Monday, 13 August 2018

S&P 500 could go higher by year end but expected long term return “not all that enticing”

Last week, Ryan Detrick, senior market strategist at LPL Financial, told CNBC that the US stock market is flashing a historically bullish signal.

“The S&P was up in April, May, June and July, those four months this year,” said Detrick. “Since 1950, there were 10 instances where that had happened, and the rest of the year, so the final five months, were actually higher every single time.”

However, Simon Moore, chief investment officer at Moola, wrote in a Forbes article that “trying to predict the market on a 12-month view is essentially a waste of time” and suggested looking a decade ahead instead.

He said that based on the Shiller PE and dividend yield, he expects “approximately 2.5% to 5.5% for the annual 10 year return for the S&P 500 looking forward to mid 2028”.

He noted that with the US 10-year Treasury offering a little under 3 percent a year, this forecast return for the S&P 500 “is not all that enticing” and suggested that investors “invest globally”.

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