Stocks Are Going MUCH Higher This Year

0:00Hello, everyone. We've got a lot to discuss today. Retail investors just set a world record for how much they are pouring into the stock market. And we have Ryan Dietrich stop by to explain why stocks are likely going much, much higher into the second half of this year. We're live today from the desk of Anthony Pompliano.

0:27We just got brand new data that retail investors bought$155 billion worth of stocks in the first half of this year. and that is the most in history. Now, here's the thing. People have more access to financial markets than ever before. It's a great thing for the American public. You gotta be an investor today to get ahead in this country. If you save, you lose. So you've got to allocate to stocks. Companies like Robinhood, eToro, Public, Webull, and others have created a renaissance. We now have opened up access to the market. And then of course, they are devaluing the dollar. And so stocks continue to go higher and higher and all of the asset owners are getting richer and richer.

1:04And so what we see is a positive reflexive response. If you buy a stock and you see it go up, guess what happens? You wanna take more money and put it into stocks because you expect them to continue to go up. Momentum is a hell of a drug and seeing your stock portfolio start to gain value without having to do any sort of hourly work, that is ultimately what teaches people that being an investor is worth your time and energy rather than simply working for a W-2 or trying to get rich on a salary. Now, of course, if retail investors are learning this and they have more access to the market, word starts to spread and there's nothing more powerful than word of mouth.

1:38And that's what we are watching happen right now. All of a sudden, the American public, especially young people who are coming into money now, they're waking up to the fact that they've got to be an investor and they've got the tools to do it. They set a world record in the first half of the year, but I don't think this is going to be the last record that they set. I expect retail investors and self-directed investors to continue to become a larger and larger percentage of the stock market going forward. and what you see in the first half of the year is that retail bought the dip while all the smart people sat on the sidelines.

2:09And my guess is that in hindsight, people who understand buying the dip and the dollar debasement being a structural tailwind for stocks, those are the people who actually are gonna perform better over the long run. I've got a very special treat for all of you today. We have Ryan Dietrich. He is the chief market strategist at the Carson Group. He's one of my favorite people to talk about the stock market and he is an eternal optimist, and he doesn't disappoint in this interview. Here's my latest conversation with Ryan Dietrich on why stocks are going much, much higher through the rest of this year.

2:41Ryan, stocks are up 25 % off the April lows. It's happening in about three months. You've got a bunch of data and analysis that you've done in terms of what do we expect for the next six months? What's your conclusion from all that work? Yeah, Anthony, thank you for having me back. There's so many different ways to look at this. This has been one of the largest comebacks we've ever seen off of a bear market or near bear market. We know that. But here's a couple of ways I'll look at this here. You know, for starters, the last two months, right, May and June were higher. Those are usually not that strong a month.

3:09I came on with you like a month ago, so this summer rally can continue. We had like the best May since 1990, and we had one of the best Junes. When those two usually week months are higher, the rest of the year, ready for this, is higher 15 out of 16 times. When you have a lower first quarter and then a 10 % gain in the second quarter, it's a pretty small sample size. It's only happened five times. Third quarter is higher every time. Fourth quarter is higher every time. Rest of the year is up 16 % on average. Those are just a couple ways to look at this. The reality is the strength we've seen the last approximate three months off those April lows is historic with major buying opportunities.

3:46Even after these rallies, I get it. It sounds crazy, but to actually answer your question, I'll be quiet. When we've seen gains like this over a short period, we're talking off the lows in 75, off the lows in 82, early 1999, off the lows in 2009, off the lows in 2020. All right, think about those times, everyone. After over a 20 % gain in a short timeframe, those times all really rewarded investors. I know 99's in there. Stock market did go for like 18 more months. But reality is those other times, really good buying opportunities. And we still think there's a lot left to this bull market, Anthony.

4:19How much of this is, most people have seen the data where if you buy the day of an all-time high versus any other day of the year, usually if you go out six months, one year, two year, three year, and five year, you outperform by having bought the top of that kind of day. And it's just kind of momentum taking over and higher highs bring even higher prices. Well, you're right. And that's one I call the fear of heights, right? We all do. I work at an RA. A lot of people are scared of heights when it comes to stock market. I went back to 1990. there's 738 all-time highs on the S &P 500 since 1990.

