In January, economists were asked to predict where the S&P500 would end up this year. This table shows their predictions. It is clear that at the current level of 4500, we are closer to the top than to the bottom. We started the year at around 3824. There is a general feeling of wellbeing in the USA, with inflation slowing and the expectation of the current rising interest rate cycle coming to an end. As before, this change in sentiment and resulting jump in equity prices was rather sudden, so that many people who had expected the markets to go down rather than up and had preferred to wait in cash, are licking their wounds now.
It is difficult to see the S&P500 dipping below 4000 points again this year and if it does, a lot of investors will pile into the market, pushing it higher again. In 2022 we had a perfect storm for all asset classes to go down. There was a bloodbath when it came to shares, bonds, crypto and even property. Currently it is the inverse. Although we have seen a strong rally in tech stocks, the broader market is still well priced and with government bond rates so high, we can expect some decent profits coming from them.
So, after all we have been through over the last two years with all the turmoil, uncertainty and scaremongering coming from social media, we are back on track and ready to face and conquer the next disaster. As Roman Emperor Julius Caesar said in 44 BCE, “Veni, vidi, vici”.
