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Ever since it became clear that Donald Trump won the most recent U.S. presidential election, the stock market has been on an impressive tear higher. Now everyone wants to know what the next four years will look like for stocks in the “Trump 2.0” era. Will this exciting price action last? Well, I have six words of wisdom to offer: Embrace the boom; beware the bust. Thanks in large part to the AI investment megatrend and long-awaited rate cuts from the Federal Reserve, the U.S. stock market has been booming for the past two years. That is, the craze around artificial intelligence has sparked an exceptional surge in investment. Companies have been racing to create the infrastructure necessary to support next-gen AI. Indeed, Meta (META), Microsoft (MSFT), Amazon (AMZN), Alphabet (GOOGL) – pretty much all the world’s major tech companies continue to spend billions upon billions of dollars to build new AI data centers, create new applications, hire more engineers, etc. And all that investment has created a major economic boom. Meanwhile, throughout 2022 – after embarking on the most aggressive rate-hiking cycle in nearly 50 years – the Federal Reserve finally slowed its pace of hikes. And here in 2024, the central bank actually started to cut rates. This has provided much-needed relief to consumers looking to finance big purchases and businesses looking to make new investments. This relief has also helped support the present economic boom. This optimal setup has helped stocks to really soar. Embrace the Boom; Beware the Bust Since hitting its lows in October 2022 – just over two years ago – the S&P 500 has surged 70% higher. It is now on track to notch its second consecutive year of 20%-plus gains. The S&P rose 24% in 2023. And so far in 2024, it is up 27%. If those gains hold, this will mark just the fourth time since the Great Depression – nearly 100 years ago – that the S&P 500 rallied more than 20% in back-to-back years. We are unequivocally in a stock market boom. And in our view, this boom is about to get even “boomier.” Thanks to Donald Trump’s victory and Republicans’ newfound control of Congress, a wave of deregulation, pro-business policies, and tax cuts are likely to sweep the nation over the next few years. Those dynamics will only add to the current economic boom. Sounds great, doesn’t it? Sure does – so long as you remember that all market booms inevitably end with busts. It is not a question of “if.” It is simply a question of “when.” As we mentioned before, the stock market is working on back-to-back years of 20%-plus gains. It has only done that three times before: in 1935/36, 1954/55, and 1995/96. After the two boom years in 1935 and ‘36, stocks immediately crashed about 40% in 1937. That boom turned into a bust almost immediately. Following the market boom in 1954 and ‘55, stocks went flat in ‘56, then dropped 15% in 1957. The boom turned into a bust after about a year. Similarly, post-1995/96, stocks kept partying throughout 1997, ‘98, and ‘99 – only to crash about 50% throughout 2000, ‘01, and ‘02. After about three years, that era’s big boom turned into a big bust as well. 
All booms of this nature turn into busts. It’s just a matter of timing. Does that mean you should dump your stocks while you still can and head for the hills to avoid this inescapable bust? Absolutely not. The Final Word Usually, the last 30 minutes of a movie is the best part of the film. The last episode of a TV show is almost always the best one, just as the last few minutes of a ballgame are normally the most exciting. Similarly, the last few years of a stock market boom can often be the most profitable. Just look at the Dot Com Boom of the 1990s. Tech stocks had some amazing years therein. The Nasdaq Composite rallied 40% in 1995, about 20% in ‘96, another 20% in ‘97, and then 40% again in ‘98. But tech stocks saved their best for last, with the Nasdaq soaring almost 90% for its best year ever in 1999. Then the bust started in 2000. Point being: The best year for tech stocks in the ‘90s was the final year of the Dot Com Boom. That’s why you don’t want to leave a stock market party early. But you also don’t want to leave too late. So, what’s an investor to do? Embrace the boom. Beware the bust. Ride stocks higher, then head for the exits when the warning signs appear. Of course, that’s much easier said than done, I know. For this reason, I created Auspex: a stock screener that scans about ~14,000 stocks every time we run the model. Typically, only around five to 20 stocks make each final cut – sometimes fewer, sometimes more; but typically within that range. With Auspex, you can gain a critical edge, identifying stocks poised for success while saving your valuable time. Don’t miss this opportunity to learn how this robust tool can elevate your investing approach. Click here to access the replay now, and take the first step toward smarter, more confident stock picking. The next market winner is waiting. Let Auspex help you find it before it takes off. Sincerely, | 
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