Is Now The Time To Get Aggressive?
Zacks Investment Research | Nov 01, 2019 04:10AM ET
When investors ask me if now is the time to get aggressive, I always say the same thing. It depends. It depends on how soon you will need your invested dollars. It depends on how comfortable you are with taking on extra risk.
It depends on a lot of factors. But let’s say that you have a portion of your portfolio that is already dedicated to growth or higher risk assets…when is the right time to step on the gas and become aggressive?
The short answer is right now, during what’s turning out to be the longest and most profitable bull market in history. And I’m expecting a lot more upside to go.
As the editor of Home Run Investor, I am constantly on the search for aggressive growth stocks. We tend to focus on small caps that show big potential. Let’s take a closer look at why now is the time to be a little more aggressive with your stock selection.
Leading Indicators
Understanding the leading indicators can really put your mind at ease should you shift more of your assets to a more aggressive stance. Paying close attention to interest rates is by far the biggest single factor that controls the movement of all money. As rates move lower, stocks tend to move higher. That was evident this past Wednesday with the S&P making another new all-time high after the Fed lowered interest rates for the third time this year.
Another important indicator that I track is job growth. The unemployment rate was 5% back in October of 2016 and has dropped down to 3.6% all while adding millions of jobs. In fact, unemployment is near record lows – 50-year lows to be exact. This simply puts more cash in the hands of consumers.
Lower rates and more people earning more dollars means more spending. Throw on top of that consumer confidence near record highs, strong GDP and household income at its highest level in 20 years and you have a formula that will lead to higher corporate sales and earnings.
One problem with tracking the leading indicators isn’t nearly just being able to separate the wheat from the chaff, it's knowing which indicators really matter to the stocks that have the biggest growth potential.
More . . .
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