Archive for January, 2014

S&P 500 Predictions, By Yours Truly

January 1, 2014

This prediction is based on the idea that the stock market tends to become overvalued/undervalued in a cyclic fashion, driven by too many dollars chasing too few stocks. As stocks rise, more people want them. They become overvalued, etc.

The S&P 500 is currently at 1848. 2013 has been a banner year. I predict that stocks will continue to rise for 1.5-2 years, approximately. At that time, we’ll have had a steadily rising market for in excess of 5 years, which is a long time. So, there will be a major correction. The correction will bring the S&P 500 to a value lower than what it is now, to about 1600 or so. This correction will occur over about two years (e.g. the correction will be nearing its end in about 4 years from now). At that point, it’s a good idea to get back in to stocks.

People getting heavily into stocks now will end up losers at the correction point, but if they keep in stocks, the prices will eventually recover.