Investing guru Byron Wien urges savvy investors to ignore any doom-and-gloom predictions because he sees only clear sailing for the next year or so.
"My belief is that we're not going to see a bear market or a recession until at least 2019," the vice chairman of Blackstone's private-wealth-solutions group told Business Insider.
“In my opinion, we have a couple more years before the next bear market sets in, and earnings are coming through at double the rate they were projected to at the beginning of the year," he said.
"So this is an earnings-driven market, and the stocks with the most impressive earnings performance are the ones that are doing well,” he said.
However, he did sound one note of caution. The Federal Reserve has ceased its asset purchases and, starting next month, will start slowly shrinking its balance sheet. He recently warned his clients that move will push the again bull stock-market rally into "uncharted territory."
“The combination of Fed policy, the yield curve, and leading indicators are three important things to watch out for,” he said.
He also is optimistic that the nation’s central bank can learn from its lessons of the past and avoid future economic tragedies.
“At the end of the last century, the Fed was worried about inflation picking up. They tightened even though inflation wasn't picking up. That contributed to the bear market we had in 2000/2001,” Wien explained.
“I think they've learned a lesson from that example. The market was vulnerable on its own because of valuations. And the combination of excessive valuation and the Fed tightening really created the bear market that we experienced in 2000. I don't expect them to do that again. They know that a lot of the good times we're enjoying are in their hands, and I don't think they want to do anything to destroy that,” he said.
To be sure, it seems most days that the stock market soars to yet another record high, ignorning most news headlines.
Professional investors frequently say they see little special significance in the S&P 500 and Dow Jones Industrial Average hitting round-numbers in the hundreds and thousands. But such milestones do affect the sentiment of investors on Main Street, said Phil Blancato, head of Ladenburg Thalmann Asset Management in New York.
“People are concerned about missing out as the market continues to rally. They think maybe they need to finally jump in,” Blancato told Reuters. “The behavior of the retail investor is more important than ever.”
Wall Street has largely shrugged off recent reports showing an unexpected drop in U.S. retail sales last month and the first drop in industrial output since January, both in part due to the impact of Hurricane Harvey.
“Investors are keeping an eye on the retail sales data, thinking it may be transitory, and are focusing on growth areas such as technology, which is mostly immune to policy decisions in D.C. and has avoided all the global noise,” said Michael Antonelli, managing director of institutional sales trading at Robert W. Baird in Milwaukee.
U.S. stocks have surged this year, despite turmoil in the White House, doubts about President Donald Trump’s ability to push through his pro-business reforms, uncertainty over the timing of interest rate hikes, and lately, tensions over Pyongyang’s missile tests.
(Newsmax wires services contributed to this report).
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