2019 Market Forecast Interview: Part I

Keith Fitz-Gerald Feb 06, 2019

Editor’s Note: Keith recently sat down with Money Morning‘s Executive Editor and Senior Research Analyst, Bill “BP” Patalon, and addressed the key profit opportunities he sees for 2019. This interview first ran on Bill’s Private Briefing service, where his followers have had the opportunity to hold 217 double- and triple-digit peak gain winners since Bill began keeping track in August 2011. Click here for more information.

Otherwise, enjoy the interview!

Most traders and market “experts” see gloomy times to come for U.S. stocks.

But not Keith Fitz-Gerald.

The Money Morning Chief Investment Strategist sees big opportunities for investors here in the New Year – thanks to a stock-market “thesis” I’ve seen nowhere else.

Keith’s identified three big catalysts for higher stock prices. And he’s created an easy-to-use “profile” to help him target the next big stock market winners – the kind of winners that can make folks rich.

Here’s an edited transcript of my talk with this down-in-the-trenches veteran of the global-investing boom…


Bill Patalon III: So Keith… when we last talked in depth, it was as part of our midyear outlook. You recommended BioTelemetry Inc. (NasdaqGS:BEAT), a Malvern, Pennsylvania-based medical-tech firm.

The stock zoomed more than 62% in less than six months.

And in one of our annual forecast reports several years before, you brought us Becton, Dickinson and Co. (NYSE:BDX), a medical-technology powerhouse. BDX shares doubled.

Keith… it’s great to have you here – and to have you participating in our annual forecast series.

Keith Fitz-Gerald: Good to be here, BP. Thanks, as always, for having me back.

BPIII: Before we proceed, I have to tell you something… we’ve been doing these annual forecast talks – and midyear updates – for a long time. And they’re always good.

But I’m probably more excited than ever for this one.

KFG: Really, BP? And why is that?

BPIII: Well… for a couple of reasons.

First, for the obvious reason… we’re at a critical point in the domestic markets and in the global economy. And insights like yours are both welcomed and useful at points like that.

But there’s a second reason…

Before we sat down, you were kind enough to share the annual outlook report that you put together for your own Money Map Report subscribers. I can’t remember when I enjoyed reading one of these more. It was probably the best one you’ve done – deeply reflective… erudite… insightful… and just an engaging read.

And I know why it turned out so well… you gave me a heads up when you were just starting to put it together… so I know how much time you devoted to it.

KFG: Well… that’s nice of you to say, BP. Very kind. But the fact is… that time was required. Because you’re right… we have reached an important juncture in this journey we’re all taking together.

In fact, I’ve dubbed 2019 “the year of turning points and big profit potential.”

Critical: Millions of Americans could collect “Federal Rent Checks”

BPIII: Interesting… and what’s prompted that tagline?

KFG: Look, BP, as you know from our earlier chats… I said that 2018 was a “year of continuation.”

BPIII: Right…

KFG: But 2019 will be a year of “turning points.”

You see, I see three – count ’em, three – very specific catalysts that will ignite sharp upside market action… and because that rally is unexpected, it’s going to catch most investors by surprise.

You’ll notice that I didn’t say “could ignite.” That’s rare because catalysts like the ones I’m describing can produce extremely violent upside action when the institutional money realizes that it’s got to get on board or get left behind.

Anybody who is waiting for a pullback has a real problem on their hands because they’re more likely than ever to miss the majority of the move. Effectively, they’ll be playing for table scraps if they wait for a “pullback” or “confirmation” like they would have received in years past.

BPIII: So, what are the three catalysts?

KFG: Okay…

  • First, overwhelmingly negative trading that’s based on emotion… on sentiment… rather than fundamentals. That’s almost always a bullish signal… a contrarian bullish signal – something I know you’ll appreciate, BP, given your contrarian bent and the contrarian book you co-authored.
  • Next, a trade agreement with China that would immediately – like a magnet – draw trillions of dollars in from the sidelines.
  • And, finally, a U.S. central bank that “learns” from its mistakes… and either stops (or better still) – “walks back” the rate-hike foolishness we’ve already seen.

