Greetings Friends,
The first half of 2018 is in the books.
It was a bumpy ride – but US stocks closed the first half of the year with some very solid gains – and cannabis stocks are heating up.
Here’s a quick review of how global stocks performed in the first half of 2018 – and what we can expect in the second half of the year.
NASDAQ 100 Up 11% in First Half of Year, S&P 500 on Pace for 7% Gain in 2018
Despite some volatility US stocks closed the first half of the year with some very respectable gains – particularly the tech heavy NASDAQ.
- Nasdaq 100 (QQQ):+10.6%
- S&P 500 (SPY): +2.5%
That puts the NASDAQ 100 on pace for a 22% gain in 2018 while the S&P 500 is on pace for a 7% gain when including dividends.
International stocks lagged US stocks.
- Vanguard World Stock Index: 0%
- Emerging Markets: -7%
Many individual stocks were up even more.
The technology sector stayed hot.
Netflix (NFLX) led the way, up 103%.
Amazon (AMZN) was up 45%.
Other sectors were strong too.
From the financial sector Visa (V) was up 17%.
From the defense sector Boeing (BA) was up 15%.
Take a look at the gains in the chart below.
What Can We Expect in the Second Half of 2018?
There is so much pessimism and negativity in the financial media.
Please understand – the financial media has a strong financial incentive to spread fear because its very good for business.
It has been proven that negative headlines get 20X more clicks or views.
Here’s an article with more details.
Bad News: Negative Headlines Get Much More Attention
However – listening to these jackals would have been costly.
The stock market has delivered big returns in the last few years. Sitting on the sidelines in cash or bonds would have been extremely costly.
Me and my clients stayed aggressive and have been buying lots of stocks for many years and we have been rewarded with market-beating gains.
Looking forward – I see more gains ahead.
In the short run – I am expecting to see some volatility. US stocks are moving into a seasonally volatile time of the year. You can see that in this cool historical volatility chart below from Equity Clock.
However, beyond seasonal volatility I am expecting more gains for US and global stocks.
You would never know listening to the mainstream media, but the US and global economies are the strongest they have been in over a decade and US corporate earnings are on fire.
These are the two most powerful factors that influence the stock market.
S&P 500 earnings growth accelerating in 2018: Anyone confused about why stocks are up so much should look at this S&P 500 corporate earnings chart. Earnings growth is the #1 driver of stocks. And S&P 500 earnings growth has accelerated big time in 2018.
First-quarter earnings growth came in at an eye-popping 24%.
Take a look at the chart below from Zacks Investment Research
Earnings growth will slow a bit moving forward – but earnings are still expected to grow nicely well into 2019 and that should create strong tail winds for stocks.
The US and Global Economies are Hot: You would never know it by listening to the mainstream media but the US and global economies are growing at their fastest rate in ten years.
Two weeks ago the Atlanta Fed raised second-quarter GDP forecast to 4.8%. Anything above 3% is considered great. So this is a huge number.
Atlanta Fed raises U.S. second quarter GDP view to 4.8 percent
Goldman Sachs just reiterated that it expects the global economy to grow 4.1% in 2018 – its fastest pace of growth in more than ten years.
These are my leading indicators. And right now the are telling me stocks are headed higher and more gains ahead.
I plan on being aggressive in the second half of the year and quickly deploying new client funds into US and global stocks.
Cannabis Stocks Heating up and Moving into the Strongest Part of the Year – And I want to Share a New Way to Profit
I am expecting big things from the cannabis sector in the second half of 2018 because of three catalysts – and I want to shares a new way to profit.
Catalyst #1 Canada is set to legalize recreational cannabis on October 17: Canada will become the first ever developed country to legalize recreational cannabis. This is set to unleash $5 billion in sales within two years and potentially $10 billion within five years.
Catalyst #2 At least 4 US States Voting on Cannabis in the midterms on Nov 16: More US states are set to vote on medical and recreational cannabis bills this November in the midterm elections. The US cannabis industry has a lot of momentum right now and this is just more good news.
Catalyst #3 Cannabis stocks are moving into seasonally strong part of year: in 2016 and 2017 cannabis stocks were weak in the first half of the year before surging in the second half of the year. I see that same pattern unfolding in 2018.
These are my leading indicators on the cannabis sector. History tells me these events could trigger a big rally in the second half of the year.
Great Way to Profit: Buying shares of cannabis companies is a great way to profit from this trend.
For example, Canopy Growth Corp (NYSE: CGC), Canada’s largest cannabis company, is up more than 1,300% in just the last two years.
Take a look.
Looking forward I am expecting Canopy to continue rising.
However, today there is a new way to profit from Canopy shares.
This strategy is a way to multiply your profits if Canopy rises.
If Canopy shares rise, this strategy would be extremely profitable.
It only requires a few hundred dollars to get started.
Canopy was Recently Up Listed to the New York Stock Exchange on May 24
Canopy was recently up listed to the New York Stock Exchange on May 24.
Canopy Applies to Become First Pot Producer Listed on the NYSE
This up listing was a big win for Canopy.
It gives the company and entire cannabis industry more credibility and it opens a pathway to more potential investors.
Now that Canopy is trading on the NYSE – there is a new way to potentially profit from shares – buying call options.
Buying Call Options is a Way to Multiply Profits if Shares of Canopy Rise in the Second Half of 2018
If you think Canopy shares are going higher – buying a call option is a strategy to multiply your potential profits.
Buying call options is the same process as buying regular shares, but this is a higher risk, higher reward investing strategy.
You can start with as little as a few hundred dollars buying one or two call options.
Here is a table of CGC call options that expire in January.
I have started rolling out this new trade to a select few clients that want to be a little more aggressive.
If you are interested in learning more or want to jump in on the trade – please contact me.
I think this trade could be very hot and you don’t have to use a lot of capital.
The Big Picture: this is the time to be aggressive in the cannabis sector.
If you already own cannabis stocks, now is a good time to add more shares.
If you have been waiting to buy, this is a good time to start.
I’ll be back in a few weeks with another update.
Your Investment Partner,
Mike
This report is for entertainment purposes only. Every investor should consult with an investment advisor before making investment decisions. The Vodicka Group, Inc. is not a broker/dealer. We do not receive compensation for mentioning stocks. At various times, the clients, publishers and employees of Vodicka Group, Inc., may buy or sell the securities discussed for purposes of investment or trading. Michael Vodicka owns shares of Canopy Growth Corp (CGC).
