Today, I’m going to talk to you about an idea you’re not going to want to believe. An idea so radical, you’re going to think, “This guy is crazy… Get him off the stage.”
On October 24, 2014, I made that statement to a sold-out audience at our annual PBRG Infinity conference. It’s an exclusive event reserved for our best subscribers.
I was new to the PBRG team at the time. So everyone was skeptical of what I had to say.
I took the stage feeling like Galileo during the Inquisition.
Galileo challenged Church orthodoxy that the Earth was at the center of the solar system. Instead, he said the Earth moved around the sun.
It was an idea so radical, people couldn’t wrap their heads around it.
The Church eventually convicted him of heresy. That was why my first presentation slide showed an image of Galileo tied to a stake, about to be burned alive.
Back in 2014, I shared an idea no one believed. People thought I was nuts. Even worse, some people thought I was delusional.
Even today, I doubt you’ll want to hear what I have to say… let alone believe it. But it’s a message I’ll be spreading for the next 10 years.
All I ask of you is what I asked the Infinity audience back in 2014: “Please keep an open mind.”
The Golden Ratio
In October 2014, the current bull market was just over five years old. The S&P 500 was above 2,000.
But like now, many investors back then didn’t believe it could continue roaring higher.
Yet, I stood there and told the audience that a “golden ratio” would kick off a massive bull market for the ages. And it would continue marching higher for years to come.
Since then, of course, we’ve seen the market rise 83.4%, if you include dividends.
At the time, I called this phenomenon the Golden Ratio.
I won’t go into all the details of how the ratio works… But it occurs when the ratio between middle-aged people and young people shifts.
When the number of people in the 35–49 age bracket grows larger than that of the 20–34 age group, it triggers a secular or long-term bull market.
It makes sense when you think about it. Most people in the 35–49 age range are earning a lot more money at their jobs, and they’re spending more to support their families. That’s good for the economy as a whole.
When the Golden Ratio is in effect, GDP grows faster, corporations make more profits, and the stock market rises faster.
And according to Census Bureau projections, the median age of Americans will rise significantly between 2020 and 2050 as the number of older people surpass the number of younger people.
Now, in late 2014, the stock market had already nearly tripled from its bottom during the Great Recession. So I imagine some people thought it was weird to hear about a bull market just getting started… five years into one.
Since then, the market has reached record highs. But I’m here to tell you – you’ve seen nothing yet…
Another Decade Ahead
My research shows we’re still in the early stages of this bull market.
I won’t go into all the details here. But what I will share with you is this: My research suggests you still have about 10 years left to make money from equities.
Sure, the market may drop again. Nothing goes up in a straight line forever.
For instance, in late 2015, the market got hammered 19% in a matter of a couple months. Here I was, banging the drum on a huge macro bull call… and the market dropped like a rock.
My call looked like a bad one, even though I had warned my audience we would see multiple 20% – and sometimes 30% – drops along the way up.
What I told my audience then – and what I’ll tell you now – was to use any of these pullbacks to buy more stocks.
Just like 2014, I’m seeing negative sentiment by individual investors on stocks. Sure, they’re expensive… But when the Golden Ratio is active, valuations stay high for years.
The beauty of being in a Golden Ratio bull market like we’re in now is, even if you have lousy timing and buy the market at the top, within a year, you’ll be back in the black.
With a historical backstop like that, you must be in stocks. Don’t fret over getting the perfect price. Just buy quality blue chips or broad-based exchange-traded funds (ETFs), and you’ll crush the performance of most fund managers trying to time the market.
If you’re uncomfortable going all in now… then simply invest a little each week or each month. The point is to get your money out of cash and working for you in stocks.
The easiest thing to do right now is to be bearish on the stock market. But anytime something is emotionally easy for you… you must question it.
Emotions are a terrible guide when it comes to investing. So if you’re comfortable being bearish, I want you to question the assumptions you’re making.
I hope I get a better reception from you today than our poor friend Galileo. And be sure to let me know if you think I’m crazy, delusional, or if you agree with me.
Let the Game Come to You!
Editor, Palm Beach Daily