2019 Market Forecast Interview: Part II

Keith Fitz-Gerald Feb 08, 2019

Editor’s Note: This is part two of the two-part 2019 Forecast interview series between Keith and Money Morning Executive Editor Bill “BP” Patalon, continued from Wednesday. Here’s a link if you missed Part I. Enjoy.

BPIII: 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.

KFG: Right, BP.

And the fact is… health tech is operating off a script very similar to the others we’ve described here. And the best opportunities will be those firms that remotely drive patient wellness with biotechnology or care. The global digital healthcare market will double by 2020, to roughly $206 billion, and virtual healthcare technology will drive the money move – regardless of the geographical relationship between patients and their doctors.

Meanwhile, we’ll continue to avoid classic retailers, insurance companies, and more than a few household names poised to go the way of Sears, GE, or Kodak. Once public trust is shattered – for whatever reason – it’s very hard to get back, and I think that will pressure already tenuous margins even further.

BPIII: Before we get to some specific recommendations, let’s talk about the broader market.

I was fascinated by your scenario… by the portrait you painted.

I was gripped by this… I think because it is a Contrarian viewpoint… and isn’t the mainstream view.

KFG: Well thanks, BP.

Quantitatively speaking, many big traders and investors are worried that the markets can go lower from here. But what they’re really worried about – and they’ll never tell you – is that they’ve made the wrong choices at a time when they can’t afford the risks they’re taking.

The way to fix this is by following our script… and focusing on companies with the size, scale, and savviness to defeat any obstacles in their paths.

The other thing to think about – and this is crucial this year, given our forecast – is that big market drops are not the end of the line.

BPIII: In fact, you’d argue that they’re the beginning… in a way.

KFG: Actually, that’s right.

In fact, here’s a case-in-point: There have only been three non-recession market wipeouts of more than 20% in less than four months over the past 40 years. Moreover, there have been only four periods in history over the past 92 years – so we’re talking nearly a century – where there were consecutive annual losses: 1929-1932, 1939-1941, 1973-1974, and 2000-2003.

BPIII: And the takeaway…

KFG: If you think about it, BP, market corrections are like a periodic, system-wide cleanout… a chance to “reboot,” if you will. If you understand this, corrections are a welcome “restart” leading to bigger profits and life-changing wealth.

BPIII: You and I both understand… corrections are something to be welcomed – not feared. They’re opportunities…

KFG: Exactly right…

BPIII: Okay… let’s talk recommendations… ways to capitalize on your prognostications.

And let’s start with your current view of BEAT, the stock you recommended to our folks at mid-year. It’s a longtime favorite of ours, so I was heartened when you zeroed in on it. How do you like it here?

KFG: I think this stock still has plenty of runway. Stocks like this largely escaped the challenges that tanked other sectors late last year, which is why they are poised to run sharply higher. The intersection of healthcare and technology will be profitable for a very long time to come.

BPIII: What else do you like? What are some other stocks you’re recommending… and that you believe will do well because of the catalysts you mentioned?

Critical message for any reader who’s already retired (or just thinking about it)

KFG: You mentioned Boeing. If folks aren’t on board with Boeing, they’d better be rethinking that argument in light of the potential for a Chinese trade agreement. The backlog alone – combined with defense sector growth – makes this one compelling.

And, of course, Becton Dickinson is a great play, too, for the same reasons we’ve just outlined.

Looking ahead, I think it’s time to think about loading up on companies that have two key ingredients: Global brand recognition and margin pricing power. This is relatively rare in today’s world, where many investors think the game is all about revenue. The bottom line matters – which is why companies making products their customers cannot live without have plenty of power. These companies can pass any cost increases along to their customers in the form of price increases. I’m talking about cost increases in such areas as raw materials, wages, currency fluctuations, and more. Companies that can’t pass these costs along have their margins get killed.

Incidentally, I just recommended two companies like this in the latest Money Map Report… and can’t spill the beans just yet… out of deference to my paid subscribers.

BPIII: Totally fair point, Keith.

KFG: Well, I absolutely do want to give your folks one more stock pick… and I have one with an intriguing “investment case.”

I’m talking about Visa Inc. (NYSE:V).

There’s been so much talk about the digital payment revolution… about digital currencies… about digital commerce – much of it energized by Bitcoin and other cryptocurrencies.

The trend is real. But the play isn’t the one a lot of investors are spotlighting.

Visa is a heavyweight… an innovator… a leader.

BPIII: Any follow-up thoughts?

KFG: Yes… and this is super-important, BP.

Investors need to think very carefully about “investing versus speculating.” Many people find out the hard way that they think they’re doing the former when they’re actually doing the latter.

And that’s a miscue that nails ’em – and usually during the big sell-offs.

To underscore a point you’ve heard me make over and over and over during the years we’ve collaborated here: Growth may slow… but it will not stop.

So continuing to “play offense” makes more sense this year than at any other point in recent memory.

BPIII: This is good stuff, Keith… really good stuff.

I really enjoyed this…

Thanks for being here, Keith… I know the folks always get a lot out of your visits with us.

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