zerohedge.com / by Lance Roberts via RealInvestmentAdvice.com / May 15, 2017 8:14 AM
As I was writing the newsletter this past weekend, the following email rolled into my inbox:
“The S&P will double. And not just eventually. But over the next 5 years (or sooner). Sounds like a Herculean task on the surface, but it’s really not.
My 5-year doubling thesis also means that we won’t see another recession until stocks double again, nor will we see another bear market until stocks double again. Got it?”
The email goes on to make the case as to why the markets will do something that has never occurred before in history, or “why this time is different,” which can be summed up in one word – “Trumponomics”
“It’s no secret that the market has been re-energized this year on the Trump administration’s pro-growth agenda, which includes the highly anticipated corporate tax cuts.
There’s no doubt some of that will go to stock buybacks. But with the US suddenly becoming one of the most business-friendly countries in the world, you will see massive new corporate investment.
These tax cuts alone could usher in decades of new prosperity.
And it should be noted that these aren’t one-time stimulus packages that provide only temporary incentives and modest economic benefits. We’re talking about transformational growth due to long-term structural changes in how companies do business in America.
Instead of the subpar 1.5-2.0% annual GDP that the market has been struggling to achieve over the last 8 years, the economy is expected to double that pace to 3-4%. But even with the weaker than normal economic pace we have been going through, the market in just the last 5 years has produced a total compounded return of 98.2%.
So it’s not hard to imagine that if GDP were to double, earnings would soar, and stocks could easily gain another 100% over the next 5 years, and likely a whole lot more!”