Time to expect less
We don’t specialize in short-term market calls and try to avoid the subject. But sometimes, tempering our expectations makes sense. Whether stocks are rising or falling—avoiding extreme optimism or pessimism is always a good call. Right now, we think investors should expect less from the stock market for a while.
This chart shows how the major indexes have moved since the beginning of the year—the Nasdaq in yellow and the S&P 500 in blue.
If the market rises for the full year in line with these first 6 weeks, the S&P would be up 40% for the year and the Nasdaq up 50%. On top of the gains in 2023, this would qualify as a major “melt-up” in prices—not something to be wished for by investors. “Melt-downs” often follow.
Much of this move has been fueled by excitement over AI, or Artificial Intelligence. We think this excitement is justified, but often stock prices move faster than the underlying events.
So our advice is to expect less in the short-term and much, much more in the long-term—the next 3 to 5 years. We continue to identify companies well positioned to benefit from the trends in technology and the business models made possible by these new tools.
Welcome to the Roaring Twenties II.
Best regards,
Daniel A. Ogden
Dock Street Asset Management, Inc. is an investment adviser registered with the U.S. Securities and Exchange Commission. You should not assume that any discussion or information contained in this letter serves as the receipt of, or as a substitute for, personalized investment advice from Dock Street Asset Management, Inc.
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