Is This Stock Market Boom Built to Last? | Jim Woods

The markets are at all time high right now. And will this move continue and which sectors could benefit next? Our guest today is Jim Woods, who's one of the top financial writers, highly regarded in this space. He's here to tell us what he's seeing in the markets. What I'm most worried about? I think I'm most worried about if we don't continue to see economic growth. If earnings start to wobble, if the economy starts to wobble for whatever reason, could be tariff policy, could be the Fed, anything, if that happens, then you're gonna lose one of the pillars that's kept the bull market going for years now. I'm Siamak and this is Market Insider. Jim, it's great to have you on, welcome. Thank you, thank you very much. We wanna talk to you about the stock market. Yes. And where we are right now. We are close to all time high and some people are getting worried. Can you tell us what are you seeing right now? Whenever you see a market that's at a new high, all time high, people get worried because am I gonna lose all these hard-earned gains? What's gonna happen? I mean, how am I gonna make sure I don't lose what I've already earned? Well, what you have to understand is when the market hits a new high, it only does that by continuing to hit new highs along the way. So when a stock's at 50, people are like, it's too high, I don't wanna buy it, it's too expensive. And then it gets to 60 and 65 and 70. Well, it made new highs all along the way. So that's just the nature of markets. They're gonna make a new high and then if they have to go higher, they're gonna make another new high and another new high. Now, the problem is when the market pulls back because it always does. But it always goes back up higher after that too. That's why we're at all times high as now. That's why we were at all time high five years ago too. Post pandemic, we went from there to an all time high. Some people are looking at the situation in the economy. Now, do you see a disconnect between the markets and the economy or do you think the economy is representing what's happening in the markets? That's a great question. I think it's a little bit of both. I think it also depends on where you are in the kind of spectrum of economic status. So if you're an investor on Wall Street and you do this for a living the way I do, the economy is good. Market's high. The economic data is objectively good. We have strong growth. Not the most robust we've ever seen, but still very strong. And especially after years of very strong growth, we're doing, our economy is still strong. Our inflation rate is still tame. We've come way down from the Biden years and we're still a little bit high on inflation, higher than the Fed wants, but we're still getting close. It's coming down everything. So then you have job data, which that's what people are worried about. That's starting to tick lower. So Wall Street is like, we got the growth, we got the inflation, but maybe the job situation is... So Wall Street always looks for a reason to worry. That's why they say the markets climb a wall of worry because people wanna make as much money as they can in investing in the market, but they're always gonna be worried about something. And they always should be worried because there's always gonna be some factor that can pull the market down. But inevitably the market always overcomes that because we have capitalism, we have geniuses out there making new products, and we have a stable government, a stable legal system, and people wanna own US stocks. If you have all of those things right there, you're gonna have a market that continues to go up over the longterm. Now there'll be pockets of pullbacks, nine month periods where there might be a bear market. That's about the average length of a bear market is nine months. So you'll have that, but you'll also have a rebound. And if you have capitalism, you have stable economy, and you have smart people that make things that are interesting, you're gonna have a growing economy and bull market in stocks. Now in terms of you mentioned there are pullbacks, is there a chance for a pullback? Is that going up? There's always a chance for a pullback. There's a chart that I use sometimes in my presentations where it says investor psychology chart. And we have like, you go from optimism to excitement to euphoria. And I think we're coming right off that in euphoria. And that's the next stage is like anxiety. And I think that's where we're at now. Because whenever you see the market at new highs, you start people, people start getting anxious. And then they look, they say, hey, there might be a war in the Middle East. There might be the tariff thing might be like unraveling what's gonna happen with the Fed. There's always things, there's always reasons to worry. I've been in the markets for 30 years. I've been worried about every economic report, every job report, every Fed announcement. I've been worried about it all. But ultimately, if you put your money in the right spots, you're not gonna have to worry about your money. Because your money is gonna continue to grow. In terms of the threats you were mentioning, which one of them is most significant? Or are these significant threats that you see? That's always a hard one to address because the unknown of some kind of major conflict. If it's a major conflict of the sort, like the Iraq War or something like that, then that would be something to be really worried about short term. But even the Iraq War, a few months later, we were at new highs again. So even the pandemic, that came out of nowhere. The market plunged the first quarter of 2020. From March 23rd, 2026, all the way till now, you've seen like 500% gains in the S&P 500. Part of that reason was because of the Fed. They stepped in and injected a bunch of liquidity into the markets on March 23rd, 2020, just right at the date. That is something you need to be aware of, that there's instruments involved that government can take. The thing that government usually does is not healthy for the markets. But every once in a while, they can do something good. And for markets, at least. But of course, there's blowback because that caused a lot of inflation. So and then a bunch of free money sent out because of COVID, just about anyone who wanted