BPIII: Good stuff, Keith…

Okay… so it’s a year of “turning points.” You’ve ID’d these catalysts…

Let’s get into some specifics…

If the market is going higher, that means there will be opportunities. And because you’re making predictions, that means we’re anticipating these opportunities, rather than reacting to them. What opportunities do you see?

KFG: A good question, BP. The fact is that I see five high-level themes we’ll be watching – and looking to capitalize on – over the next 12 months.

Let me run through them…

  • Safety in Strength: The best investments will be companies with muscle – strong enough to chart their own paths and control their own destinies.
  • Be Willing to Travel: Many of the best choices will be found in overseas markets, where new populations of consumers are opening wholly new wealth windows. Already, 54% of the world’s fastest-growing large companies are based in China – while only 24% are found in the United States, according to Crunchbase data.
  • The New View of Value: It’s no longer the tale of what a company is “worth,” but rather how its shares are priced. I mean, BP, just look at Warren Buffett and Apple Inc. (NasdaqGS:AAPL); the billionaire bought Apple because of the value of its “ecosystem” – something we… and you… have been talking about for several years now. Apple, incidentally, has retreated to the $150-per-share level I identified last fall during an appearance on Fox Business Network when asked when I’d reconsider buying it. Ideally, I’d like to see it hit $120- or $125-a-share via one or two more violent selloffs to clear out the weak money – then it’ll be off to the races.
  • The Amazing Allure of Adaptability: I’ve noticed a pronounced shift in annual report language over the past 12 months – a shift away from the financial lingo we’re used to and toward a more complex concept… adaptability. Companies that mirror that are best positioned for huge profits. Alphabet Inc. (NasdaqGS:GOOGL), for example, spends $20 billion a year on research and development. That’s more than the combined profits of both American Express Co. (NYSE:AXP) and The Coca-Cola Co. (NYSE:KO), says Fortune magazine. Google and others do this for a reason… it’s an investment in the future… an investment in adaptability… in customer access.
  • The Transition from “Broadcasting” to “Monocasting:” This is exciting… and is something I know you’ve talked a lot about, too, BP. It’s all about specialization – about giving each consumer what he or she wants… from retailing to video content. This is why we’re seeing the shift away from mass retailing and why you’re seeing the whole “cutting-the-cable” trend in broadcasting. Companies able to provide highly individualized choices – accessed through mobile technology – are poised to win big.

BPIII: That last point is especially interesting because it bolsters your points about “strength” – companies that are able to chart their own course – and adaptability.

KFG: Very good, BP.

BPIII: I also have to tell you, Keith… I also really liked that you’re talking about artificial intelligence, or AI. I like how it fits so well into your broad thesis.

KFG: It does, indeed. You see… all these elements come together in a tapestry that illustrates our biggest wealth opportunities.

That’s why we’ll be targeting platform technology, artificial intelligence, and aerospace companies – all of which are capable of disruptive innovation.

We’re not chasing short-term fads here. My goal is to help my followers stake a claim to companies that can deliver huge profits – and meaningful wealth – 3, 5, even 10 years out. Every short-term dip – and this is something I want to come back to in a moment – gives folks a chance to start anew… or to double-down on existing long-term wealth opportunities.

Let me mention a couple of the areas of focus… including one that I know you’ve been all over – defense spending continues to rise, which means geopolitical uncertainty remains a certainty. This is especially true when it comes to space, cryptography, and hypersonic weapons (and defense against each). Companies providing AI and software related to these areas are going to be top profit generators, even as the competition in those segments gets tougher.

BPIII: Yeah, we’ve been talking about The Boeing Co. (NYSE:BA) since our recommendation in 2011. Drones for years. And the whole “New Reality” with new nuke threats… and hypersonic weapons… for years.

Next we’re going to touch on a realm that I know – for a fact – you’ve been way ahead of the curve on… health technology.

[To Be Continued on Friday, February 8…]

One Response to 2019 Market Forecast Interview: Part I

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