Last week we talked about whether this current market downpour was a pullback, correction or start of a bear market. And whether we were already seeing the end of the pain before a lasting bounce takes place. Yet discussions like these are often missing the main point.
That’s because in the short run, the market has a mind of its own. It can truly run in any direction, often defying the predictions of even the best market timers.
The best solution is not to play the market timing game. Just stay focused on the primary long term trend and align your portfolio accordingly.
Week by week in this commentary I have explained why that trend remains bullish. That’s because most every key facet points to more upside including economic conditions, earnings growth, and even valuation, which is surprisingly below peak levels even nine years into this bull run.
Yes, at some point it will turn bearish. And I am happy to sound that alarm and short stocks with both fists. Now is just not that time.
For as wonderful as that all sounds, it doesn’t mean that the overall market is going to produce gangbuster returns. At this stage of the game you shouldn’t expect more than 8-12% annual gains.
That’s why my year-end target for the S&P is 3000, which equates to a 12% return on the year. And next year pushing up to around 3300.
This is a comfortable rate of return for many investors. They can just load up on index funds and glance at their portfolios every month or two.