Happy Friday.
Shares are on the up, the S&P/ASX 200 Index heading towards 5,600. The Aussie dollar is flat. Gold has lost its shine, and allure.
Dividends are on the up. Interest rates are staying low. Individual stocks are hitting new highs.
Speaking on ABC's The Business, Roger Montgomery this week said…
"I'll stick my neck out… we are on the cusp of a boom in the stock market."
Who am I to disagree?
Happy Friday indeed.
U.S. markets rose again overnight, sending the S&P 500 Index to a two-week high.
Tensions eased in the Ukraine. Weak employment data gave stock market bulls even more reason to believe interest rates will stay at these ultra-low levels for an extended period of time. Shares in Wal-Mart Stores gained even after the retailing giant lowered its profit forecast.
In this mood, the market takes good news as good news, and bad news as good news.
Happy Friday.
Yet investors remain jittery.
It was only last week when our S&P/ASX 200 Index fell for a six painful days in a row.
The bears pegged it as the start of the long overdue stock market correction.
The bulls — and yes, we're talking about ourselves — urged calm. We urged a focus on the long-term. We urged you to invest regularly in the stock market, through the ups and inevitable downs.
We urged you to buy strong, growing, quality companies, trading at fair prices.
We urged you to buy dividend paying stocks, reminding you of their relative attraction versus the pathetic rates of interest on offer with term deposits.
Our message stays consistent, in bull markets and bear markets. The time to sell is never. The time to buy is always.
The stock market has a wonderful long-term record of creating wealth, compounding at roughly 10% per annum.
Miss the market's best days, because you sold out in a panic, or you sold out with the intention of buying back in after the correction or crash, and you'll have seriously dented your returns…not to mention your mental well-being.
The share market is not for everyone.
If volatility scares you, leave your money in the bank.
If you are not prepared to invest for the long-term, allowing the share market to weave its compounding returns magic, leave your money in the bank.
If you are looking for a short-term punt, put your money on Flemington Race 6 number 5.
If you are looking for a high risk bet, stick your money on number 32 on the roulette wheel.
Good luck.
Meanwhile, the Jackson portfolio is on fire.
One of my small-cap stocks, already one of my larger holdings, jumped 9% yesterday. It's up another 4% again this morning. One broker suggested the stock could go 56% higher still.
Happy days.
The early, smart investor catches the worm.
Speaking of small-caps, Boyd Peters of Contango MicroCap Limited (ASX: CTN) writes…
"For the first time since 2011 the small and microcap sector is poised outperform large cap indices."
As I've written previously, I have an interest in Contango MicroCap, attracted by its combination of a) trading below net asset value, b) trading on a forward dividend yield of 6%, and c) its exposure to the small-cap sector.
Time will tell. But I'm off to a good start, my Contango shares up 10% in double-quick time.
Speaking of time, shares in Warren Buffett's Berkshire Hathaway have closed above $200,000 for the very first time.
That's not a typo — each Berkshire Hathaway A share trades for more than $200,000. The B shares trade at a mere $135 each, enabling 'normal' investors like you and me to invest in Buffett's holding company.
I first bought my Berkshire Hathaway B shares on 15th February 2000. I know the exact date because I have the original rade confirmation framed, hanging on the wall of my office.
Clearly last week's temporary market wobbles didn't see me sell out of my stocks. On the contrary, I've been buying, again.
To my mind, buying when stocks are lower is a better strategy than buying when they are higher.
Simple, Foolish Investing.
I'll leave the final word to Steve Johnson of Forager Funds.
Talking exclusively to Livewire, he said the recent pullback in the market was healthy and many stocks are now at more sensible levels compared to earlier in the year.
Happy days for stock pickers.
Where Johnson's comments get really interesting is around interest rates…
"I'm very confident… that interest rates are going lower over the next four or five years in Australia, and I wouldn't be surprised to see them much lower than they are today."
No wonder Roger Montgomery thinks we're on the cusp of a boom in the stock market.
