Creating An Initial Portfolio For The New Bull Stock Market

The Wall Street Journal’s weekend edition carried the front-page article, “Stocks Post Worst Week of 2023.” However, “worst” presumes ownership of the last bull market’s leaders. Looking ahead instead of backwards converts last week to an advantageous time of opportunistic buying dips. Below are the details of such an applied buying strategy.

Note: This is the third article about the new bullish developments taking place in the U.S. stock market. Here are the previous two:

MORE FROM FORBESA New, Exciting Bull Stock ‘Market’ Is EmergingBy John S. Tobey

MORE FROM FORBESHow To Identify The New Bull Stock Market WinnersBy John S. Tobey

New possible bull market winners

In the first article, I said I had recently identified nine potential stocks and would discuss them when/if I bought them. Using the all-time high methodology I described in the second article, here are the seven I bought last week – four during Tuesday’s stock market selloff and three during Friday’s selloff.

An initial overall view of the new bull market

The new bull market’s trend characteristics and rationale are not known yet. They will evolve from later evaluation of the stocks that become recognized leaders. The seven above offer an initial view. The similarities of the companies start with their being very different from the past bull market’s leaders. They are small- to mid-sized, industry-diverse, independently valued and not included in the S&P 500 Stock Index. The stock graphs show dissimilar past history.

They do have two common elements. This first is that they all have an attractive, all-time high price rise pattern with heightened trading volume. The second link is that they are all smaller companies. That means, even without knowing why the buying interest is occurring, there are investors willing to pay top dollar for the shares of these companies.

The potential gains could be high

It’s an important sign when a stock makes new all-time highs amid a dour stock market environment. The reason is most likely desirable developments at work – i.e., somebody knows something. That possibility means there could be further gains.

Add to that individual stock potential the increased possibility that the overall stock market could be turning up and the potential gains increase.

Then there are the bonus gains of investor optimism returning, particularly for the then clear leaders. (This a time that past performance can be a valid reason to buy.)

The bottom line: Strive to be the first to become a stock market optimist

Whatever happens within the stock market, realize that stock market observers have worn out the negative drivers. The diminished number of stock market forecasts reveal a tired investor base.

The investor feeling of blah is because the past bull market drivers continue to look weak. But that’s as it should be. By recognizing that the next bull market will be distinctly different and that there are already stocks looking attractive, we can confidently return to being optimists.