4 Reasons Why The Juice Thinks Stocks Will Keep Going Up

It’s a pretty crazy world we live in. 

At the same time as we justifiably lament so many big problems — the housing crisis, inflation that doesn’t feel like it’s cooling on the ground, people struggling to make ends meet, divisive politics — we’re about as bullish as ever on stocks. 

Typical American story, right? The haves and have nots. 

The funny thing about this though — in a peculiar sense — is that if you can muster just a few bucks a month, you can be in the stock market. If you can resist the urge to touch your — hopefully — growing nest egg, you’re building wealth. Investing has never been so accessible to such large numbers of Americans than it is today. 

Of course, there are barriers — real and psychological — that keep people with relatively lower incomes (this includes the middle class) from investing. But that’s a story for another day that The Juice will actually write in September. 

As for now, the four reasons why we think stocks will continue to crush it. 

We’re Seeing Solid Market Breadth

For a while it has felt like it was all about the Magnificent 7 stocks. And, to a meaningful extent, it has been. While potentially lucrative for investors, this type of dynamic can be dangerous, particularly because it can discourage diversification. 

Why am I going to waste my time and divert resources to snoozers when all of my cash could be working in the biggest advancers? 

Fair question, but also a somewhat shortsighted one. 

As The Juice has been saying for a while, expect things to even out with Fed rate cuts on the horizon. And, as we have been pointing out lately, this move into dividend stocks, consumer defensive stocks and such is happening.

From a Yahoo! Finance article the other day:

The S&P 500 equal-weighted index, which is less influenced than the cap-weighted S&P by moves in Big Tech, just hit a new record high. Sectors including Utilities (XLU), Consumer Staples (XLP), and Health Care (XLV) are now sitting at 52-week highs, while Financials (XLF) are currently at a record level.

“This has been a really healthy rally in our view,” Abby Yoder, JPMorgan US equity strategist, told Yahoo Finance. “It has been this broadening out. Breadth is the best that it’s been since the summer of last year. In terms of the participation across different sectors, different names.”

Breadth being a larger number of stocks in an index going up as opposed to a select and strong few. Just look at the YTD performance of today’s Trackstar top five. 

That’s not too bad in comparison to an 18% YTD gain for the S&P 500 at large and 32% for the S&P 500 Information Technology index. 

Market breadth is good for sustained rallies and great for encouraging portfolio diversification. 

As Inflation Decreases, Will We See More Discretionary Spending?

Just seeing the headlines can change the vibe and, subsequently, behavior. But there’s also the desire — the pent up demand, if you will — to go out and do stuff. 

To feel good. 

While prices remain high (one look at housing or one visit to the grocery store is all it takes to realize this), lower prices — real or perceived — should give discretionary spending a kick. This will further improve things for the aforementioned consumer defensive names as well as companies such as Home Depot (HD) and Lowes (LOW). As people start listing their homes for sale and buyers step off of the sidelines, there will be demand for home improvement, something The Juice will cover next week. 

We’re In The Early Innings Of AI

The Juice thinks we’re in the early innings of artificial intelligence. Depending on whose numbers you listen to, the global AI market is expected to expand to between $827 billion and $1.8 trillion by 2030 from its current figure of nearly $200 billion. For goodness sake, Nvidia (NVDA) alone grew its data center business by 262% over the last year. 

Apple (AAPL) has been unable to produce the next big thing in tech ever since Steve Jobs left us. 

Doesn’t matter, because AI is the next big all-compassing thing that’s here right now. It will carry the tech sector on its back if necessary. And that goes beyond the Magnificent 7 into other attractive stocks and ETFs. 

Ad Businesses And Tech Ecosystems Have Never Been Better 

The Juice loves Uber (UBER) and DoorDash (DASH). We love them because they’re solid examples of tech companies able to create broad consumer- and business-facing ecosystems that integrate lucrative advertising and marketing. They function in the image of the first wave of modern-day tech (think Amazon and Google), but now they can leverage AI in the platforms they’re creating. 

The Bottom Line: It might be the case that the success we’re seeing in tech and the broader stock market won’t necessarily trickle down to the masses. This remains to be seen. But what’s clear today is that the best way for most people to participate in this prosperity is to invest in stocks. 

The Juice is near- and long-term bullish because—

• We’re seeing breadth that we think has legs.
• We expect consumer spending to increase heading into 2025. 
• We think AI is as big, if not bigger than anything we have seen before in tech. 
• We think the tech ecosystems being built now will turn into Amazon- and Google-like juggernauts. 

If you see weakness associated with any of these bullet points (e.g., consumer stocks tank on a poor consumer confidence report or the government threatens tight AI regulation), The Juice says take it as an opportunity to buy on the dip. 

Do as the stock market does, shrug off politics and pessimism and buy growth and innovation. 

As usual, we would love your thoughts (use the feedback link at the bottom of the page) even if you don’t share our bullish tendencies.

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