The stock market in the U.S. has been surging all year long, raising concerns that it could be getting overheated. But Tom White, director and chief strategist at TD Ameritrade unit TradeWise Advisors, is not in that camp. He believes that the record-setting stock market still has room to generate profits, providing investors with end-of-the-year investment opportunities.
Speaking during TheStreet’s recent Financial Success Strategies conference, White said that the economy was doing “great,” pointing to the low unemployment rate and noting that there aren’t any signs that a recession is on the horizon. While some bears have been warning that the stock market is leveling out, White argues that, outside of deregulation efforts and the potential for tax reform, stocks have been rising because of a strong showing in companies’ quarterly earnings results. That, he argues, is a fundamental reason for optimism and should position the stock market for more upward moves.
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The TradeWise Advisors executive pointed to options investing as a year-end strategy that could boost the gains investors have enjoyed this year and at the same time limit the downside risk. White said that options investing is ideal for the banking sector, which has been gaining in 2017. But financial stocks aren’t the only area that White is bullish on. He also pointed to the cybersecurity industry as an area that will see more growth. One of his picks in that market is FireEye, Inc. (FEYE), a competitor of Cisco Systems, Inc. (CSCO). “They’re up 40% this year already; it’s about an $18 stock,” he said, according to TheStreet. “I like the cybersecurity space and think it’s an industry that will continue to grow.”
The comments on the part of White mesh with the feelings of TD Ameritrade customers. Earlier in November, the Omaha, Nebraska-based online brokerage reported that customers stepped up investing in stocks during the month of October after inching away from equity investing in September. According to the online brokerage, its Investor Movement Index (IMX) increased to 7.4 in October after coming in at 7.14 for September. The index gauges what its customers are buying and selling via their TD Ameritrade accounts and their exposure to the stock market.
TD Ameritrade said that, while customers were net buyers for nine months in a row, it was from September to October that the broker saw the IMX jump close to 4% to reach the second highest reading in the history of the index. The online trading firm said that October was characterized by strong U.S. markets, positive quarterly earnings on behalf of all sorts of companies and a global economy that is strengthening. Taken together, that appeared to influence retail investors’ behavior on the positive side.
“TD Ameritrade clients have continued to be net buyers and seem to be putting their money where they see opportunity,” said JJ Kinahan, chief market strategist at TD Ameritrade, in a press release this week announcing the monthly reading of the IMX. “Retail investors have increased their exposure to Chinese stocks while taking profits in the energy sector as crude oil hits 52-week highs.”