Stocks are the best game in town

The outlook for equities is stronger than for bonds, metals, commodities and currencies.

By TheStockAdvisors May 28, 2013 10:29AM

Bull figurine on ascending line graph and list of share prices (© Adam Gault/OJO Images/Getty Images)By Mary Anne and Pamela Aden, The Aden Forecast


The stock market is super strong, hitting new all time record highs. Its bullish momentum keeps gaining strength. The Dow Jones Industrial Average ($INDU) have surged above 15,000 and the market is likely headed much higher.


We all know the Federal Reserve's easy money policies have fueled the boom in stocks. So much money has been created, it had to go somewhere -- and so far it's going into the stock market.


Many investors are doubtful. They're convinced the rise in stocks is just a Fed fueled bubble. But it really doesn't matter. Whether it's the Fed's bubble policies or not, the point is, stocks are bullish and you want to be in the market.


For now, stocks are the best game in town. They're much stronger than bonds, the metals, commodities and currencies.


Think about it. Investors have nowhere to go. With interest rates near record lows and paying next to nothing, a savings account or CD simply doesn't make sense. And while that's not good for savers, it's very good for the stock market, making it more attractive.


Currently, the economy is improving, but it remains sluggish. That pretty much guarantees the Fed will keep interest rates low and the money flowing.


This is a great combo, especially combined with record corporate profits and reasonable valuations. Plus, the stock market looks ahead, so its rise is also a positive sign for an improving economy.


Baby boomers heading into retirement age are not getting any income from their savings or cash retirement accounts. That means they have to increase their risk factor somewhat by going more heavily into stocks to make up for near zero interest rates.


For starters, investors have primarily been buying into the bigger, high quality dividend paying stocks. These are the blue chip stocks that are considered the safest for long-term growth and income via consistent dividends.


These are stocks like Johnson & Johnson (JNJ), Coca-Cola (KO) and Wal-Mart (WMT), which we've been recommending and they've been good performers.


But now investors are kicking it up a notch. Tech stocks are picking up steam and so are some of the global stock markets. Here, too, low interest rates and strong earnings are fueling the rises.


Tech stocks, for example, are still very cheap. And the same is true of many of the world stock markets.


Plus, don't forget, there's still a mountain of cash sitting on the sidelines and most money managers are bullish. This alone could drive stocks to sharply higher levels.


There's an old saying in the stock market and it's so true, "Don't fight the Fed." Well, we're not. We're staying with the Fed and we hope you are too.


The bottom line is this -- as long as the Fed keeps buying bonds, providing easy money, and keeps interest rates at super low levels, stocks are going to rise further.


We believe stocks are headed higher. For new buyers it would be ideal to buy on a downward correction, especially if the "sell in May and go away" syndrome comes to pass. But the ideal moment may not come. So we'd go ahead and buy at least some now, and then buy more when stocks do correct. In other words, average in.


Currently, we'd continue to buy positions in Powershares QQQ (QQQ), SPDR Dow Jones Diamonds (DIA), iShares S&P Global 100 (IOO) and iShares Dow Jones US Telecom (IYZ) as well as our newest recommendations, the iShares Dow Jones Transportation (IYT) and Consumer Discretionary Select Sector SPDR (XLY).


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74Comments
May 28, 2013 11:04AM
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"Stocks are the best game in town"

Of course they are.  Especially when the Fed is pumping financial crack to the addicts to the tune of 85 billion a month...

May 28, 2013 10:52AM
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Stop printing all that currency and let's see how the Wall Street hummingbirds do?
May 28, 2013 10:58AM
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Where is Anthony? Where is Anthony? WHERE is Anthony?
May 28, 2013 11:06AM
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The author's spin makes a strong case that a market bubble is devloping in equities (there is no where to go but equities; the extreme valuations of fixed income securities due to fed manipulated low interest rates provides now viable alternative investments).  I don't care.  Show me the money.  The market doubled before giving up its gains after Greenspan's irrational market exuburrance warning.  You can't fight the fed....and if you can't beat them join them.  Let's ride the bubble and try to jump off before it pops.  Show me Dow 20,000.
May 28, 2013 11:19AM
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Stocks are a money machine;If you`re smart.
May 28, 2013 11:49AM
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If your in the stock market, your a winner. If you get out, your a looser.

