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What To Expect From Equities In 2018
Summary: US stocks will likely rise in 2018. By how much is
anybody's guess: the standard deviation of annual returns is too wide to get
even close to a correct estimate on a consistent basis. Earnings growth implies
6% price appreciation, but tax cuts could boost that to 13%. Investor
psychology could push returns much higher (or lower).
While it's true that investors are already bullish and valuations are already high, neither of these implies a likelihood of negative returns in 2018. That the stock market rose strongly this year also has no adverse impact on next year's probable return.
A bear market is always possible, but is also unlikely. That said, the S&P typically experiences a drawdown every year of about 10%; even a 14% fall would be within the normal, annual range. It will feel like the end of the bull market when it happens.
The Fed will likely continue to raise rates next year, which normally leads to higher stock prices. While political risks seem high, the stock market usually ignores these. The "Year 2" presidential cycle provides no investment edge.
This article highlights 11 key ideas to explain what to expect in 2018.
Heading into the end of the year, investment pundits are beginning to share their expectations for how stocks will fare next year. All ten strategists polled by Barron's expect the S&P to rise in 2018, by a mean/median of 6-7% (full article is here; the next three charts from Barron's). Enlarge any image by clicking on it.
While it's true that investors are already bullish and valuations are already high, neither of these implies a likelihood of negative returns in 2018. That the stock market rose strongly this year also has no adverse impact on next year's probable return.
A bear market is always possible, but is also unlikely. That said, the S&P typically experiences a drawdown every year of about 10%; even a 14% fall would be within the normal, annual range. It will feel like the end of the bull market when it happens.
The Fed will likely continue to raise rates next year, which normally leads to higher stock prices. While political risks seem high, the stock market usually ignores these. The "Year 2" presidential cycle provides no investment edge.
This article highlights 11 key ideas to explain what to expect in 2018.
Heading into the end of the year, investment pundits are beginning to share their expectations for how stocks will fare next year. All ten strategists polled by Barron's expect the S&P to rise in 2018, by a mean/median of 6-7% (full article is here; the next three charts from Barron's). Enlarge any image by clicking on it.
Abrazos,
PD1: Un cristiano lleva consigo
dos dimensiones de la fe: la unión con Dios y el servicio a los otros. Con
unidad de vida: que impida que haya una solución de continuidad entre una cosa
y otra. Nos comportamos como creemos, amamos a los otros como amamos al Señor,
somos cristianos siempre, a todas horas, no solo en el templo, sino las 24
horas del día… Refractamos nuestro modo de ser cristiano, somos distintos a los
demás, que nos deben ver como cristianos, ya que todo lo que hacemos tiene esta
característica diferencial…
