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Prediction #4: Stock Prices are Rising!

Five Predictions for 2014

Prediction #4: The equities (i.e., stock) markets are going up! I am betting on 7% (S&P 500) in 2014.

Ok, so 2013 has been the best year for the equities markets since 1995; in fact, we have had five straight years of winners. 2014 will not disappoint. It, too, will move marginally upward, but be forewarned, there is more than a 50-50 chance, in my mind, that you will ...see a 15% drop sometime during the year. I am predicting (ok, speculating) the retracement will take place during July and August.

2013 recap: S&P 500 up 28%; Russell 2000 up 35%; nasdaq up 35% -- the late year surge is symptomatic of the later innings surge of a classic bull market. About $250 billion found its way into the equities markets in 2013, and the small caps are richly valued -- time for a correction when the euphoria wears off.

But, it will be a bit, because the cautious retail investors, who are always late to the party, still have some funds to shift from money and bond funds into equities. Also, there is sufficient momentum to carry this market for another year. Stock buybacks are fast and furious (probably shouldn't use that term in this context). And what about all of that cash that is sitting on the sidelines -- both household and corporate??? Will 2014 be the year the cash floodgates are opened?

I should probably add some disclaimer, such as: I am not an investment advisor, and the above does not in any way, shape, or form represent investment advice. I should also add that I am a semi-strong efficient advocate of the equity markets. Thus, you cannot consistently beat the market; so, just dollar-cost-average your way into market indexes and you will outperform the best stock pickers in the world...yep, that pretty much sums it up.


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