Our year-end market analysis finds the “Trump Trade” (as it is being referred to on Wall Street) continues to drive stock markets higher. Historically, the period between November 15th and January 15th is a good time to own stocks for investors. Many believe that stock markets move on moods of investors, and we are definitely experiencing a mood swing. Stocks had very minimal returns for 20 months, then, with the election results, a switch appears to have been flipped on Wall Street. Eventually companies’ earnings will need to justify stock prices, but for now conditions are favorable for stocks to indeed reach 20,000 in the next few weeks.
Over the past few weeks since the presidential election, stocks have rallied, and now we are experiencing what is referred to as “the Santa Claus effect”. I have mentioned the Santa Claus effect in past market analysis blog writings.
Companies announce their earnings reports starting in mid-January. Going into the end of 2016 and the start of 2017, the enthusiasm for the President-Elect has caused the price-earnings ratio of the stock market to reach extremes. Will this increase be maintained? It is possible, but we need to see companies return to growth, which has been stagnant the past two years.
As we approach the end of 2016 and look forward to 2017, I am very thankful for our clients we have the pleasure to serve. Sharing our life experiences, dreams and goals are the most rewarding perks of being a wealth advisor. From all of us at Indie Asset Partners, we want to wish everyone a blessed Holiday Season.