasdaq. With the exact same thing quite possible, even likely, for the Dow Jones and the S&P500 in the not too distant future.
It is never a straight line however, and while markets are most definitely strong, they are due for some healthy hesitation. Just like anything else, markets need energy, and this is why they sometimes pull back like a slingshot, or just steadily build at around the same level for a while like a dam slowing filling until it is ready to flow over. And I do mean flow over to the upside, as well as down. In this particular case, in the midst of the greatest prosperity ever seen, the spillover is definitely leaning to the upside the more time passes.
Just quickly, on another energy note, I was out climbing a mountain today! Not too difficult, but not easy either. About a 5 hour hike, and a few hundred meters of near vertical climbing near the summit.
Myself, I like to travel light and fast and actually run much of the way. Then, there are other approaches?
I had the honor of carrying a 79 year old Grandmother, with walking stick, down the last part of the mountain. She had not been to the summit, but to the base of that few hundred meters. First, I walked her ten year old granddaughter, Sienna, down. Then, we went back to bring Jill down. She was with her daughter of course, thatâs the three generations, but her legs were completely turned to Jello. So I carried her, taking the odd breather. The surface is rough, and she was most concerned with my falling, while all the time apologizing.
As I told my story to others afterward, there was the constant dismay that she was even on the mountain. Sure, a self-inflicted situation had arisen, but to me it was all about what our current times and the future is like for all of us.
We are moving forward in age, all of us to be sure, but we are ever more healthy, energetic, aware, educated and connected than ever before. This means we can all have greater lives and for longer, in the main, than any generation before us. When you look around these days at children who are glued to screens from a far too early age, one might wonder if in fact our generation will be the pinnacle of wellbeing, in opportunity, and for many of us in reality.
All I could think of Jill, 79, with walking stick, who did in fact nearly make it to the summit and was on her way back down, was what an amazing lady. Out there having a go with daughter and granddaughter. There was a fourteen year old grandson too, but he had streaked ahead to set a new land speed record. As well all fourteen year olds should.
Our generation, from Jill to middle age, has achieved, built and invented so very much. Now we are being active beyond the years of our forebears. And this brings me to my essential and extremely valuable point. Old theories of static demographics are a complete nonsense in this age of constant endeavor, and productivity even from the humble home office. We are super productive.
The idea of retiring, is as outdated as the buggy whip. The more we do, the more energy we have. Sure, people are changing their jobs and careers. The productivity though. This is continuing. It is what life is about. The more productive and contributing you are, the more life you have.
Which brings us to markets. The world has changed in so many ways it would be glib to mention them all here. One thing we can be sure of however, as with Jill, is that there is still plenty more to come.
The world is not going to stop turning, because of ageing populations or anything else. More productive people living longer equals an even stronger, more vibrant and more prosperous economy. This is one of the foundational principles as to why I have been calling this grand bull market, before, and for longer than any economist in the US and for that matter the world. There are plenty of other reasons too. As I have said before, we really must think âbottom of the future rangeâ when at record highs. It is the only approach that works.
Take a look at the fundamentals. Recent data is absolutely terrific. All pointing to a robust, expansive, economic environment. One of full employment, low interest rates and tremendous corporate profits. The latter of course being the very appropriate reward for fantastic innovation. All as it should be.
US Retail Sales were up 0.5% in June, following an upwardly revised 1.3% in May. These are simply great numbers. Boom economy.
US New York Empire State Manufacturing Index was 22.6 in July.
Another unbelievably powerful number. Boom economy.
Corporate Profits in the United States increased by USD 153.0 billion, or 8.7 percent, to an all-time high of USD 1,920.0 billion in the first quarter of 2018. This is nearly double the level of the previous boom. Stocks are cheap.
We are living in the most prosperous period in history. One where stock prices are not appreciating the ever more effectively nuanced nature of capitalism itself, or the accelerating capabilities of all of us.
There is value.
Regards,
Clifford Bennett
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STOCK SPOTLIGHT
A review too!
The view on Netflix is still to buy for strong gains. We are however at lower levels suddenly, but this is something we increasingly see, even for the established new technology brands like Apple. An absolute over-reaction to just one aspect of corporate performance, and over just one quarter, which usually lasts only 1-3 days. Then the inevitable resumption of the underlying well justified bull market in these stocks.
We remain bullish Netflix, and suggest taking advantage of this gift sell-off over coming days.
No one likes China very much at the moment. Hence the languishing nature of Alibaba. It did take investors a while to understand this stock, but once they did, it really took off.
The fundamentals remain strong for this kind of Amazon of the East.
The companyâs efforts to push into new markets, to become truly global in nature, should not be under-estimated. The extent to which they can establish themselves is likely to be as surprising as the recent price highs. That said, what is really dominating the stock at the moment is sentiment on China. With first steps of a trade war with China now in place, it is not exactly an encouraging climate. This is why we see real value here. The underlying fundamentals are strong, but there has been a sentiment swing to the downside.
This is our favorite kind of opportunity. As the chart below shows, the trend is well established, and now too, is the dip we should look to take advantage of.
Regards,
Clifford Bennett
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