I wanted to share a few thoughts as to what I’ve been learning, as well as personal opinions, about the current market and economy. I was recently at a top advisor meeting with some top economists, who forecasted the following for the remainder of 2021:
- DOW ends up at 35,000; S&P around 4,200 (that’s about 10% from where we are now)
- Value stocks will outperform Growth (which happens to align with our thinking)
- Inflation likely around 2.5% and GDP growth in the 3-3.5% range
Now, of course, if anyone could predict the market they would be….well, they just don’t exist. But, I agree with the possibility of this scenario given the following set of things going on:
- With bonds and savings rate at near zero, they are almost laughable
- Our banking system has massive excess reserves
- The consumer balance sheet is more rock solid than it’s been in 40 years, if not ever.
Remember, for there to be a “bubble” in the market, this usually happens with borrowed money, and they just don’t burst until both the consumer and the banking system get hideously overleveraged.
I agree with my good friend, and mentor, Nick Murray that we are in the second decade of a secular bull market that began on March 9, 2009 (oh boy do I remember where I was on that day after the hardest 6 months of my 20 year career in this business!). Why do I agree with, and also think this? 3 reasons:
- Growth of the global middle class
- Public fear and hatred of stocks since the Great Recession of 2008-2009
I could go on and on….. but I’ll say this- The pandemic has caused many, if not all, of us to go nuts! We have too much time on our hands and money we can’t spend, and only interact with people virtually or on social media. So, I’ll just say to those out there making excuses for not being in the stock market, or sitting on the sidelines and saying “it’s a bubble”, I disagree. It’s the pandemic. And, as the vaccines start to fade the fear of this pandemic, and people get back to “normal”, watch out, as we will likely see demand that has been building inside of us for over a year come exploding out. Stay the course, friends.
The stock indexes mentioned are unmanaged and cannot be invested into directly. Past performance is no guarantee of future results. Any opinions are those of David Adams and not necessarily those of Raymond James. This material is being provided for informational purposes only and is not a complete description, nor is it a recommendation. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Investing involves risk and you may incur a profit or a loss regardless of strategy selected. Prior to making an investment decision, please consult with your financial advisor about your individual situation.