it, everybody almost got some free money. That also caused inflation or prices to rise. So, but we're still good, even after all of that. So, but to answer your question about what I'm most worried about, I think I'm most worried about if we don't continue to see economic growth. If earnings start to wobble, if the economy starts to wobble, for whatever reason, could be tariff policy, could be the Fed, anything. If that happens, then you're gonna lose one of the pillars that's kept the bull market going for years now. So we've had healthy growth. I think we're gonna continue to have healthy growth. I think like, for example, the one big, beautiful bill, President Trump's signature legislation, I think that's fantastic. You're getting tax cuts, you're getting deregulation, and that's very market positive. So that, and that's just starting to kick in. So I'm optimistic, but I'm an optimistic type anyway. In terms of potential risk, you mentioned you're worried about some areas. Is there any specific industries or areas that you're looking at that you're getting worried about? The biggest worry at this juncture right now is the AI disruption worry, okay? A lot of companies in the software space are getting hit very hard because the idea is what they do can be replaced by an agentic AI bot, an app, basically. So you don't need to have an Adobe software anymore if you have AI that can do it for you. Or you don't need to have CrowdStrike because you've got a data protection software that you downloaded for free. Now, I personally think that that's misguided. And I think the stocks that are selling off now most, like Palantir and CrowdStrike, those are the kind of stocks that I think you can have opportunity in right now if you're willing to kind of gradually step in and buy them if you don't already own them. Stock like Intuit or Adobe, something that you might be able to do with AI, they might have an issue later down the road. We don't know yet. And the fact that you don't know is the reason why these stocks are selling off. So that whole, it's called the AI disruption trade, is how much is AI going to disrupt the economy? And is it going to be such that certain industries kind of just fall away? I think it's too early for that to really be the case. AI is being adopted, but not that fast. But the market is a forward-looking tool. It's discounting future earnings, not current earnings. So if the market thinks that Intuit or Adobe or some of these companies that are getting really hit hard, if they think that that's going to go down in the future, then they're going to sell it off now in preparation for that. And that's what you're seeing. For people that keep track of the market, the one indicator that is better than all of these for right now is this exchange-traded fund called IGV. So if you watch that, you can see it's down like 30% already just this year. So it's been sold out hard. And it hasn't had anything to do with the earnings of the companies? Not really, no. It's just their future, it's the future. It's the fear that AI is going to replace the need for them to exist. So if you think your company's not going to exist in five years, your stock's going to get sold off. You know, just like the horse and buggy industry got sold off, you know, during when Henry Ford rolled out the Model T. People were like, whoa, this might displace horses. And it did, of course, you know. But guess what? The world is a hundred times, thousand times more productive than it was in because of that tool. So that's the thing, when people get scared about AI, I understand their fears. It's a new thing, it could displace a lot of workers. But if it does what almost every other invention has done, which is increase productivity, it's going to be a humanity accelerator. And it's going to be pro-humanity. And I'm in that camp. Is there any other sectors that you're looking at? I mean, that's the main one right now. I do think that a lot of these companies, these hyperscalers have spent a lot of money on their AI build-outs. So this is a slightly different part of the AI story. But they better start seeing some return on their investment or they're going to get hit hard too. Like some of the companies have been criticized, like Apple has been criticized for not putting more money into their AI operations. But they're sitting back and saying, we have all the handsets. It's all going to be on our handsets. So you guys build that out, spend all the money, we'll just reap the benefits. So buy Apple is my accurate recommendation for the AI trade. And it's not intuitive because people think, oh, they're not really in the AI game, but they already are. They've got the hardware for it. There's always sectors that are out of favor. Like right now, the business development companies are kind of out of favor. But then there's companies that are in favor, like utilities, okay? Utilities used to be like a place where you just park money and it got no big return. Now it's one of the best performing sectors because AI. See, so AI giveth, AI taketh away. You have to be constantly on top of these markets. And in my publications, that's what we do. And we're always analyzing the markets. Because one of the things I like about the markets is it's every day is something different. And there's weekly trends, monthly trends, decade long trends. And that's the kind of thing you have to keep track of. That makes a good market watcher. If people had money in the markets and they were well off or they had assets, they did well. But the people that are young and they're starting might not be doing as well, or people that didn't have assets. What are your thoughts on that? I was once there too, okay? I come from modest means. But what you do is you want to just start as soon as you can, okay? Get a skill that somebody will be paying for you for. And the main thing is, be positive and optimistic about where you are. You hit the lottery in life, okay? You are born in America, or if you were born in America, or if you live here in America. You live here in America, if you've already got more than just about anybody else has ever had, okay? You've got freedom. You've got economic opportunity. You've got educational opportunities. And you've got a system that rewards like effort. If you can put something together and