A powerful reason why you should be bullish on stocks right now

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Today’s issue in preview:

• A powerful reason why you should be bullish on stocks right now

• It’s raining money in the healthcare business. Are you getting your share of it?

• This stock chart shows you that things are actually fantastic

• Learn our Top Themes to buy now

A powerful reason why you should be bullish on stocks right now

Credit: Art Wager

If money could make noise, you could hear lots of it sloshing around the world right now.

As you read this, many of the world’s largest and most important banking firms are reaching new all-time highs. That’s good for the economy and good for your stock portfolio.

This week, American banking giants JPMorgan Chase (JPM) and Bank of America (BAC) reached new all-time highs. Japanese banking giant Mitsubishi UFJ (MUFG) reached a new high. Asian banking giant HSBC (HSBC) reached a new high. British banking giant Barclays (BCS) reached a new high. Spanish banking giant Banco Bilbao Vizcaya Argentaria (BBVA).

You know JP Morgan Chase and Bank of America. You may not know the others, but they are massive, consequential parts of the global financial machine. And they are all registering new highs. This is a big deal.

I typically avoid individual banking stocks. Since I started trading stocks in 1997, I’ve seen too many seemingly strong and safe financial companies look good one day and then get crippled the next day… with the investment community later finding out they were hiding or mismanaging liabilities.

However, I like to monitor the price action in broad groups of banking stocks. The health of a region’s financial system can serve as a good barometer of its overall economic health… or at least a good gauge of all-important financial liquidity, which has a huge influence on asset price movements.

The stock market is the world’s greatest forecasting mechanism. It tends to look ahead 6-12 months. When an industry is in a recession, its stock prices will rise before the news media announces it is recovering. When an industry seems to be doing well, its stock prices will decline before the news covers its downturn. This is often called “discounting” or “pricing in” the future.

Applied to banking, when a region is about to start doing well, its banks will rise in advance of the good times. When a region is about to struggle, its banks will plummet in advance of the bad times.

A list of banking stocks as large and varied as the one above, all hitting new highs, means there is tremendous liquidity sloshing around the world’s banking systems.

It means there’s plenty of money to loan out to businesses, consumers, real estate developers, and infrastructure builders. It also means there’s plenty of money that can flow into stocks and send them higher. In layman’s terms, it means “Party On.”

Reading about bank stocks isn’t nearly as exciting as explosive sectors, such as AI and space, but this surge across a wide variety of major banks is hugely important.

Will the boom in global financial liquidity and stock markets come to an end someday? Sure. All booms eventually end. But for now, this very important trend is up. Position yourself accordingly!

It’s raining money in the healthcare business. Are you getting your share of it?

Credit: Drazen Zigic

One of our core operating principles at Money & Megatrends is that making money in stocks is far easier and far more lucrative when you invest in themes and industries with massive, multi-year growth potential.

You want to invest in industries creating new markets, new products, and new services that have the potential to generate so much revenue growth… and attract so much investor capital… that, financially, you are essentially floating downstream on Amazon rivers of money flow. You want to invest in industries where even a moron can make a million dollars.

With all this in mind, I’m reminding you that “Boomer healthcare” is one such theme.

Avid Money & Megatrends readers know that Boomer healthcare is one of our highest-conviction long-term trends. If you forced me to put all my portfolio into Boomer health stocks, I would not object in the least.

The bull case here is as follows: More than 10,000 Americans reach retirement age every day. The U.S. population aged 80 and older is projected to roughly double, from 14.7 million in 2025 to 29.4 million by 2045.

This is the enormous Baby Boom generation entering the phase of life where healthcare and longevity spending skyrocket. For many boomers, a typical month involves going to see at least one doctor to have something looked at, removed, or treated.

This means many healthcare businesses are experiencing huge demand now – and will for at least the next decade. It means boom times ahead for many “ology” businesses, stocks, and careers, such as dermatology, cardiology, radiology, oncology, anesthesiology, and ophthalmology. The list goes on.

Investing in many healthcare businesses over the next decade will be investing with a gale-force tailwind at your back. If you’re a parent and worried about your child getting a job, just point them to the booming healthcare industry.

But don’t take my word for it. Take the market’s word.

