OTW #51: Bull market or bear market rally?, Don’t waste time with predictions, and more.
Important financial stories to check out over the weekend
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1. Bull market or bear market rally?
This chart and commentary from
shows why you should be skeptical of anyone who claims that we’re “definitely” in a new bull market:I want EVERYONE to looks closely at those decade-long rectangular periods AND notice the rallies that happened in them.
NONE of those rallies were a “new bull market.”
This is my point - we don’t know until after you take out the inflation-adjusted high if it’s real.
Antagonist subscriber
also offered this insightful comment:Deflate that chart with the price of gold and I think it would appear that most of the “gains” are ethereal.
That’s a great reminder that stocks aren’t the only game in town. You have to analyze their performance and risk relative to other assets as well.
Antagonist’s take
Despite what the screaming heads say in financial and social media, it’s simply too early to tell if we are in a new bull market or if this is just a bear market rally. There is no reason to go “all in” in either direction.
Yes, invest in stocks, but consider other asset classes as well. This will hedge your risk and give you the opportunity to profit when other assets rally.
For specific ideas on how to do this, check out the Antagonist Blend Portfolio. It’s included in a premium membership, which you can try for free for 7 days.
2. Don’t waste time with stock market predictions.
Stock market predictions are pointless.
Here’s how 2023 S&P 500 guesses from big bank “experts” turned out (credit: Oktay Kavrak on LinkedIn):
BMO: 4300
J.P. Morgan: 4200
Wells Fargo: 4200
RBC: 4100
Credit Suisse: 4050
Goldman Sachs: 4000
HSBC: 4000
Citi: 4000
Bank of America: 4000
UBS: 3900
Morgan Stanley: 3900
Barclays: 3725
The S&P finished the year at 4770.
Antagonist’s take
As Kavrak said, “No one knows anything.”
Analyze the data yourself and make decisions based on probabilities. Certainties don’t exist when it comes to investing.
3. 150 years of S&P 500 performance.
This Visual Capitalist graphic shows how the S&P performed each year since 1874.
Antagonist’s take
Given the stock market’s performance over the last few years, particularly in the tech sector, new investors may be tempted to believe that stocks only go up…and go up big time.
Don’t be fooled by recency bias, however. As you can see from the chart, the most common returns are “only” in the 10%-20% range. That may not sound like much, especially considering how stocks like NVDA performed in 2023, but those are excellent returns. If you can average 10%-20% over the long term, you’ll likely be sitting on a very comfortable nest egg.
Of course, that’s a big “if.” There haven been plenty of years when stocks have crashed or returned next to nothing.
As I mentioned earlier in this post, that’s why it’s important to look for investment opportunities outside of equities as well.
Last thing...
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Jason Milton
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Haha...all the banks was so pessimistic...so bet on the other direction coz they know nuts? so do we? nobody knows anything yet there's so much money to be made in the stock market 😂