 

I know many people who got out when the stock market tanked a fiew years ago. They put thier 401K into a much safer pot...so they thought.

 

They jumped out of the stock marked when it was down.....what's  a stupid thing to do. They wil never get to recover all that they lost. I ,as did many other's, stayed in...& doing so purchased more shores at the same time. Now that the stock market has reconered....my 401K...Looks VERY GOOD.

May 28, 2013 11:38AM
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The Fed's easy money policies may be good for Wall Street's false bubble but Main Street is struggling economically and financially. The Fed's spending has not only inflated the market but our dollar along with it.

Someone will have to pay the piper for the $85 billion monthly welfare (QE's) for the past several years.

 

We all know who gets the bill as usual.

May 28, 2013 11:27AM
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The strong devour the weak. The sneaky don't do so bad for themselves either.
May 28, 2013 12:43PM
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This writer is actually advising retirees to jump into a bubble market that's at an all-time high.  That's horrible advice because this bubble is going to burst sometime.  You'll notice that the majority of the run-up has been on daily volume that's about half the normal volume and the writer admits that there is a lot of money on the sidelines.  That's because the economy can't create any jobs because there's so much government interference leading to so many unknowns and GDP growth can't even reach the ho-hum level of 3%.
May 28, 2013 12:37PM
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Irrational exuberance. Play with caution and don't use any money you will need in the next few years.
May 28, 2013 11:53AM
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This group says stocks are headed higher. There are many others (like Anthony) who warn of a sell-off.  In time, both will be proven right. I like the "broken clock" analogy. Wait long enough and all of these pundits can point to market moves and boast that they predicted them. I think  trying to predict day to day moves of the market is like handicapping horse races.In the short term there are more losers than winners. For the average investor (and at least 50% of us are average or below average) viewing the market as a long term investment is the safest way to invest.
May 28, 2013 12:44PM
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Oh, and Cramer says the economy is on the right track so the bursting of the bubble can't be far behind.
May 28, 2013 10:58AM
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Where is "Broken Clock" Tony today?
May 28, 2013 11:25AM
May 28, 2013 12:54PM
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“Think about it. Investors have nowhere to go.”

 

Gee, that’s the first time I heard this…..IN THE LAST 12 HOURS!! It’s shameful what cargo cult sales BS passes for financial advice these days.

 

The Fed is playing a nasty game which relies on the selfish egos of market participants. Everyone in the stock market thinks they are getting ahead when the broad market rises. The truth is, when everyone’s wealth rises in price by the same percentage, no one but Wall Street brokers and traders really gets ahead. Ironically, once the Fed pushes yields on both stocks and bonds to zero, the only thing it will have accomplished is to cancel all hopes of meaningful future gains on everything. Then where are ya gonna go? And, how long are you going to wait in hopes of being among what is inevitably only a small percentage who will be able to make the transition successfully before everyone else?

 

When everyone in the contest gets a gold star, no one really wins anything.

May 28, 2013 12:35PM
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It's all just smoke and mirrors.....and, once a mirror breaks, 7 years bad luck. I just blew my nose with a $1 bill. It's not worth much more than that. I am not seeing the growth in my 401k, which is, basically, a stock driven portfolio as I could not see panicking and retreating when the Market crashed years back. I have yet to get back to pre-Crash levels despite all of this 'record breaking' rhetoric. I'd love to be like the power mongers that run the country and be able to play on Wall St like it was a sand box but I have too little and that 'too little' is too much to lose. When my 401k recovers then I'll drink the Kool-Aid. Right now I'm just not thirsty enough to drink battery acid. 
May 28, 2013 1:15PM
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Hey REGAL MAN 500

 

What else could the explanation be for the booming market??

 

That the economy is booming???

 

P. T. Barnum was right;  There IS a sucker born every minute.

May 28, 2013 12:54PM
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Would you be happy and excited seeing the DOW @ 30,000. and the average price of a new car @ $100,000.? Of course you would, you could always buy a less expensive used car. These realities and tricks are what the money-masters employ to keep Joe and Jane happy. Prop-prop-proping up the stock market...it makes everyone feel soooo good, so good...I Feel Good!
May 28, 2013 2:11PM
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Who the hell are these people?  Buy! Buy! Buy!  Sounds like 1929 all over again. 

 

My advice... wait for it... wait for it.... wait for it....

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