The Bull Market Is 10 Years Old. Now What?

Genia Turanova's picture

Friday, April 5, 2019 - 2:30pm

by Genia Turanova

I have to admit that I had not expected the tenth anniversary of this bull market to have come and gone without much fanfare. Yes, there was a celebration -- after all, the 10-year bull market is the longest since World War II, and the S&P 500 is up more than 300% -- but it wasn't as omnipresent as I had anticipated. 

Instead, investors have been reveling in another, albeit related milestone -- the market recovery from the fourth-quarter 2018 selloff in the strongest three-month performance since the third quarter of 2009. 

This strength has helped the market to recover much of the fourth-quarter losses and, as a result, post strong positive year-over-year returns. 

One-Year Sector Performance (As of March 31) S&P 1-Yr Sector Performance
Source: S&P Global Market Intelligence

Nearly every corner of the market has turned a strong performance over the past year. The market, as represented by the S&P 500, is up 7.3% year-over-year -- helped, without a doubt, by the first-quarter rally. But even as every single market sector turned out a positive performance in the first quarter of 2019, some -- such as energy, materials and financials -- are still down compared with a year ago. 

Let's look under the hood of one of the sectors to see which well-known stocks are powering the performance.

Many of you may be thinking I'm referring to the technology sector, since I'm the Chief Investment Strategist for Fast-Track Millionaire. After all, many of the stocks we feature naturally tend to come from this sector. But I'm not talking about technology this time. Instead, I invite you to get to know the newly named and arranged "communication services" sector. 

The New High-Growth Sector You Need To Know
Up 4% year-over-year and nearly 14% in the latest quarter, this is no longer the home of just the high-yielding, slow-growing telecom stocks -- the likes of AT&T (NYSE: T) and Verizon (NYSE: VZ). 

If you are a growth investor looking for new ideas, or if you are considering a growth-oriented exchange-traded fund (ETF) for a portion of your portfolio, you can no longer disregard this sector (and if you are an income investor, pay attention as well): last September, the indexing companies announced a major change to the way they treat this formerly stodgy fraternity. 

The result was an expanded telecommunication services sector, including several companies from the consumer discretionary and information technology sectors. 

If you think Alphabet, the parent company of Google (Nasdaq: GOOGL), is a technology company, you might be right. But it's not in the technology sector, not officially, at least. As of September 21, 2018, Google became a charter member of the "communication services" sector, right along with Facebook (Nasdaq: FB) and Twitter (Nasdaq: TWTR).

Netflix (Nasdaq: NFLX), too, is now a part of this sector now, together with a host of more traditional media companies such as CBS (NYSE: CBS) and Disney (NYSE: DIS). 

Technology-driven, these game-changing companies have had a profound impact not just on their businesses or sectors, but the entire economy. This is what we want from our portfolio holdings over at Fast-Track Millionaire, current and future -- a promise of lasting, high-growth, boundary-shattering impact. They may not all officially be classified as "technology" -- as long as they carry the promise of big-time returns to our portfolio, I will be perfectly fine with whatever they're called.

But for now, back to the future: does this overall rebound have legs? Is it still safe to dip your toe in the water?

In a word, yes. And we'll be ready to dive in as opportunities arise.

Action To Take 
I believe that this market has further room to run. It didn't just rebound on a whim. Stocks have been propelled higher by expectations that the monetary authorities -- the U.S. Federal Reserve -- have ended the nearly four-year streak of interest-rate increases. And the markets are now considering the possibility that the Fed might even cut interest rates, if it comes to that, making money cheaper, savings and other low-risk investments (like bonds) relatively less attractive and stocks -- again -- an attractive proposition.

In such an environment, bad news can accidentally become good news again. The market might overlook an occasional lagging economic indicator or a profit warning from a bellwether company or two -- as long as those data readings don't fall too far off behind or the profit warnings are not too dire. And if they set the stage for a buying opportunity, so much the better.

Still, we'll need to be on guard -- especially with the market just a couple of percentage points off its all-time highs. Taking a strategic gain or two in such an environment could also be a good idea.

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Genia Turanova does not personally hold positions in any securities mentioned in this article.
StreetAuthority LLC does not hold positions in any securities mentioned in this article.