A study by LPL Financial shows that if the S&P 500 is up three months before election day, the incumbent party nearly always wins. This according to an article in Chief Investment Officer. The study shows that the phenomenon has held true 87 percent of the time since 1928 (when what is now called the S&P 500 index was formed) and in every election since 1984. “The market-election nexus theory makes some sense,” the article… Read More
A recent MarketWatch article shares the findings of one industry executive who had reportedly had enough of end-of-days-like market predictions and did some calculations of his own. Michael Cembalest, chairman of market and investment strategy for J.P. Morgan Asset Management, “rounded up apocalyptic predictions from a range of commentators, including famed investor George Soros, bond-market giant Jeffrey Gundlach, activist Carl Icahn and New York Times columnist Paul Krugman,” the article explains. Cembalest calculated the consequences… Read More
In an interview with Finanz und Wirtschaft, DoubleLine CEO Jeffrey Gundlach expressed concern for U.S. equities as a result of the levels of government and corporate debt, arguing that investors must “brace for significant disruptions.’ Here are highlights from Gundlach’s comments: Investors should begin preparing for the next downturn now, even though we can’t know when it will come: “If you don’t start preparing now, you will maybe do better while the economy continues to… Read More
The “c” word (i.e. crash) is “awfully good at grabbing investor’s attention,” but there’s no way to know when it will arrive, according to a recent article in The Wall Street Journal. But that hasn’t stopped many from trying, the article notes, citing examples of some of history’s bold prognosticators: Roger Babson, who “pioneered the practice with his 1920s newsletter of making predictions that he claimed were based on Newtonian physics,” and whose “reputation and… Read More
At the start of 2019, BAM Alliance director of research Larry Swedroe outlined a list of predictions–made by various market experts and investors–to identify a consensus of “sure things” that he recently scored with “+1” for true, “-1” for false. Below is a chart outlining his findings: Prediction Score U.S. economic growth would continue strong -1 Corporate profit growth would continue strong -1 U.S. stock market would have a strong year +1 It would be… Read More
A recent article by John Rekenthaler of Morningstar begins: “Economic predictions are wonderfully useful…after the fact.” He discusses hindsight bias, and how “history gives a simple picture of that which was once complex.” To illustrate his point, Rekenthaler shares the results of a Merrill Lynch survey of 200 institutional investment managers across the world on various items to gauge their views on the biggest “tail risk”—that is, the item most likely to have caused a… Read More
The stock market boost fueled by the Trump victory will probably continue through December, says Wharton professor Jeremy Siegel in a recent interview with CNBC. “When you have all the small stocks, large stocks, even tech stocks—which we know have some challenges—joining with it, I don’t think this is something that ends tomorrow.” At the time of the interview, Siegel predicted that the Dow could reach 20,000 (it now stands at 19,300). Siegel says that… Read More
Back in 2012, when the Dow Jones Industrial Average was at 12500, Seth Masters of asset manager AllianceBernstein predicted that it would reach 20000 by the decade’s close. This according to Steven Russolillo in this month’s Wall Street Journal. Masters, who has a history of bold forecasts over his 26 years at the firm, told Russolillo that his prediction “hit a nerve” due to the pessimistic investor climate at the time–bonds had beaten stocks over… Read More