Kevin Matras Blog | Why Stocks Are Poised To Soar | TalkMarkets
Vice President of Zacks Investment Research
Kevin Matras is a Vice President at Zacks Investment Research, where he is the fundamental stock screening and technical chart patterns expert. He heads the Research Wizard Division at Zacks, which focuses on stock screening and backtesting. Matras also runs the Chart Patterns Trader service, ...more

Why Stocks Are Poised To Soar

Date: Friday, December 18, 2020 12:18 PM EDT

Image: Bigstock

Since the pandemic lows in late March, the Dow has surged by more than 66%, the S&P by 69%, the Nasdaq by 92%, and the small-cap Russell 2000 by more than 106%!

It’s been a record-setting move.

But the best part is that it looks like there’s a lot more upside to go.

That was echoed by Goldman Sachs when they forecast the market to hit 4,300 by the end of next year (+16.3% from here); and 4,600 by the end of 2022 (that’s another +7.0% on top of that). All in all, that represents a 24.4% increase from where we are today.

And if you get into the right stocks and industries, your gains could be far greater than that.

These are historic times for both the economy and the market.

And if you play it right, you could transform your portfolio.

History In The Making 

Q3 GDP just showed a 33.1% growth rate, which was the largest in history.

Full year GDP for 2021 is expected to grow at the fastest pace in 38 years.

We’ve seen record job growth over the last 6 months.

Home sales just hit a 15-year high.

Retail sales have hit an all-time high.

And interest rates, which are near zero, are at all-time lows, and are expected to stay that way for the next 3 years or longer.

With all of these bullish economic records being made, it should come as no surprise that stocks have been setting records as well with all of the major indexes having just recently broken out to new all-time highs of their own.


Vaccines Are Here and Stocks Should Skyrocket

As you know, the FDA recently approved Pfizer/BioNTech’s vaccine, with vaccinations having begun just this past Monday.  

And on Thursday afternoon, the FDA advisory panel recommended a second vaccine (this one from Moderna), for emergency use authorization.

Two vaccines means double the coverage and distribution.

And these vaccines mark the beginning of the end of the pandemic. (And there’s more vaccines on the way.)

Let’s also not forget the new therapeutics to treat the virus if you get infected.

All of these breakthroughs are being hailed as the catalysts that will finally let the world get back to normal.

That means, everybody going back to work, going out to eat, traveling, going on vacation, spending money, and just living your life.

Even though social distancing restrictions are still in place, the amount of pent-up economic demand that was unleashed when we came off total lockdown was historic.

But we all know that a large portion of our economy was left behind.

When restaurants, and airlines, and hotels start opening back up to full capacity, not to mention concerts and sporting events, tourism and travel destinations, and every business big and small that benefits from servicing these industries, the economy is expected to grow at unprecedented levels.

And that should send stocks skyrocketing.

But remember, the market is forward-looking. It won’t wait until it happens. It will start moving in anticipation of that.

And that means to the time to act in now.


Stimulus Is Coming 

The market is also eyeing developments on the long-awaited stimulus package.

While we still don’t have an agreement yet, it’s looking like we could get one over the weekend.

As long as it looks like it’s really coming this time, stocks could soar even more. Because once that money gets into the hands of the people and businesses that need it, it will be spent immediately, helping to support the economy and jobs.

And that, of course, is good for the market as well.

What we are seeing right now is history in the making.

And that means the potential for historic gains ahead.

So don’t squander this opportunity with preventable mistakes.

If you ever wished you would’ve traded the market differently in the past, now is your chance.

And making money in the market is easier than you think. You only need to do a few things right.


Do What Works 

So how do you fully take advantage of this historic opportunity?

By implementing tried and true methods that work to find the best stocks.

For example, did you know that stocks with a Zacks Rank #1 Strong Buy have beaten the market in 26 of the last 32 years with an average annual return of 24.7% per year? That's nearly 2.5 x the S&P. But when doing this year after year, that can add up to a lot more than just two and a half times the returns.

And did you also know that stocks in the top 50% of Zacks Ranked Industries outperform those in the bottom 50% by a factor of 2 to 1? There's a reason why they say that half of a stock's price movement can be attributed to the group that it's in. Because it's true!

Those two things will give any investor a huge probability of success.

But you’re not there yet, as those two items alone will only narrow down a field of 10,000 stocks to the top 100 or so. Way too many to trade at once.

So the next step is to get that list down to the best 5-10 stocks that you can buy. 


Proven Profitable Strategies 

Picking the best stocks is a lot easier when there’s a proven, profitable method to do it.

And by concentrating on what has proven to work in the past, you’ll have a better idea as to what your probability of success will be now and in the future.

For example, if your strategy did nothing but lose money year after year, trade after trade, over and over again, there’s no way you'd want to use that strategy to pick stocks with. Why? Because it's proven to pick bad stocks.

On the other hand, if your strategy did great year after year, trade after trade, over and over again, you'd of course want to use that strategy to pick stocks with. Why? Because it's proven to pick winning stocks.

Of course, this won't preclude you from ever having another losing trade. But if your stock picking strategy picks winners more often than losers, you can feel confident that your next trade will have a high probability of success.

Disclaimer: This and other personal blog posts are not reviewed, monitored or endorsed by TalkMarkets. The content is solely the view of the author and TalkMarkets is not responsible for the content of this post in any way. Our curated content which is handpicked by our editorial team may be viewed here.

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