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This Is the Bull Market Your Kids Will Be Talking About

19 | By Michael A. Robinson

With U.S. stocks at all-time highs, folks are wondering where prices can go from here. After all, U.S. growth is still anemic, the Federal Reserve is rolling back its market assistance and corporate profits aren’t all they could be.

Granted, there will be periodic corrections and unpleasant events that will “shock” the markets into temporary downturns.

But I believe the conditions now in place could foster a bull market that could last 18 to 20 years.

Much of it will be fueled by technology investments and innovation.
And the investors who take advantage of it will have a shot at life-changing wealth.

Today I’m going to show you the five catalysts that I believe will fuel this dramatic run. And I’m also going to show you how to go along for the ride.

But if there’s one lesson you should take away from today’s discussion, it’s this: In a generational bull market like this one, you should always have money at work in the market.

But it has to be at work in the “right places” …

Nothing Threatens This Bull

As you might imagine, generational bull markets are rare.

Most bull markets last about five years before there is a correction. But with a generational bull market, stocks not only rebound to reach their previous high but go on to set new records.

Between January 1960 and October 1968, the Standard & Poor’s 500 rose 87%. But then it went into a decline that lasted until the early 1980s. By January 1980, the market had only climbed back to break even.

Then came the generational bull market that started in January 1982 and ran until January 2000. Even accounting for the 1987 market crash, this was a great ride for investors.

During that period, the S&P 500 rose from nearly 103 to about 1,500 for an astounding 1,268% gain. After the decline in 2000, it took seven years for the market to get back to break even, only to retreat again with the 2008-to Great Recession.

The current bull market dates back to March 2009, when the S&P 500 hit an intraday low of 666.79. Since then, it’s reached heights of 1,968.17.

That’s a 195.1% gain.

But I think that’s just a start.

Today, a unique set of conditions are in place to take this five-year trend on a long ride.

I call them my Five Generational Bull Market Catalysts. You might call them your road map to wealth over the next couple of decades …

Generational Bull Market Catalyst No. 1: The New Superpowers Emerge

China has become such an integral part of our economy that many Americans forget that it is still a relatively new relationship.

Back in 1980, there was little trade between the United States and China, which President Richard Nixon only opened to the West in 1972. The communist nation began adopting market reforms seven years later.

Those two events set in motion a huge boom in China’s economy. According to the World Bank, in 1980 China’s adjusted-for-inflation gross domestic product (GDP) measured a mere $202 billion, or roughly today’s market cap for Verizon Communications Inc. (NYSE: VZ).

By 2002, China’s GDP grew to $1.2 trillion. By 2012, that figure had climbed to $8.2 trillion.

And by the end of 2016, China’s economy likely will be worth a whopping $14.93 trillion.

In comparison, the U.S. economy will grow from about $6.49 trillion to $18.36 trillion over that same period.

And I think China will overtake the United States in 2018.

With an annual growth rate in excess of 7%, China’s economy could easily double again in the next 10 years. So, with a population of 1.3 billion people with increasing wealth per capita, China can’t possibly produce everything it needs domestically.

And that’s why you see big American technology companies like Apple Inc. (NasdaqGS: AAPL) making aggressive forays in China. Apple recently announced a deal with China Mobile Ltd. (NYSE: CHL) to bring low-cost iPhones to China. And that’s one of the reasons Apple’s stock is up 15% so far this year.

And Apple is only one tech player jumping into China and other exploding markets, including India and Brazil.

Additionally, a company that could have the largest U.S. initial public offering in history is based in China. E-commerce leader Alibaba is expected to go public as early as August, and analysts say the value could be in excess of $20 billion.

Generational Bull Market Catalyst No. 2: The Record Corporate Cash Hoard

Corporate debt played a big role in the early stages of the bull market that began in 1982. Back then, there was a boom in corporate takeovers that used leveraged buyouts -or debt – to purchase target companies.

