Stock Market Projection for the Rest of the Year
Projecting the 2016 Stock Market
The stock market is nothing less than bipolar. We haven’t seen a new high in almost a year. However, we have seen an increase in volatility that would send any investor reaching for their Xanax.
The lack of direction stems from 2 lingering concerns:
- Is the US entering a recession?
- Will corporate earnings continue to grow in the face of recessions and negative interest rates in Europe and Japan?
I am going to blame the volatility on the computer driven high frequency traders uncompromisingly complex derivatives that allow massive leverage and the lack of human interaction on the trading floor to toss in a little sanity when it needs a dose of reality.
Of course the 3 underlying long term fundamental issues are having a profound impact on the economy and the markets.
The Retirement of Baby Boomers
1) The demographic overhang of the retirement of 90 million baby boomers is still the biggest drag across the entire developed world. This generation was the cause of the booming 80’s and 90’s, but now they are retired, spending and consuming less. This drag will continue for another 5-7 years.
These issues are discussed in great length in Facing Goliath – How to Triumph in the Dangerous Market Ahead and my brand new book, Surfing the Retirement Tsunami: Your Guide to staying Afloat and Retiring Comfortably.
The Federal Reserve
2) The end of the Federal Reserve’s stimulative monetary policy of quantitative easing. Since it ended in October, 2014 stocks have gone nowhere with a lot of headaches and heart attacks thrown in.
The 2008/9 Crash Still Haunts Us
3) The memory of the 2008/9 crash is still with us. People are so nervous that they are saving more than usual. This is probably why we aren’t seeing consumers spending their gas savings. An entire generation of Millennials has deferred family formation and consumption by about five years. Tons of people will never buy stocks again, the same happened after the 1929 crash.
So where are we heading? Sideways, until investors realize that we are NOT going to go into a recession and that corporate earnings as well as the US GDP will continue to grow, albeit at an operate level at best. Growth is growth and not recessionary. We could see this grinding pattern for 3-6 more months before people are comfortable enough to send stocks to new highs.
Investor Strategy From Keith Springer
With more volatility expected and new highs likely by years’ end, investors must position their portfolios properly. You must be tactical and not buy-and-hold or buy-and-hope. In addition, be sure your portfolio is prepared for the next bull market, not the last one. Also, of course, do your planning and work with a qualified retirement advisor to help you…and that’s where we can help. You need retirement plan advisors to make sure you retire stress free. Let us do the work for you. We’ll start with a retirement income analysis and help you create a perfect plan to retire.
To get a FREE customized Retirement Income and Tax Strategy Analysis. Simply click on this link or give us a call for a no obligation consultation today.
As always, please feel free to contact me.
Cheers –Keith Springer