 | | Alexander Green | There's one equity class that is likely to seriously outperform for the foreseeable future. It offers the best opportunities in the market right now, in my view. But before we get to that, a bit of context... Stocks have faced a lot of headwinds recently. [The #1 Stock Under $5 ] In response to the highest inflation in 40 years, the Federal Reserve took rates to a 16-year high. That stoked fears that the central bank would push the U.S. economy into a recession. In the third quarter, bond yields rose to their highest level in 16 years. Oil prices have been moving back toward $100 a barrel, thanks to rising global demand and supply cuts by Russia and Saudi Arabia. And yet consumers continue to spend. The economy remains at full employment. Third quarter GDP growth was at least 3.5%. (That's a long way from a recession.) And the fourth quarter should be stronger still. The October inflation reading was the lowest in two years. That significantly lowered the likelihood of further interest rate increases by the Fed. And ignited a rally in stocks. Despite the steepest rate hikes from the Federal Reserve in four decades, the economy has remained much stronger than expected. Survey Says... Recently, the Fed released the results of its Survey of Consumer Finances. Here are just a few highlights. (Please note that these figures were adjusted for inflation, so these are real gains.) - Average family income rose 15% from 2019 to 2022. This increase was seen across the income spectrum, from low-income families to wealthy households. It also spanned racial and ethnic groups. The median income rose about 3%.
- U.S. households' net worth rose 37% over the three-year period. That's the biggest increase in net worth since the Fed started surveying households in 1992. And it was "universal" across different types of families, income groups and races, according to the Fed.
- Homeownership increased over the period. Two-thirds of American families are homeowners. The median net home value - home value minus debt owed on the home - rose from about $139,000 to $201,000.
- There was broad participation in the good news mentioned above. For example, the average net worth for Black families rose 28% to $211,500 - the biggest gain of any racial group. Hispanic families saw their average net worth rise 19% to almost $228,000.
In short, the U.S. economy remains strong. That's good for corporate earnings... the market... and certain stocks... Right now, it's key that investors build up a portfolio of high-quality microcaps. Microcaps are the most volatile class of stocks. But they are also the most profitable in a rising market. As you can see in the chart below, microcaps outperform everything else over the long haul. 
View larger image It isn't very close: $1,000 invested in large caps a century ago is worth $12.3 million today. The same amount invested in small caps is worth $38.5 million. And $1,000 invested in a diversified portfolio of microcaps is worth $67.8 million. That's $55 million in outperformance. Once investors start to prioritize corporate profits rather than what the Federal Reserve will do next, I expect stocks to rally. When they do, the rally will happen - as it always does - without advance notice. And microcaps are likely to lead the charge. Build Your Fed-Proof Portfolio So if you aren't seeing the returns you want thanks to the Fed's antics... I'm hosting a special training course specifically designed to help you. In short, through new and never-before-seen research, I've found a way to dramatically increase your returns in the coming years. During this special training course, How to Build the Perfect Fed-Proof Portfolio, I'll teach you how to create a new portfolio using just four simple metrics. It's free, but you need to RSVP to secure your spot today. Register here now. Good investing, Alex Want more content like this? | | | | | Alexander Green Alexander Green is the Chief Investment Strategist of The Oxford Club and a primary contributor to Liberty Through Wealth. He has more than three decades of experience as an investment analyst, portfolio manager and financial writer. He directs a monthly financial newsletter, The Oxford Communiqué, along with three specialized trading services: The Insider Alert, The Momentum Alert and Oxford Microcap Trader. Alex is also the bestselling author of four books: The Gone Fishin' Portfolio, The Secret of Shelter Island, Beyond Wealth and An Embarrassment of Riches. | | | | 
Post a Comment
Post a Comment