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Reasons to Be Bullish On Stocks

Stock-Markets / Stock Markets 2014 Aug 30, 2014 - 05:08 PM GMT

By: Investment_U


Alexander Green writes: Just a few weeks ago, the bears started thinking things were finally going their way.

But it didn't work out that way... again.

This week, the S&P 500 closed above 2,000 for the first time. The Nasdaq hit its highest level in 14 1/2 years.

And so the bears have gone back to grumbling about how stocks are trading on nothing more than hot air, an accommodative Fed and lots of hopes and prayers.

Nothing could be further from the truth. There has been a ton of good news lately. It's just that you have to dig through all the noise to get to it.

Here are eight solid reasons to be bullish now:

•After an abysmal first quarter, second quarter U.S. economic growth was just revised upward to an unexpectedly strong 4.2%.

•Job growth is improving. According to the Bureau of Labor Statistics, compared to last year, unemployment is down in 49 states, Washington D.C., and Puerto Rico.

•Remember the complaint that the recovery was only in low-wage jobs? Not anymore. According to the National Employment Law project for The Washington Post, hiring has picked up steam in construction, manufacturing and professional services in recent months, sectors with a median wage of at least $20 an hour. Jobs that pay higher wages are coming back.

•Natural-gas prices, buoyed by forecasts for a hot summer, have slid more than 20% since June due to unseasonably cool weather.

•Globalization is leading to greater prosperity. The McKinsey Global Institute recently estimated that the value of all cross-border trade, money and services is now over $25.9 trillion, an all-time record. Today, 35% of all goods cross borders, up from 20% in 1990.

•The digital age is still ushering in all sorts of new innovations. Uber, for instance, has led to amazing price reductions and efficiency improvements in the taxi industry. And technology is still bringing disruptive improvements: next-generation smartphones, disease-killing medicines (like Gilead's Sovaldi) and new oil and gas drilling techniques.

•Remember all the nattering about insolvent Chinese banks - and how their imminent failure would spark a financial panic? It isn't happening. The Wall Street Journal reported this week that Chinese banks are in the process of raising $300 billion in debt and equity to beef up reserves.

•Public companies have reported second quarter sales and earnings that are ahead of expectations. According to Forbes, 64% of U.S. firms are beating revenue expectations, a much higher rate than normal. That stronger sales growth is leading to better-than-expected profit growth: up 8.4%. That's the second-highest earnings growth rate since the fourth quarter of 2011.

And while we're on the subject of profits, here are three more reasons to be bullish: U.S. companies are reporting record corporate profits. They are enjoying all-time record corporate profit margins. And corporate profits as a percentage of GDP are an all-time record too.

So if you bump into a bear who tells you there's no reason for the stock market to be hitting new highs, tell him to go back into hibernation.

As my friend Dr. Mark Skousen likes to say: "Bears make headlines. Bulls make money."

Good investing,



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