Another day, another record.
No, we’re not talking about the US S&P 500 index. Although, it did scratch out a 0.1 point gain to close above 2,000 points for the second day running.
This record is much bigger than that.
We’re talking about the biggest stock market record of them all — the total global value of stocks.
According to Bloomberg, the value of global equities now stands at US$66 trillion.
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That’s US$3 trillion higher than the 2007 high, and US$41 trillion higher than the March 2009 low.
Stocks everywhere are rising — the US, Europe, and emerging markets. But from all those options, where is the single best place for an investor to put their money today?
Here’s our advice…
Before we tell you where to put your money today, we need to make one thing clear.
The best place to put your money today may not be the best place to put your money next month or next year.
By then there could be better opportunities.
That’s why it’s important to have a flexible investing approach. You need to adapt your investments and investing approach to suit the market.
If you don’t, from an investment perspective you’ll find yourself in a whole lot of hot water.
Advice that some don’t want to hear
We recently received an irate letter. It was in response to one of last week’s Money Morning articles. That’s where we suggested investors consider buying into Commonwealth Bank of Australia [ASX:CBA].
Why was the reader so angry about some fairly innocuous investment advice?
Well, he didn’t like it that we suggested buying a bank stock after we had previously been on record to say that banking stocks sucked.
But that’s the thing with investing. It doesn’t matter what opinion you’ve had of a stock or sector or market in the past. What’s more important is the view you have of the market now.
That’s how we play the markets.
We try not to get stuck in a rut, or become tied to a particular theme just because we don’t want to admit we’re wrong.
If you want someone who’s always bullish on stocks regardless of the market, you can find analysts who’ll give you that view elsewhere — just pick up a mainstream newspaper.
If you want someone who’s always bearish on stocks, there are plenty of those folks floating around on the internet.
And if you want someone who says it’s always a good time to buy gold, you’ll find plenty of people with that view too.
But that’s not how we work. We know that sometimes the market is better suited to one type of stock or sector over another.
If that’s the kind of advice you’re after, stick around, we’ll provide more of it in the weeks, months, and years ahead. If you prefer your financial advice to be rigid, with no room to change according to the market, then this eletter probably isn’t for you.
But back to our best advice right now…
Celebrating another winning trade
Now, you may think this is tainted advice given that we used to edit Australia’s biggest small-cap advisory newsletter.
But the fact is small-cap stocks remain the best bet in terms of risk versus reward. You may know that many subscribers to Australian Small-Cap Investigator are celebrating a recent big stock win.
A small-cap stock we tipped two years ago has gone on a tear. It’s now up 765%. Most of the gains have come in the past three months.
But that’s not the end of it. A tiny oil stock that we tipped in December 2011 gained 19% yesterday, taking the total gain since the tip to 86.7%.
Not only that, but small-cap analyst Tim Dohrmann’s latest nanotechnology stock tip (and by latest we mean just two weeks ago) is already up 120%. And that could be just for starters.
If the company achieves what Tim believes it could achieve much bigger gains are in order.
Of course, nothing is certain. As we say, the market can change. If it changes for the worse, then we’ll admit that small-caps aren’t a great place to be when the market is falling.
But right now we don’t see evidence that the market will fall in the short term. Take this report from Bloomberg overnight:
‘European stocks advanced, pushing 10-year yields from Germany, Italy, Spain and France to record lows, as economic data fueled stimulus bets.’
We don’t want to harp on too much about interest rates. Mainly because it’s boring. But if more stimulus is on the way, that’s sure to mean good news for stocks.
And when stocks are powering higher, typically it’s the small-cap sector that powers ahead first and the fastest. If you’re game to play this high-risk market today, make sure you allocate part of your portfolio to the stocks that stand the best chance of gaining the most.
Cheers,
Kris+
The post Make Sure You’re in Stocks as Another Record Falls… appeared first on Stock Market News, Finance and Investments | Money Morning Australia.