get somebody to pay you for it, you're going to be a successful person. It's not free. You know, you can't just sit back on your laurels and say, ah, you know, I'll just, whatever happens, happens. No, you got to go out there and get it. You've done that with your career. I've done that with mine. People that are successful don't apologize for their success, but they realize that they're fortunate too. I was fortunate to be born, to smart parents who helped my education, helped steward me toward like the things I liked, gave me books, gave me musical instruments, you know, provided a safe home. That's the kind of thing that if you squander that, it's only at your own peril. It's up to you to go out there and get what you want in life. You know, no one's holding you back except you. So if you have an American spirit, as it were, that kind of, that rugged individualism kind of thing, that seems to be out of favor these days. But I think it should be back in favor. I'm bringing it back. Jim, you're optimistic about the future of the U.S. markets and economy. Yes. Can you tell us what are you seeing out there? Because a lot of people may not see what you're seeing. There's always going to be some kind of trend that isn't conducive to certain things. Certain things I like, certain things I don't like about the markets. But what you want to do is, what is the overall trend? Do we have economic freedom? Yes. Do we have a tax structure that rewards success? Yes. Now, could that be better? Do I want less taxes? Yes. Do I want zero corporate taxes? Yes. Do I want lower tariffs? Yes. I want all these things, but I have what I have. I'm working with what I work with. And what I'm working with is positive. You can always find a kind of positive spin on anything if you're looking properly. And you can always find a negative spin if you're looking that way, too. But your money needs to go to the place where, I always say money goes to where it's treated best, okay? So that means the U.S. market is one of those places where it gets treated well. So when you compare U.S. to other countries, which countries are you looking at and how does the U.S. differentiate? I mean, Europe is a slow growth area. Their social safety nets are good if you live there. If you happen to live there, you get a lot of free benefits. But it's not free. Their tax rates are huge. They have a small country population-wise. Yeah, they get a lot of goodies, like healthcare and stuff like that. But it comes at the expense of their economic growth. That's why they're not superpowers like we are. I mean, one of the countries that I'm actually quite optimistic about, and I'm hoping that this resonates with you as well, is your country, Iran. Yeah. I think that that is like a potential. There are a lot of young people there. There are so many young people that love freedom, love America, hate the regime, and they're speaking out, which I give them. I'm honored by that. It's an amazing level of commitment. You know, you ask yourself, if you were there, would you do that? I would like to think I would, but I don't know if I would. You know, it's a serious question. It's dangerous. It's risky. It's totally dangerous. It's risky. You're putting your life on the line. Yeah, you put your life on the line for freedom. I mean, that's some real courage, okay? And just think about that. Look at the way we live here in America versus the way some other people live. That's the difference between freedom and not having freedom. And in terms of investing, if it was, what about Asia? Do you look at Asia or do you see risk in Asia? Yeah, Asia's good. I mean, China, the Chinese economy is kind of lukewarm. They've gone through periods of immense growth and then immense pullbacks. They have a lot of unlived-in real estate out there, but then they have a thriving manufacturing base too. They make a lot of stuff, obviously. You can't go to a Walmart without 80% of it being from China, especially in certain things like toys and electronics and things like that. It's funny you bring that up because right now international stocks are doing well, okay? European stocks, like a broad-based international stock. Part of that is the U.S. dollar's weak. Part of that is people are finding value outside the U.S., but there's still no place that you'd rather do business than the U.S., and there's no place you'd rather live either. I mean, at least there's no place I'd rather live, so. If you were to recommend to people where should they invest, what would you recommend? Well, the first thing you wanna know is what are your goals? If you just say what's the best stock to own, depends on what your timeframe is, depends on what your goal is. If you want to generate income from your money, one stock is better than another. If you want to maybe hit a home run with growth, that different stock is better for that. Because each stock has its own place in a portfolio. So it's really hard to say this is a great stock, that's not a great stock, whatever. But I'll give you one stock that I like a lot right now that everybody knows the company, and I'll give you the reason why, and it's Caterpillar. Okay, everybody knows Caterpillar makes those yellow Tonka truck things, right? You know that, everybody knows that, right? But what they don't know is that it's an AI play now. Because these data centers require a lot of power, and Caterpillar has these big, huge generators with one gigawatt, two gigawatt, so they're providing the power for that. And they're also providing the components to build the data centers. They become one of the biggest players in that field. So you've got this massive economies of scale company, and their earnings are growing. The stock is up like 200% over the last four years, which for a company that's in a Dow component is incredible. They were by far the best performing Dow component last year. And I think they're gonna continue that, so that's my recommendation. Buy the Tonka truck. Jim Woods with Eagle Publication, it was great to have you on Market Insider. Thank you, thank you very much, and anytime. Love to do it again. What do you think of this conversation with Jim Woods? Do you agree with what he's seeing in the markets? Let us know. You can always comment. I'm Siamak, this is Market Insider. We'll see you next time.