Outrageous tech sector price-to-earnings ratios stretch the imagination — Tesla’s now stands at more than 1,200 times trailing earnings compared to about nine for the auto industry!
Investors are happy to buy at these prices if interest rates and inflation stay low. But the Biden administration’s goal to “act big” with huge fiscal stimulus has the usual gang of skeptics worried about inflation. That’s starting to push Treasury yields higher.
Today, I’ll tell you how that could affect the stock market, along with two other specific warning signs…
If those three signals align, it will be time to get off the tech bandwagon and embrace the rotation to cyclical stocks for your next big profit opportunities.
Here’s a rundown of what you’ll learn this week:
- Watch out if Treasury yields cross this important level. (3:26-7:05)
- What would happen if corporate bond yield spreads begin to widen. (7:05-10:55)
- Why you should hope for a weaker dollar. (10:55-14:22)
Click here to watch this week’s video or click the image below:
Before I sign off, I want to share the news that my Profit Switch research service just closed out two of its best gains. We got in on Square at just the right time. The result? We closed out the first half of the position for 101% in four months … and closed out of the remainder for a total gain of 195% in nine months! And we had similar success with Roku … first closing half the position for a 100% winner in three months. On Wednesday, I recommended selling out of the recommendation completely. That netted us 166% in five months.
Watch my Profit Switch Summit now, free of charge, to find out how my system identifies winning stocks.
I’m up over 200% in just three months!
— Dave G.
Editor, The Bauman Letter