It’s a vastly different world today …

Yes, mergers and acquisitions (M&As) are once again on the rise. However, rather than using debt, these deals are being fueled by massive amounts of cash on hand.

According to Thomson Reuters, global M&A activity so far this year rose 3% from the same period last year to $1.6 trillion. Health care, which includes biotech, had the largest chunk of that, at $264 billion, more than triple the amount last year.

According to a study by business professors Amy Dittmar (University of Michigan) and Ran Duchin (University of Washington), U.S. firms are awash in cash.

In their study, Dittmar and Duchin found that, adjusted for inflation, companies had $234.6 billion cash on hand in 1980.

By 2011, the last year of their study, that number had skyrocketed to $1.5 trillion.

Of all U.S. industries, the technology sector is sitting on the biggest cash piles, with companies holding on average around 40% of their values in cash.

Much of that money will eventually flow back into the market in new products, M&As, share buybacks, higher dividend payments – and rising stock prices.

Generational Bull Market Catalyst No. 3: American Energy Independence

Because of the United States’ long-term dependence on foreign oil, many investors have forgotten just how important the nation’s energy sector really is.

We rank as the world on foreign oil, many investors have forgotten just how important the nation’s energy sector

More to the point, hydraulic fracking has ushered in a huge new energy boom. The federal Energy Information Administration now says the United States could soon become a net exporter of natural gas.

The Boston Consulting Group notes that continued drops in wholesale natural gas prices could bring back up to 5 million jobs to the U.S., many of them in high-wage manufacturing jobs.

That’s right. Manufacturing is making a comeback – great news for workers, the economy and stocks.

Indeed, according to the U.S. Bureau of Labor Statistics, more than 550,000 manufacturing jobs have been added since 2010 because of lower energy costs.

And the U.S. energy boom is being driven by breakthroughs from the technology companies we regularly follow and invest in here – everything from hydraulic fracking and to seismic maps to sensors and remote asset monitoring.

Generational Bull Market Catalyst No. 4: The Confluence of Powerful Tech Trends (Finally!)

The personal computer revolution was a key driver in the 1980s bull market.

But as many productivity gains as the PC ushered in, they’re nothing compared with the tons of tech advances now occurring daily.

What we have today is a true “confluence” of mutually augmenting tech trends – a situation I usually describe as “self-reinforcing” tech trends. By “self-reinforcing,” I mean that these trends intersect and augment each other and drive the overall sector higher.

Just take a look at the impact of the Internet of Everything (IoE). This all-encompassing technology will soon connect an estimated 50 billion devices, turning Earth into a hyper-connected “smart” planet. And it could produce as much as $14 trillion in new profits throughout the global economy over the next two decades.

This one tech ecosystem alone will touch everything: Big Data, Cloud Computing, Wearable Technology, Smart Homes, Miracle Materials, the Mobile Wave …

Plus, it will require as many as 1 trillion sensors placed all around Earth – some literally, in satellites – many of which also will help find new energy supplies.

The companies that make these sensors – and the other components of the IoE – will drive this Generational Bull Market … and benefit greatly from it.

Generational Bull Market Catalyst No. 5: Health Care and Longer Life Spans

Better health care technology and pharmaceuticals (biotech) are leading to longer life spans – and that will be a boon to the stock market.

According to the World Bank, U.S. life expectancy at birth is now 79. It was 74 in 1980, climbing nearly 7% in 30 years.

But that’s nothing compared to what’s coming. I’ve seen some radical medical treatments, still very much in the R&D stage, that could extend life to 120 and beyond.

This works out well for the stock market in several ways.

First, health care and biosciences companies are coming up with new drugs, procedures and equipment that keep people living longer – and we’re in a buying mood.

Second, the aging of America – by 2050, according to U.S. Census Bureau, one-in-five Americans will be 65 or older, and at least 400,000 will be 100 or older – is leading the need for more and more expensive health care.

And third, people are not only living longer. They are working longer.

