What we expect in 2019
Technically the Panic of 2018 qualifies as a “correction” rather than a “bear market” because the S&P 500 fell “only” 19.8% instead of 20%. For those of us with real money on the line, the fourth quarter of 2018 was nasty no matter what we call it.
A classic bottom in prices was established on Christmas Eve and the follow-through in January has been extremely reassuring. What does history tell us about the prospects for the 2019? The table below suggests that the next 6 to 12 months should reward patient stock investors.
What holds these six events together is the absence of a recession in the US. Reports on the Christmas shopping season and December job gains settled the question of a recession in 2019, so we remain optimistic about the prospects for stocks in the near term.
Some may recall that we thought the same thing in September just as stock prices were about the collapse, so a certain amount of scepticism would be understandable. Still, given the facts we know today that’s our conclusion.
Daniel A. Ogden