TommyIV
Administrator
Everyone and the financial advisor see trouble ahead in 2023. One example was of this comes from the article: Expect a U.S. Recession That Will Ravage Markets and Could Send Stocks Spiraling Down 24% Next Year, Bank of America Says.
This is not a standalone article. It's almost consensus with the way things are going that the economy is slowing and the market is sinking with it in 2023. But when everyone agrees about the future of stocks, that's when it's best to question everything. So for fun let's speculate a different possibility. And that is that stocks are set up for a rebound from its 2022 woes.
Today, 12/29/2022, it's easy to be in a bullish mood; the S&P 500 is up 1.74% mid-day. However December has been ugly and the tease of a Santa Claus Rally has added injury to insult for those attempting to recover from any losses 2022 brought. Coming into today the S&P was down more than 7% for the month. And it reminds me of December 2018, and what followed. The C-fund lost more than 9% through December 2018. What followed was a 28% gain through 2019 that started immediately in January. What helped 2019 reach outstanding gains was the fact that the market started out low in the first place.
That is certainly the state of the market today. The S&P 500 is down around 20% from its high, leaving plenty of room to catch up.
The only thing that is different is about 2018/2019 and today's market is everything else. The world was worried about tariffs in 2019, since then we have moved through a global pandemic. Heavy stimulus fueled the gains we saw in the second half of 2020 and through 2021. Stimulus also fueled the gains of 2019. The Federal Reserve lowered rates three times in 2019. They have promised to do the opposite in 2023 with their goals to drop inflation back down to around a 2% annual rate from its more than 7% rate today.
But now I wonder if that has been talked about for so long that it has been appropriately priced in. Markets are priced by expectations of the future and do not always match the current state of the economy. But how far ahead are we buying into?
I don't expect a repeat of 2019 in the year ahead, but I do have more hope for the market than Bank of America. But the Fed is not on the market's side for now and that will be a weight to carry. But investors will eventually start buying as soon as there is a glimmer of light at the end of the tunnel.
The stock market boomed in 2019. Here’s how it happened
This is not a standalone article. It's almost consensus with the way things are going that the economy is slowing and the market is sinking with it in 2023. But when everyone agrees about the future of stocks, that's when it's best to question everything. So for fun let's speculate a different possibility. And that is that stocks are set up for a rebound from its 2022 woes.
Today, 12/29/2022, it's easy to be in a bullish mood; the S&P 500 is up 1.74% mid-day. However December has been ugly and the tease of a Santa Claus Rally has added injury to insult for those attempting to recover from any losses 2022 brought. Coming into today the S&P was down more than 7% for the month. And it reminds me of December 2018, and what followed. The C-fund lost more than 9% through December 2018. What followed was a 28% gain through 2019 that started immediately in January. What helped 2019 reach outstanding gains was the fact that the market started out low in the first place.
That is certainly the state of the market today. The S&P 500 is down around 20% from its high, leaving plenty of room to catch up.
The only thing that is different is about 2018/2019 and today's market is everything else. The world was worried about tariffs in 2019, since then we have moved through a global pandemic. Heavy stimulus fueled the gains we saw in the second half of 2020 and through 2021. Stimulus also fueled the gains of 2019. The Federal Reserve lowered rates three times in 2019. They have promised to do the opposite in 2023 with their goals to drop inflation back down to around a 2% annual rate from its more than 7% rate today.
But now I wonder if that has been talked about for so long that it has been appropriately priced in. Markets are priced by expectations of the future and do not always match the current state of the economy. But how far ahead are we buying into?
I don't expect a repeat of 2019 in the year ahead, but I do have more hope for the market than Bank of America. But the Fed is not on the market's side for now and that will be a weight to carry. But investors will eventually start buying as soon as there is a glimmer of light at the end of the tunnel.
The stock market boomed in 2019. Here’s how it happened