The pollster Gallup recently found the average retirement age has climbed to 62, the highest reported retirement age since 1991, when the firm started asking this question. And younger Americans now expect to retire at 66, up from 63 in 2002.

That means workers will be investing their retirement portfolios in the stock market for longer and longer periods as the years click by. Stocks accounted for 67% of new contributions into retirement portfolios in March, according to the most recent data from experts Aon Hewitt.

In other words, workers are placing more and more of their money in the stock market for longer periods of time.

Add it all up, and that’s at least five major catalysts that will drive this Generational Bull Market for the next decade and a half – or longer.

Yes, there will be setbacks and corrections along the way. Don’t let them distract you.

If you want to improve your net worth and plan for an exciting, enriched retirement, you absolutely have to do two things.

First, make sure you are invested in the U.S. stock market.

Second, invest that money in the technology companies that will send the market zooming upward for the next generation.

Have a great weekend.

19 Responses to This Is the Bull Market Your Kids Will Be Talking About

  1. Jim Van Steenbergen says:

    Dear Sir,

    Thank you for reporting your excellent research on future economic growth.
    What i expected at the end of the report was a recommendation, which stocks to invest in to make use of these tremendous changes. Is that being planned for the next report?

    Thank you for your response.

    Jim

    • William Patalon III says:

      Dear Jim:

      Thanks for the thoughtful … and savvy … note.

      In answer to your question, we’ve been delivering recommendations all along the way. And you can be confident that we’ll continue to do so.

      One thing to keep in mind about this newsletter … it’s an ongoing “conversation” between Michael and folks like you … our subscribers, who make this such a great job to have … And part of that conversation must include strategies, tips, cautionary tales, observations and predictions.

      Over time, our goal is to make you all wealthier … even as we help you become more-savvy investors. We want to “arm” you all with the mental ammunition to be independent thinkers … to keep you free of Wall Street’s “gamed system” … and show you how to navigate the land mines that Washington policies seem to set in our paths.

      Keep tuning in … there will be more to come.

      Folks like you make if fun for me to come to work here every day….

      Sincerely;

      William Patalon III
      Executive Editor/Editorial Director
      Money Map Press LLC

  2. Anthony Cacciottolo says:

    It’s all very well making such statements and predictions:- it’s not really that hard. The real job comes selecting and investing in the real earners in all fields you mentioned. In my opinion that is the only reason for which people have subscribed to your letter. isn’t it time you delivered?

    • William Patalon III says:

      Dear Anthony:

      We appreciate folks who take the time to comment. But from your comment asking Michael if it’s “time he delivered,” I have to wonder what newsletter you’re actually reading.

      The feedback we get — consistently – on Strategic Tech Investor is among the best on any publication I’ve ever edited. We have a team of six folks specifically dedicated to Michael’s technology investing franchise — I’m talking about paid staffers. And this e-letter is absolutely free.

      On top of that, Michael has delivered some pretty heady results … including peak gains of 577% on 3D Systems, 257% on Adept and 254% on Organovo … in a free newsletter.

      I only have our feedback to go on … and it’s been hugely positive. Michael is one of the very best tech-stock gurus in the business … and cares very much about his readers.

      I’d call that “delivering” …. in a big way.

      Sincerely;

      William Patalon III
      Executive Editor/Editorial Director
      Money Map Press LLC

  3. Bob Baker says:

    I too am very optimistic about the U.S. stock market (and owning companies that do vast business abroad).

    One must not get worried, or lose focus, just because there is a 5 or 10% correction along the way.

    Stay the course with great companies like AAPL, GOOG, CELG, MSFT, &KO.