This morning, the market enthusiastically supported our healthcare thesis by sending the world’s largest healthcare ETF – the Health Care Select Sector Fund (XLV) up 3% to a new all-time high. The fund’s trailing 12-month return is a robust 26%.

XLV holds a diversified basket of giant healthcare firms… the firms that are benefiting and will continue to benefit from trillions of dollars in Boomer healthcare spending.

Major holdings include Johnson & Johnson (JNJ, Merck (MRK), AbbVie (ABBV), UnitedHealth Group (UNH), and our top longevity pick, Eli Lilly (LLY).

The market values of these firms are rising so much because their revenues and profits are rising, driven by soaring Boomer healthcare spending.

The giant business, tech, and demographic trends that shape our world tend to play out in five or more years, not five months. This means the stock market trends they manifest play out over the same time periods.

With this trend truism and XLV’s new high in mind, I recommend staying bullish on Boomer healthcare. For actionable, investable themes here, see our work on heart health, Baker Brothers stocks, longevity, and eye health investments.

This stock chart shows you that things are actually fantastic

Credit: Torsten Asmus

This morning, as the world’s keyboard warriors complained about the Iran war, Elon Musk, socialism, AI, and government debt, the most important ETF you don’t follow reached a new all-time high.

But since this ETF hitting new highs is wonderful news and will not induce “rage clicking,” it won’t get much attention on X or in the mainstream media.

Money & Megatrends may not be where you hear about it first, it may be the only place you hear about it at all.

This ETF of distinction is the Invesco S&P 500 Equal Weight ETF (RSP). This morning, it advanced 1.07% to reach a new all-time high of $217.50 per share.

Here’s why this new high is so important…

In early 2023, stocks began emerging from the 2022 bear market and started a huge uptrend that has made investors a lot of money.

During this run, fueled by the historic AI infrastructure buildout, bearish financial gurus have consistently warned against owning stocks, claiming the bull market was “narrow” and therefore dangerous.

A “narrow” bull market is one in which a small group of stocks accounts for most of a stock index’s gains… while most stocks go down or sideways. Some analysts say such a market should be avoided… so that’s what they did, and they missed out on extraordinary returns.

One of the best ways to gauge whether the market is narrow is to look at the performance of the S&P 500 Equal Weight Index.

The popular S&P 500 Index is a “market-cap weighted” index. This means the biggest companies, such as Nvidia (NVDA) and Apple (AAPL), have a greater impact on the index’s value than smaller companies. A big rally in a $4.9 trillion giant like Apple can overwhelm losses in 30 smaller companies.

An “equal weight” index nullifies market-value-related impacts – assigning equal weight to each stock in the index regardless of company size. With an equal-weight index, a massive 100% annual gain in a giant like Nvidia cannot mask or overwhelm weakness in hundreds of smaller stocks.

RSP is by far the largest ETF that tracks the S&P 500 Equal Weight Index. As mentioned above, it just advanced to an all-time high. This tells us that it’s not just a bull market… it’s a broad bull market generating wealth across many industries, companies, and portfolios.

Does the U.S. economy have big problems and imbalances? Of course. It always does. But keep in mind: Making money in stocks is never about being in problem-free economic climates. It’s about being in economic climates where the big negatives are overwhelmed by the even bigger positives.

As you can see in the RSP chart below, the big positives are bulldozing aside the negatives so forcefully that we’re enjoying not just a bull market… but a broad bull market where stocks of many shapes and sizes are rising. Manage your affairs accordingly!

Market Notes

• Consumer tech supergiant Apple (AAPL) reached a new all-time high today.

• Credit card giant Visa (V) reached a new all-time high today.

• Automotive giant General Motors (GM) reached a new all-time high today.

• Shopping mall giant Simon Property Group (SPG) reached a new all-time high today.

• Public storage giant Public Storage, Inc. (PSA) reached a new all-time high today.

• Railroad equipment and services giant Wabtec (WAB) reached a new all-time high today.

• Full-service restaurant giant Texas Roadhouse (TXRH) reached a new all-time high today.

• Electronics retailer Best Buy (BBY) reached a new all-time high today.

Regards,

Brian Hunt
Editor, Money & Megatrends

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