4:52Yes, there was a period right in 2007, obviously, and there was a period right before COVID, and I guess early 22 also. Not the best times to buy, but the reality, you look six months to a year later, you actually outperform. The median performance a year later is well into the double digits after an all-time high since 1990. So yes, the average year gains about 9%, 9.5%. So it's not like wildly stronger, Anthony, but I think the key concept, it sure isn't bearish. And we're not saying just buy all-time highs. Honestly, when you and I did this a while ago, we said maybe you should look for opportunity.

5:26But the reality is don't be scared of all-time highs. Now, when we go and we take a look at the mid-year point, which we basically are at right now, you've got this data that suggests if you're up 5 % to 10 % year-to-date at the midway point, 13 out of 15 times, you end up higher. So it's like every data point that you're bringing up here is showing that the odds now, again, no guarantee, but the odds are we should have a spectacular second half of the year. Yeah, let's combine that with the one I started with, right? When May and June are higher, rest of the year is up 15 to 16. The one you just mentioned, I call this the sweet spot.

5:58S &P was up right around five or six percent midpoint of the year. And there's some years that honestly, for the listeners, the worst second halves of the year historically are like after the worst first halves, right? I mean, 2008 and some other really bad years. So kind of momentum begets itself. But the flip side is like 87 was a huge, huge rally the first half of the year. We know it pulled back. There are some other times we've seen that. So I'm calling this a sweet spot. We're up between 5 % and 10%. Oh, by the way, the average first half of a year is like 4.5%. This is a little bit better than average, but not wildly better.

6:28And that's that sweet spot where, again, going forward, you're up 13 out of 15 times the rest of the year. Average return is right around a little bit in the low teens or so. So it's not like, again, wildly off the charts bullish, but it's still better than average. And again, it suggests when you stack it on top of all this stuff that I've been pointing out, that you've been pointing out with all the negativity. I mean, one last comment on this negativity. I travel the country, get to talk to people. I never get asked the question, wow, Ryan, this is really good. How high is this going to go?

6:57I mean, I am not seeing that at all. So from that contrarian point of view, that's another reason I think the second half of this year will probably be pretty solid. Now, one of the things that we've seen in the mainstream media and also in the data is that retail investors in particular have been participating. I think I saw a stat that in the first half of the year, they bought like$155 billion worth of stocks, which is an all-time high. And we also see articles about hedge funds and kind of traditional financial folks kind of offsides or not as allocated to equities. Is this now a market dynamic that has completely shifted and retail's in control?

7:27Yeah, it sure feels like it. I've been doing this for 26, 27 years, always called the dumb money. I put that in quotations. I don't mean it like that. That's how Wall Street looked at the retail crowd, the dumb money. Oh, they don't know what they're doing. But what have we seen off these lows? Like you said, hedge funds are still all bared up. Oh, hopefully I remember what it's called. The Bank of America Global Fund Manager Survey looks at managers with real money. Just the data that just came out. They're like the most underweight U.S. equities they've been in a long time. Okay, so that's the big money.

7:55But like you just said, the retail crowd, so many people, hopefully the work I'm doing, the work you're doing, A lot of people are realizing, well, markets go up, but they also go down. And the opportunity is a lot of times when they go down. And congrats to the retail crowd because they haven't been panicked as much as the quote-unquote smart money has. I'm not sure if this dynamic's completely flipped forever, but it's really nice in 2025. The retail crowd's having a lot better year than the smart guys, quote-unquote the smart guys. You know what I mean by that? Now, when we go and we take a look at the stock price, I think a lot of people are like, oh, maybe this is a bubble.

8:25Maybe it's speculation. Maybe there's just frothiness. but earnings seem to be very strong as well, which you've pointed out. Yeah, that's exactly right. What drives long-term stock gains into the day? It is earnings. I mean, yes, if things go up a whole bunch and those companies don't make money, well, that you could argue is a bubble. Maybe it's going to come back down. But by the way, earnings season kicks off like next week with a lot of the financials. But just looking at the second quarter, second quarter earnings came in. I'm sorry, it'd be first quarter. First quarter earnings came in way, way better than expected.

8:49We think second quarter is going to follow that. And honestly, at the start of the year, 2020, uh, 2026 estimates on the S &P 500 were for 13.3 % earnings growth. This is in 2026. So next year, as of right now, 13.3%, all the crazy stuff we've seen, all the promises of recessions and everything we've been told. I don't think any of it was true looking back, fortunately. And the reality is earnings continue to impress. One more thing about earnings. Well, it's a cousin to earnings profit margins, profit margins last weekend had a new high this cycle. How long have we been told profit margins have to go down?

