I'm a glass half full kinda guy - I'd say I'm an optimist - I see learnings, not failure. And I try and instil this into my children. To learn from the past and grow into the future. How am I going? I have no idea. I guess I'll find out in the years ahead.
I also take this philosophy into markets and investing. Most investors, however, are far too influenced by the so-called experts. 2024 was supposed to be a shocking year for the markets. Everything that was supposed to go wrong, well, went right.
Soft landing - the Fed nailed it. The election - markets have been thrilled with the result. Earnings season and valuations - 65% of companies reported better than expected Earnings Per Share (EPS) results while 61% topped revenue estimates, and the average stock rallied in reaction to its results.
In fact, surprisingly, 2024 is on track to be the lowest volatility year since before COVID.
Listen, there is always a smart sounding reason to sell stocks.
And you know what happens after one of these major global events? We see massive rallies in markets that get away from you before you knew it was even a thing.
Just like we have seen over the last two years. The narrative from here? Well, I'm sure it will be valuations. Don't get me wrong, this cannot be ignored. The market isn't cheap. And if you ask warren Buffett, he might tell you the same thing.
Maybe a correction would be welcomed, in fact, healthy for the market. It is, however, hard to not remain bullish right now. The average bull market lasts more than five years - we're only two years into this one. Company forward earnings expectations continue to grow. We also see company profit margins expanding and earnings hitting all-time highs. All of these factors are a tail wind for stocks right now.
Stocks are closing in on back-to-back 20%+ gains. The four previous times it did this, the next year did this: +2.6%, +31%, +26.7%, 19.5%.
Stocks going up isn't a be a bad thing.