Have you heard of TINA?
She’s been the driving force behind the surge in stock prices over the last six months.
And she’s here to stay, wielding her influence over individual traders, hedge fund managers and even the biggest institutional investors.
Bet against TINA, and you’ll likely lose a big portion of your retirement savings.
But if you know how to invest alongside TINA, you could grow your wealth so you can enjoy the things that matter most in life.
Who is this TINA? And how is she powerful enough to manipulate the entire stock market?
Let’s take a look!
There Is No Alternative (to Stocks)
On Wall Street, there are hundreds of acronyms that traders use every day:
- DFTF stands for “Don’t Fight the Fed”
- BTFD is code for “Buy the *Freaking* Dip”
- And P&D refers to the “pump and dump” practice of hyping a stock in the media before selling in the market.
During my hedge fund days, I could follow just about any rant screamed by a New York trader on the floor of the stock exchange.
These days, there’s a new acronym that’s made its way into the trader lexicon. It’s TINA, and it stands for There Is No Alternative!
You see in today’s market, investors are left with fewer options for protecting and growing their wealth. And it all ties back to the Fed’s aggressive zero interest rate policy.
In response to the coronavirus crisis, the Fed lowered its target interest rate to a range of 0-0.25%. This target rate is what the Fed charges banks for overnight balances.
And while this target rate can help to influence interest rates that you pay or receive, the Fed took another step to change the way the economy and markets work.
As part of its response to the crisis, the Fed spent hundreds of billions of dollars to buy treasury securities, mortgage-backed securities and corporate bonds.
All of this buying naturally drove prices for these investment options higher. And when prices for bonds move higher, it naturally means that the yield you can get on these bonds moves lower.
And in this case, a lot lower!
Today, American investors are challenged by negative real interest rates. In other words, the interest you receive from just about any “safe” bond investment will be less than the rate of inflation.
So you’re actually guaranteed to lose value if you invest today.
That’s where TINA comes in.
Thanks to all the money the Fed has plowed into different areas of the bond market, investors have no alternative to investing in the stock market.
So TINA naturally causes investors to allocate most of their capital to the stock market. And this trend will continue for as long as the Fed keeps manipulating the bond markets.
How to Bet Alongside TINA and Grow Your Retirement Wealth
In the six months following the Fed’s shift in policy, many investors bought “the market” indiscriminately.
Here at Rich Retirement Letter, we’ve talked about how individuals and institutional investors have invested in broad averages like the S&P 500 — even while these averages are driven by a small number of mega-stocks.
That strategy worked out fine for a while. The broad markets were naturally pushed back to all-time highs thanks to this flood of capital.
But over the last two weeks, we’ve seen a shift. Some of the biggest stocks like Amazon, Alphabet and Tesla have begun to pull back.
Does that mean that TINA has lost her power?
With bond prices too high and negative real interest rates still frustrating investors, we have no alternative than to invest in stocks.
The real question is which stocks should we be investing in?
And that’s where TINA is starting to shift her focus.
You see, now that the big mega-cap stocks have become more expensive, investors are looking for better places to put their money to work.
And many smaller companies still have plenty of room for growth!
As investors shift their focus to stocks that give them more profit for their capital, value stocks are starting to surge.
And there are hundreds of great stocks to choose from!
I’m talking about technology stocks I’ve talked about before like NetApp Inc. (NTAP) and NortonLifeLock Inc. (NLOK).
Many housing stocks are still great values too, like Pulte Corp. (PHM) and Beazer Homes Inc. (BZH).
Industrial names like Caterpillar Inc. (CAT) and Vulcan Materials Co. (VMC) also have lots of room to run.
Despite the recent pullback in the market, TINA is alive and well. There really is no alternative to investing in the market right now.
And fortunately, there are plenty of great companies you can pick that will help protect and grow your wealth through this uncertain period.
Here at Rich Retirement Letter, we’ll continue to bring you our best plays that can safely grow your wealth.
So make sure you stay tuned and take advantage of these profitable plays.