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Outlook for Markets - Mar 2019

This is a COMPLIMENTARY post, and may be updated in-frequently here. To be in touch with the markets, please subscribe to our Monthly Updates (10 - 20 mins), or to the Portfolio Design Service (PDS).

First, the US Markets - World Drivers (S&P500)

Fundamentals / Valuations:

  1. S&P500 ~ 2800. Trading at trailing 12-month (TTM) PE Multiple of 18x annual earnings, having an effective Earnings Yield of ~ (1/18=) 5.5%. Compared to US 10Year Bond Yields ~ 2.5% (nearly half-of the market's Earning Yield). Bullish for stocks. 

Technicals / Charts:

  1. Likewise technicals are also indicating a potential recovery on the charts (after Dec 2018 volatility). Spot (2800) has recovered the important & bullish Moving Average ("green line"), and is also above the support band of 2600 - 2620.
  2. Sustained breakout above 2800 levels could take S&P500 to the next targets of 3200 - 3300 (+15%) in 1-1.5 years. On downside, we expect 2600 - 2620 to hold if it goes there. (More details in the Monthly Update, listed on the website)
  3. In the chart below for SPY ETF, you can see an example of the Moving Averages (MVAGs), which are also called 'Momentum Indicators'. They quickly help us in identifying the mood of the markets, and also the high & low points very quickly. Details of the these MVAGs, and how to locate these charts, can be found in the first paid video, Video 0 - Parts 7 & 8.


US Outlook: 

  1. Taking a positive view of the investment, S&P500 ETF could generate an upside of ~ 15% in 1-1.5 years, more so after a 1-year consolidation in 2018. 
  2. Exotic-ETF on S&P500 - Can generate an upside of +60-70% (downside depends on S&P500). See Blog#3 on Exotic-ETFs.

INDIA NIFTY (~ 11,450):

  1. Positive bias on the NIFTY - along-with S&P500 breakout. Next targets 12,500 - 13,000 (+10-13%).
  2. Following the FED Hike Pause (in Mar) - RBI may cut rates in next meetings (boosting the NIFTY, & partially discounted). 
  3. General Elections 2019 - Base case is that the current Gov't is re-elected (maybe with a coalition). If not, expect some 'temporary' volatility. Further, if NIFTY tanks on any US panic, add to positions around important support levels of 9,900 - 10,100 (More details in the Monthly Update, listed on the website).


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Investing Small - for Big Benefits !!!

Invest only Rs. 100,000 or $5,000, for some great long term benefits. Invest, & forget about it.

While asking people to learn about the Stock Markets, we get this very frequent reply that, "We don't have the Money", or, "We don't have the Time" etc. While the reality maybe, that you are invested in some alternate options, and/or are scared of the stock markets, for lack of knowledge. 

But still, this blog is intended to help such people, who genuinely don't have the above 2 things, and hopefully we can show you, how with a small & ONE TIME Investment, you can get great long term benefits, with just Buy-n-Forget investing. 

It can be accomplished with 2 things: 

  1. In the long runs, the stock markets can be expected to just go up & up.
  2. Investing in the some of the smart products, that can multiply exponentially. 

Details: 

Part 1) People like Mr. Warren Buffett will say that Dow can hit 1 Million in a 100 years (by 2117). That would imply a jump of ~ 38x from today's levels of 26,400 (as of Apr 12, 2019). 

Historically, if you check, in the past 101 years, the Dow has in-fact multiplied a huge 352x, from only 75 to 26,400 today. So then, the prediction of Dow 1 Million in the next 100 years (38x) doesn't sound so egregious.

And then further, if you look at some of the cool innovations coming out, like Space Travel (& re-usable rockets), Plans of colonizing MARS, Vertical Take-off & Landing (VTOL) vehicles, Hyperloop Technologies, & Supersonic Commercial Planes (traveling at Mach 5), then more so, the prediction of Dow 1 Million in a 100 years, seems even more plausible. Please refer to the article below.

https://www.cnbc.com/2017/09/21/dow-1-million-warren-buffett-says-it-can-happen.html


Part 2) And then, in the process of Dow multiplying 38x in a 100 years, it will first have to multiply 3x, 4x, or 10x, say in the next 15, 20, or 30 years. And there, there are some very smart, EXOTIC-ETFs available in the (US) markets today, that will simply multiply x^3 (as designed). For example, by when the Dow multiplies 3x or 4x, these Exotic-ETFs will multiply (3^3=) 27x, or (4^3=) 64x. On the downside (risk), your maximum loss is -1x (or -100%) & nothing more than that.

So then, if you just invest Rs. 1,00,000 or $5,000 in these, & forget about it, that could be a great proposition 15 - 20 years down the line. Worst case you'll lose Rs. 100,000 or $5,000, best case you'll make Rs. 27 - 64 Lakhs or $135,000 - $320,000. And hopefully, you can use this money yourself during retirement, or else, set it aside for your children. Further here, do remember that here we are not talking about any single stock, which can easily crash -50% to -70%, but talking about big ETFs, which could be an average of the top 50 to 100 companies, and so the entire group failing as a whole might not be that easy. 


Having a better understanding of the markets & these products, can further enable you to time them better, and/or add more risk capital into these. We will help you along the way, for relative high & low points, if you need so.

Finally, these smart products started in the US markets only 8 - 9 years ago, during the 2009 - 10 market bottom, and have become incrementally very popular (having significant daily traded volumes). These are discussed in detail, in the paid Content Video #4 (US Opportunities), or Blog #3 ("Exotic-ETFs"), and is some of the exclusive knowledge that you will find only on L2M website as of today. 

Also Luckily, the INDIAN residents & the GLOBAL residents, can invest in the US markets easily, to benefit from these products. And for that, please refer to our "India-2-US" tab for details. Further below, please find an illustration of a risk-reduction strategy.

https://www.listeningtothemarkets.com/india2us-investing.aspx