Hey, Ross here:
Markets are looking much better after last week. Hopefully that continues into this week.
But don’t count your chickens before they’re hatched.
Unlike tariffs – which can be altered unilaterally by President Trump – the Iran war has many more players in the game.
But as always, while I do look at the broad indexes as a gauge…
They’re not really the focus of my trading.
Today’s chart helps explain why.
Chart of the Day
The legendary investor Howard Marks found that when the forward P/E ratio of the S&P 500 was at 23X…
The historical data shows that the 10-year return has fallen between-2 % and +2% each and every time.
That’s not good.
Now, right now, with the selloff the forward P/E ratio of the S&P 500 is sitting currently closer to 21.
But if you look at the chart above, that still implies a 10-year return of under 5% a year.
That’s better than 2%…
But it’s not good enough for me.
And if you’re reading this, I’m guessing it’s not good enough for you either.
Like I said, this is why I’m a stock picker.
And that leads me to an important insight for the second quarter.
Insight of the Day
Don’t expect the winners for the second quarter to be the same as the winners for the first quarter.
Everyone knows who the winners of the first quarter were – energy stocks.
And with the war still going on and oil prices still high…
It may seem “obvious” that energy stocks will be the winners this quarter too.
I would strongly caution against jumping to this “obvious” conclusion.
Yes, energy stocks could very well end up being the winners of the second quarter too.
But, you’d be surprised.
The wrong move is to try to “predict” what the second quarter’s winners will be based on their first-quarter performance.
The right move is to instead follow where the biggest buyers are going…
Because they are the ones that will determine who the winners actually are (remember, the only thing that makes stock prices go up is BUYERS).
I’ll show you exactly how to do that tomorrow, so keep an eye out in your inbox.
In the meantime, if you’re worried about the likely low returns of the S&P 500 moving forward?
Well, there’s a reason I’ve sold ALL of my S&P 500 holdings in my long-term retirement account…
And put them in this one ETF instead.
Customer Story of the Day
“I guess I have been a newbie in the stock market for years. Buying a stock and just letting it ride.
Yes, I made a little money, but after finding Ross Givens and his educational methods a few months ago, I have moved the stocks in my portfolio to ones with more potential than ever before.
I am so impressed I purchased a lifetime membership and learned a new selection method daily.”
Ross Givens
Editor, Stock Surge Daily