  4. Jeff P. from Canada says:

    I agree that tech industry investing is probably our best bet for rapid growth in the coming years. We are at an amazing time in history and I am glad to be alive to experience it. With the advances in material technology, most specifically Graphene, and with the advances in genetic medicine (a good friend of mine has a daughter who is a genetic researcher and she is convinced that she will be able to live for thousands of years because of the advances that she and others are making in genetic medicine) we will see huge improvements in the human condition.
    As for the overall market going up, I just don’t agree. I am age 61 and have been self-employed and a continual learner for my entire life. I have seen a creeping socialism into Western culture that scares the bejeebers out of me. That socialism is so prevalent in the U.S. and its government that it is overtaking the effects and benefits of free market capitalism. And I don’t see any way for it all to end, except badly. When interest rates rise, which is inevitable, the United States will no longer be able to support its interest payments on the debt it is carrying. There will be a huge chain reaction that will adversely affect the entire world economy. Socialism, as any reasonably intelligent person knows, just doesn’t work. Ask the former members of the old Soviet Union.
    The United States government is the largest business in the world. Yes, governments are businesses too. And if you apply the same analysis to the U.S. government’s business that you would apply to any other business, you would never make a bet in favor of that business. In fact, I would be going short on it.
    So as for a generational bull market, it will end when the USA has to restructure its debt because it can no longer make its debt servicing payments. This is a logical conclusion regardless of the oil from fracking or the advances in tech or medicine.

    • William Picken says:

      From one Canadian to another Jeff, you have spoken the truth… and the more descriptive argument, in it’s detail, is that of Shah Gilani who sees no more than thin gruel ahead for those who insist on only going long the market.

  5. RIC says:

    My friend, we will most likely due to a long bull market provide we dont collapse under the weight of a government that hands out h1b visas like candy, thereby widening the gap between have and havents,leadining to a civil, and then WWIII

  6. Tim Harris says:

    Do you have a comment on Harry Dent’s projection of a severe crash caused by “baby boomers” retiring and massive federal stimulus causing a false “bubble” stock market?

  7. Barry Geltner says:

    As a retired teacher with limited funds, how about a few low-cost stock leads that might increase the size of my wallet with each of your segments. That would be most helpful. Thank you.

  8. William Picken says:

    Except that your prognosis here is focussed on the tech sector….it is at odds with the vision of Shah Gilani, who’s summing up last week of that Yellen woman’s press presentation, forecasts a very protracted and near apocalyptic general crash, in which those short the market will make out like gang busters while others lament. Certainly the essentials that you point out, as coming into alignment, are logical and quite valid in theory….but the clear realities of Shah’s observations are too, ‘stares you in the face evident’ not to argue caution when considering being fully invested the market. Or is the tech sector to be an exception to a world shattering economic quake? Perhaps though, you might also suggest a solid allowance of shorts in one’s exposure, as an insurance policy so to speak!

  9. Carlos Alberto Cassis says:

    Well, all this points are really important to be accounted for economics and investments reazons.
    Good analysis.

  10. Donna Wasley says:

    I have no idea how to start investing in these tech sector stocks. How does one get started? Thanks

  11. jim hooper says:

    I am begining to have some concern about what I heave ben able to put together or am I just getting peranoid some of the speaches that oboma said about rounding up people in question and put them away indefenlety for things they might do means high tec is going to betray the people there will not be any more privacy the internet of everything in my mind means that mems is going to be a tool of distruction no man should have accseus to all the worlds doings so keep your eyes open ears to the ground and be preparid for anything for good or not so good. some times we need to look at the whole picture and see if it is the wright thing to do the internet of everything will know all. who will be in charge of that. the world will be watched. this means both you and I good luck and god bless

    • Harold says:

      Michael,
      You spoke a concert today, which was
      In my opinion, a very flashy piece of
      Art. It is a striking force to hear all of the things that I only dreamt of as a
      Youngster, as I watched the classic
      “Flash Gordon,” as he took off in his
      Homemade space ship, and do you remember how aerodynamic that was
      As it zoomed across the first Zenith ,
      Being held up with a very thin wire?
      You gotta love it when Trump is no.1
      And I’m just gonna kick back and wait for Jesse Ventura to run with him!
      My hats off to you today with much respect. Thanks!

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