The stock market saw this coming
Another historic chart, but this time it’s good news. Business sales in April were up 40% from the Pandemic year before. A normal good year would show a 15% gain in sales.
The red line shows sales (revenues) through March for the S&P 500, so when those numbers are updated they should mirror what we see in the blue line.
All signs point to a record second quarter in sales and profits, which explains the gains in the stock market so far in 2021. As it usually does, the market correctly predicted the booming economy we see around us today. But what about next year?
At some point in the third quarter the market always shifts its focus to next year’s results. 2022 will probably be a good year for the economy, but the growth rates will be much lower than we’ve seen lately. The gains in the stock market should also be lower than we’ve seen lately.
We look forward to a more normal investment environment, when investors will be looking at the performance of individual companies rather than speculating on the course of the economy. We like how our collection of companies will stack up against average businesses over time.
Daniel A. Ogden
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