Does a New Year Change Anything?
2017 ended amid much hype and expectation for the stock market, at least in the US, in the wake of the rally following Donald Trump’s election victory. In late December a CNBC ‘investment expert’ forecast that the Dow would hit 20,000 in January and 30,000 in the next four or five years. More recently other commentators have come out with a selection of remarkably precise forecasts, one for 31,000 in two years, another for 38,820 as part of a ‘super boom, and there has even been a forecast for Dow 50,000. The last time such numbers were so publicly discussed was in the second half of 1999 after books proclaiming Dow targets of 36,000, 40,000 and 100,000 were published. Perhaps this time it will happen, but almost certainly it won’t. It is more likely that all these forecasts are just further expressions of the heightened level of expectations that are now priced into the US market. Unfortunately heightened expectations always result, eventually, in disappointment.