The No. 1 Reason You Should Buy Stocks Now
Tired of the same old economic data?
It seems like all we hear about in the media is jobs and consumer spending. But they don’t tell the whole story. And to be perfectly honest, they’re wildly erratic and prone to huge revisions.
There’s a better solution.
It’s an economic indicator the Wall Street Journal calls “One of the timeliest gauges of economic activity”.
In fact, according to Bloomberg, growth in this indicator has an 82.4% correlation with GDP growth. That’s a claim very few economic indicators can make.
What’s the indicator nobody’s talking about?
Trash… or more specifically, the number of train carloads of waste and scrap.
Carl Riccadonna, a senior economist at Deutsche Bank Securities said, “It’s sort of like measuring horse power by looking at the smoke coming out of the tail pipe.”
In other words, increased economic activity generates more trash. As disappointing as that is for conservationists, it’s the ugly truth. So the more train carloads of trash we generate, the better the economy looks.
Take a look at this chart.
The blue line tracks the 4-week moving average of carloads of waste and scrap over the last year.
You can see it peaked early on in the 2nd quarter. Right at the same time, the S&P 500 peaked and GDP growth projections were highest.
Clearly the economy went through a period of slowing growth from April to July.
And it scared the pants off of investors. That’s to be expected. The 2008 market crash is still fresh in everyone’s mind.
But everything is changing. Over the last month, the number of carloads of waste and scrap has started growing again. This is a clear indication economic activity is on the upswing.
The economy is improving and that’s great news for spending, jobs, and consumer confidence.
You can throw all the double dip recession predictions out the window. It’s just not going to happen.
Some investors will doubt the strength of the economy… But that’s ok.
I’m more concerned when the vast majority of people believe an asset “can only go up from here”. Like we’re seeing in gold, bonds, and Treasuries right now. Remember, investing with the crowd has a long history of ending badly. You need to invest ahead of the crowd.
And based on the amount of trash we’re generating right now, economic growth is accelerating again. It won’t be long before the crowd is rushing back into stocks.
It’s time to buy stocks before the rest of the crowd does.
Category: Stocks
