This column is my opinion and expresses my views. Those views can change at a moments notice when the market changes. I am not right all the time and I do not expect to be. I disclose all my positions clearly listed on the page, and I do not trade my account on the stocks spoken of in this column unless fully disclosed. If that does not work for you stop reading and close the page. Do not bother me or harass me.
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2019 is nearly here, and that means it is time to roll out my ten predictions for the new year. As I did last year, I will start with number 10 and work our way up to number 1 over the last month of 2018. Enjoy!
Prediction #1 – The S&P 500 Rises 20% to 3,000 in 2019
The S&P 500 has fallen 16% since its October highs but with the Fed on hold, interest rates and the dollar falling, oil rising, and the trade war settled the stock markets risk appetite comes back in a big way in 2019.
At its current valuation, the S&P 500 is trading at just 15.8 times 2018 earnings estimates and 14.4 times 2019 earnings estimates. Dow Jones S&P Indices now estimates that earnings will grow 9.6% in 2019, a respectable showing. But the current PE ratio is well below its historical average since 1988 of 18.7 for the current year or 17.75 for the next twelve months. It makes the current valuation for the equity market too cheap given all of 2018 worries are now in the rearview mirror and settled.
A Rise to 3,000
Growth will slow some in 2019 but stays strong enough so that we do not have an earnings recession. As a result, the earnings multiple will once begin to rise. Even if it expands back to its historical average of around 17.8 times 2019 earnings estimates, the S&P 500 could increase to roughly 3,063 about 21%.
It eases the pain of 2018 and makes 2019 a year of economic prosperity setting up President Trump’s re-election in 2020. I think I just made a prediction for 2020.
It makes the S&P 500’s increase of 20% to 3,000 prediction #1 for 2019.
Hope you enjoyed all of these!
Mott Capital Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future results.
S&p 500, stocks, stock market