Federal Reserve cuts interest rates - Sep 18, 2024

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Historically, the U.S Stock Market grows about 7.5% per year, on average.  This last year the U.S. Stock Market fell about 10%.  My Long term Trend Equation had forecast a 7.5% fall in stock prices over this last twelve months.  So, the Long term trend did pretty good in forecasting this last year's stock market performance.

Stocks also pay dividends, and this is about 2%.  This 2% dividend yield is added to stock price appreciation to calculate total stock market return.  So My Equation projects a typical yearly gain in stock prices of 7.5%, and to this a 2% dividend yield is added for a total stock market investment return typically of 9.5%.

The 20% gain in stock prices projected for the next 12 months by Long term trend is possibly explainable.  The Stock Market's all-time (S&P 500 Blue chip company index) closing high is just about 4,800 (January 3, 2022) against the current index value of about 4,050.  So, in a way, the Long Trend Equation is just projecting a little more than a return to the Stock Market's all time record high.

Once the Federal Reserve stops raising interest rates, the stock market is poised to rally; and especially if China successfully re-opens its economy from its Covid lock downs.

(posted by Elvis Clark on February 3, 2023)

It's kind of an odd recovery in the stock market since the low posted back on March 22nd of this year, when the initial Virus shutdowns take effect.  The current market is being carried by some selective industries, such as Home Depot, Amazon and Walmart companies; and big tech companies like Apple, Microsoft, Facebook, and Google.  Some sectors are actually down significantly for the year.  This is your oil and conventional energy companies.  Plus banks, airlines and jet making companies are down too.

So, this is a case where you are safest in broader diversified stock funds, as you could be flat-to-down if you are heavily invested into energy, airlines, and banks.  Of course, you are probably joyously dancing if you are invested heavily in big tech companies with brand name.

At this point, the stock market seems about ten percent too high, against my long, long time trend equation projection.  And maybe with the approaching Presidential and Congressional elections things might get volatile for stocks once more this year.

(posted by Elvis Clark on August 21, 2020)

The U.S Stock Market as measured by the big company index, S&P 500 index, is up about 2% for the year despite an economy in recession.

The U.S stock market is only down 3% since hitting its record high in February 2020, just before the Covid-19 virus related economic shutdown disrupts the U.S economy.

The Federal Reserve Central Bank and the U.S federal government pumped out an extra ten percent in economic stimulus in the U.S.  Effectively this bails out the stock market.

The easy money is also boosting gold prices, as gold is zeroing in on the $2,000 per ounce range....up some 30% since the start of the year.

 This is a momentous year for the future of the U.S.  On the extreme left, you have a significant portion of the U.S populace wanting to rip up traditional governance and rules of law in the U.S.  This poses a risk to those with accumulated savings, and therefore, it boosts demand for gold.

On the other side of the political dial, you have folks wanting to maintain our traditional governance and accompanying rules.  In this case, gold prices probably settle back - rather than continuing to increase as a political hedge.

(posted by Elvis Clark on August 3, 2020)

Goldman Sach's a week back or so predicted stocks would hit a low of about 2,450 for the S&p 500 stock market index (graphed above) this Spring (spring hasn't even got here yet), and then begin a slow rebound and eventually recover to the 3,200 level by the end of this year.  Hope they are right about this recovery.  If it turns out this way, that would be a positive 29% return from where the S&P 500 (stock market) is today.

Crossing fingers for this pandemic to slow in its acceleration, very soon.

(posted by Elvis Clark on March 12, 2020, PM) 

The S&P 500 stock market index, the standard benchmark for stock professionals (not the Dow Jones), should be a good long term (multiple year) investment if it goes down to around 2,550 from its closing level today of 2,747,

At 2,550, the stock market will be down 25% from its closing high of 3,386.  Should be a good buying opportunity.  In fact, even today's level of 2,747 is got a really good chance of yielding 12% in gain by the end of next January 2021...based on my long, long trend equation.

A mother lode of stock market index buying would be if the S&P 500 market index falls to the 1,700 range.   This would represent a decrease of about 50% in the stock market from its record closing high of 3386.  In the last 20 years, the stock market is only fallen 50% from its high, twice.  Once in the year 2003 and again in the year 2009.  Big returns followed from these levels within a few short years.

A lot rides on the world authorities getting a grip on controlling the Corona Virus.  A vaccine is probably not available until late summer or Fall this year.  But return of summer heat in late Spring and Summer might give a period of respite.  One OHSU doctor I talk to says maybe we won't find a good vaccine, just as with most flus and colds.

But I am optimistic this Corona Virus will too pass, and economies will steady and grow at least modestly going forward.  This is our history, after all.

So, good luck to all, except those who want to kill free markets and free spirits (not the booz kind, either).

(posted by Elvis Clark on March 9th pm, 2020)

The way I intend to use this trend equation projection is to invest more in stocks in the next twelve months when the S&P 500 index falls between 8 and 10 percent below current level of 3,225.5.

This is the first buying tranche threshold.  As the market gets to between 13 to 15% less than current value, you add more to stock market holdings.  You create these buying targets measured by the S&P 500 index value versus today's close of 3,225.5 all the way down to a 50% drop in the stock market (if such were to occur - which upon rare, short bouts, such occasions do occur).

This is my approach to re-balancing an investment portfolio between stocks and cash/liquid holdings.

Of course, nothing is hardly guaranteed with this approach...so you need to maintain some degree of portfolio investment diversity.  If investing just based on S&P 500 bench mark index value, then you invest in passive stock market indexes....rather than individual stock company shares.

A really good book to read and study, to keep from going too wild in investing, is the book "Black Swan" by Nassim Nicholas Talib. 

Japan is a curious case of where the stock market is flat for decades on end.  So using a time trend for U.S stock market investing is going with the direction of current long, long term momentum, and hopefully we in the U.S don't experience a major long term correction like that in Japan.

(posted by Elvis Clark on January 31, 2020)

If you are diversified, 5% is probably not enough to justify selling off some stock now.  However, I might sell off a tad tomorrow.  Eventually, there is what you call a "correction," or reversion to the mean.

(posted by Elvis Clark on January 16, 2020)

My Long, long term stock market time trend  equation projects the S&P 500 stock market index to increase to a value of 3,160 by the end of this coming January 2020.  This would represent an increase in the stock market of another 4% between now and the end of this coming January.  

Tomorrow is important for the near term trend in stock prices.  The Federal Reserve (Fed) is expected to cut short term interest rates by one quarter of one percent.  If the Fed signals it is likely to continue lowering interest rates, then the stock market probably continues its steady upward climb.

The Fed will brief the public on its sentiments for making further interest rate cuts, at 11 am to 11:30 am Pacific Standard Time, 10/30/19.

(posted by Elvis Clark 10/29/19)