“Should I sell?” asked my friend Megan.
“Did you see what happened on Friday?” asked my friend Justin.
After two months of going up, the stock market is going down.
My friends want to know, is this “the end”?
“The end” to them means the stock market is going to crash.
As happened in the stock market crash of 2008.
Everyone now wishes they had sold in October 2007, when the markets peaked.
However, an even greater number now wish they had done something else.
Because after the markets crashed, they bottomed out in March 2009.
Then they started to climb… and never stopped.
This stock market behavior was so unexpected that it put most investors out of the market. Every time the market hits new highs, these people get “fear of missing out” anxiety.
This includes many wealthy and even sophisticated investors.
In fact, whenever the stock market goes through a period of decline, most investors expect it to crash because they have missed it.
Is this the moment to vindicate these investors who have been lost and left out?
A recipe for a huge bull market
No. There is little chance of a crash at this time.
The reason is because the things that support the market aim higher.
Those things are future sales and earnings.
According to FactSet, earnings estimates hit their highest level of positive revisions in 16 years this quarter.
Broken down by sector, 10 of the 11 sectors posted an increase in their bottom-up earnings estimates in January.
That means analysts covering almost every sector of the market say that business conditions are incredibly strong right now for companies.
When you look at interest rates, they are still low. When you consider how strong business conditions are, inflation is still subdued. Globally, all of the world’s major economies are growing.
Trading conditions around the world have not been this good in decades.
Solid earnings, low interest rates, subdued inflation, and global growth are a recipe for a huge bull market.
Is this the next stock market crash?
This is what I think is going to happen.
If you’re a regular reader of my articles, you know that I think the Dow Jones Industrial Average will hit 50,000 and then continue to go higher.
I have been saying this since early 2016.
Now, the stock market may go a little lower. However, it will go back up and then continue to go up.
In short, a stock market crash is not coming.
Yes, there is no doubt, seeing their shares fall is painful.
However, here’s what I know from 25 years of investing experience: You’ll never make a lot of money, hundreds of percent in profit and even thousands of percent in profit, unless you push through times like this.
It’s time to buy
Now, if you have cash and want to avoid FOMO when the market keeps going up…you should go ahead and start buying.
Focus on stocks related to the big megatrends of our time: Internet of Things, precision medicine, new energy, fintech and the rise of millennials.
These are the stocks that I focus on because these stocks have the most potential for growth. And I think they will give you the biggest gains as this bull market in stocks continues.