Ryan Detrick's Bull Case for Stocks Heading Into Earnings Season

Sam (0:00)

With Ryan Detrick, Chief Market Strategist over at the Carson Group. Ryan, always nice of you to join us. You have remained bullish on this market this year through a hot war, through obviously interest rate hikes, through higher yields, even now talk of AI slowdown, and there have been reasons to be optimistic. I mean, we continue to climb to these record highs, even in the face of all of that, there is a degree of resilience in this market. But I do have to ask you about the news of the day, and that is what we've just heard from OpenAI.

Why has it hit such a nerve with this market? Is it because of the supply-demand narrative? Is it because we're trying to assign a multiple to this story right now? What is it exactly? Does it tell us something about just how leveraged this trade is? Please help us understand what's going on right now.

Ryan Detrick (0:54)

Boy, what a tough one to start off with, Sam. Thank you for having me back and good afternoon, everybody. I love your conversation before I came on. I mean, everyone says, oh, the market, by the way, you listed all those concerns like market breath is the one we've heard nonstop for the last month and a half, how market breath is weak, the end of the world is coming. Then you look today, eight sectors are up. Now, as you just said, utilities are down, healthcare is down, and tech is down a lot. I think you summed it up. There's a combination of many parts of why tech might be down a little bit for the year.

Just a couple of days ago, tech was up 40 percent. Let's be honest, maybe any second, it's due for a little pullback, but you mentioned financials. That group has just gotten beat up in a big way ever since the Fed hiked rates. We still like financials and we like tech. We're overweight tech, overweight financials, over at industrials, those cyclical areas. So I think it makes sense or not make sense. I think I like to see today's action where yet tech is finally taking a break and all of a sudden, you have outperformance in a lot of other groups, and it's going to those other areas. Those financials, last comment. Those financials of earnings, really, really soon, we all know that, kicks off earning season. We expect another positive earning season. Yes, anxious to see what they have to say about the state of the consumer and financing and loans and debt and all that stuff that's out there. We're optimistic, it's still going to say the consumer is in pretty good shape.

Marlee (2:08)

All right, Ryan, so let's dive in to this unwavering bullish call that you have. Use an analogy that I love. You say this bull market like a cruise ship. It's hard to slow down. It's hard to stop. It's hard to turn it around.

The bull market's turning about four years old this coming week. So as you look at that, you are making an argument that investors are looking at the age of this bull in the wrong way. So walk us through how you view we should be looking at this bull market at its age and how much farther we can run.

Ryan Detrick (2:41)

Well, that's right, Marlee. You know, happy birthday. The bull will turn four years old on the 12th next week. October 12th, 2022 is when that vicious 25% bear market ended. Now we're up close to 120% four years later. Who would have thought that four years ago? Believe me when I say this, not many people would have thought that.

But you look at it, and I love that cruise ship analogy. I've used it for a while because once a bull market gets past its third birthday, some of them have gone up a lot for a year, year and a half, then they kind of fizzle out. But like a cruise ship, once they get moving, they're hard to stop. Now here's what matters to the listeners. Go back 50 years. We've had five other bull markets that made it to at least their fourth birthday, like this one will again next week.

The shortest any of them went was five years. The average length was eight years. Now listen, I'm not saying this bull market's only halfway over and it's going to go to eight years, but what we are saying is a concept that these cycles last a lot longer than you think, and that's a positive. Now one more quick one on this. We're up like 120% this bull market. You look at all the other bull markets on their fourth birthday, right? They were up actually more, only two. This is a heck of a start four years in. The reality is those other two is one in the 80s and then one in the last decade, in 2010s. The fifth year of those bull markets, we're up 22% one time and over 30% the other time in the fifth year. Now again, not calling for that, but what we are saying is this is a heck of a run for four years just because we're up a lot. Just because you've been told the bull market's old and has to end. History would say no if the AI spending is still strong, if the Fed is more dovish, we think they're going to be, if earnings are still strong, profit margins, all this stuff is still in play. We think it is. This next year or so, I get to come back with you guys next October, I think the bull will be turning another year older and we'll have some pretty solid gains, all things considered.