9:20So with higher profit margins, with strong earnings, those are kind of dual tailwinds, if you will, to why this economy is better than people think and why the stock market is hitting all-time highs as we're doing this. Now, Ryan, one of the things that everyone's paying attention to is the Fed. Jerome Powell has been very staunch in his kind of hold the line. He's not cutting rates. There's a lot of people who think that he should be cutting rates. If stocks are rising at the rate that they are before we get the rate cut. If a rate cut comes, should we just expect that to accelerate and kind of the cheap money coming into the market will flow into the equities?

9:51Yeah, we do think, you know, first off, I'll answer like this. We think the Fed should have been cutting earlier this year. We don't see inflation. Now I get it. The worry about it. You know, the pal himself said two weeks ago, I would have cut twice if we didn't have tariffs. So we get that. But the reality is, yeah, I think the market's sniffing it out. I know after the stronger, and by the way, we're talking about stronger data, the stronger jobs number on last It's Jobs Friday. It was Jobs Thursday because of the holiday. And the expectations for a rate cut were pushed back a little bit. But the truth is, OK, a strong economy is not a bad thing.

10:18But look at what small caps have been doing lately. Small caps, Anthony, have really taken the baton. Mid caps as well. Some of those areas do a little bit better, potentially, rate cuts coming. And we think maybe that's sniffing it out. So we think there's still some cuts coming, hopefully, in September. And the market probably is going to like that. Now, when we take a look at things like Bitcoin, gold, or maybe other things than U.S. equities in particular, those seem to be doing pretty well also. And so it kind of feels like this is a asset price rally, not just a stock rally. You're exactly right.

10:45We call it a global bull market. You can throw in some of those other assets you just mentioned. I mean, just about every country is higher this year. And we've added gold to the market. We run real money. My team runs about$5 billion. We added gold back in April of 2023. We're not gold bugs, but we thought a diversified portfolio, potentially a lower dollar made a lot of sense. And one of the things we've preached, I think I probably talked to you last about this. When in doubt, diversify it out, right? We're still over with equities, but we've got some managed futures. We've got some gold. We don't have any pure Bitcoin, per se.

11:15We've got an ETF with a little Bitcoin in there. So we absolutely have some exposure to some other areas. We remember 2022. We don't think that's happening again, but everything went down. I could say almost everything went down in 2022. Energy did okay. Some other things did okay. So you want to have that diversification, not always chase the latest shiny object. We think it still makes sense the rest of this year. Now, what are you maybe worried about? Or where is there risk potentially on the horizon that could change the way that you're so bullish right now? Yeah. So we hit rewind to one of the early questions about the Fed.

11:43I mean, I think the Fed should be cutting. We don't see inflation. We think the Fed should be cutting. So a potential policy mistake the second half of this year. Let's be very clear. I mean, I don't know. People say, what grade is Jerome Powell's get? I mean, I say C pluses. I mean, I don't know if Powell's done as well as some people think he has. He was really late raising rates the first time. And we think he's late cutting them this time. So we are a little worried there. That could be a policy mistake. But two things I like to watch, keep this real simple. I know we're probably near the end.

12:08Credit spreads and advanced decline lines. All right, advanced decline lines, how many stocks go up versus down, cumulative basis. We're at all-time highs on various indices right now. That is bullish. Credit spreads are not showing a monster under the bed. The credit markets are the smartest people in the room. If there was a monster under the bed back in April, they would have showed more fear. They didn't. Junk bonds actually held in okay in April. If the monster was that bad, we thought jump bonds would have done terribly. They didn't. That was the clue. So to me, spreads are still tight. Advanced line lines high.

12:37Those are what I watch. They're going to sniff out trouble before anything I know or maybe even you know. And those are still positive. But the Fed policy mistakes, one we're watching very closely. Ryan Dietrich, chief market strategist at Carson Group. I appreciate it so much. You're always, always, always high energy, which is very welcome here, where optimists are usually the people who end up actually being smart and right. So thank you so much. And we'll definitely do this again in the future. A big fan. Appreciate it. I look forward to the next one. Thank you, Anthony. All right, guys, that's it for this show.

13:04I hope that you enjoyed that conversation with Ryan. It is obvious that he is bullish on the stock market. We will be back tomorrow, but make sure that you're following us on X and also make sure that you subscribe to the YouTube channel. I'll see you guys tomorrow live from the desk of Anthony Poppliano.