Bull market not done yet

[+ Vegas_Millennial]

Stock Market Outlook: Bull Market May Not Be Finished

WWW.MORGANSTANLEY.COM

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The bull market in U.S. stocks may have further to go, with the rise in bearish sentiment pointing to...

Key takeaway for investors right now:

The bull market probably isn’t finished, and the S&P 500 may yet end the year with single-digit gains.

Hints of investor euphoria that began to appear have been washed out of the market, creating the possibility that the bull run for stocks may stretch out longer

When stocks fall 15%, as they did in early April, it can be a good time for investors to increase their commitment to equities. The S&P 500 has fallen at least 15% from its peak on 18 occasions since 1950, and the average subsequent one-year return for stocks bought at that level is 14%. Yes, stocks will often keep falling for a time, but the subsequent one-year returns are often attractive when using a 15% decline as an entry point.

Stocks could certainly retest their early April lows. Although the base case outlook is for gains in 2025, the market is open 251 days in a year. Should stocks drop 20% or more, we believe investors would do well to consider increasing equity allocations even more aggressively. In the 12 times since 1950 that the S&P 500 dropped 20%, the average subsequent one-year return with that decline as the entry point is 19%. There are two instances in that data set with negative one-year returns after a 20% drop: during the great financial crisis in 2008-2009 and during an oil shock in the 1970s.

 

[+ Vegas_Millennial]

The NYSE just experienced the best May on record dating back to 1990, and the quickest return to normal after a correction since 1998.  In 1998, the worry then was that the Internet was going to disrupt everything, and we had the dot.com bust in March 2000.  Today, there is a similar sentiment with AI going to disrupt everything.

U.S. stocks are still flat for the year, having underperformed international stocks.  I always keep 1/3 of my stocks in foreign companies, so I'm up for year.  Everything looks expensive if trying to time the exact moment to buy.  For those trying to time the market, think about 1998 in hindsight and diversify.

 

Edited May 31 by Vegas_Millennial

[+ Vegas_Millennial]

S&P 500 reached a new record high last week.  My retirement portfolio is looking very good.

[+ Vegas_Millennial]

History says the stock market will soar in the second half of 2025.

"The S&P 500 has only returned more than 20% in two months on six occasions since 1950, and the most recent one was this year. The S&P 500 climbed 20.5% during the two-month period that ended on June 9, 2025...

...After a two-month gain exceeding 20%, the S&P 500 has always increased during the next six months and the next year. Moreover, the index has returned an average of 16% in the next six months and 31% in the next year..."

MSN

WWW.MSN.COM

 

Edited July 10 by Vegas_Millennial
Added quotation

[+ SundayZip]

Interesting piece in the NY Times today. According to the article, Edward Yardeni, independent Wall Street economist and strategist, "... estimated a range of 'subjective probabilities' for the stock market. There is a 60 percent chance that the bull market will continue, a 25 percent chance of a bear market caused by a recession, and a 15 percent chance of a melt-up."  

This is my first encounter with the term, melt-up.  Investopedia: Melt-Up
 

 

[+ SirBillybob]

I think I would rely more on the 15% protein estimate of a tuna melt.

[mike carey]

On 7/12/2025 at 11:23 PM, SundayZip said:

This is my first encounter with the term, melt-up.  Investopedia: Melt-Up

Well, to me 'melt-down' is a collapse of some sort, not necessarily 'down'' in a market sense, more like someone losing their mind about something. But apart from it seeming to me to an abomination in linguistic terms, I concede that in a market sense it's a useful term when a collective loss of reason causes an upwards spike in markets.

[+ augustus]

Beware people.  US stocks are very over valued historically.  Right now, the CAPE ratio for the S&P 500 stands at 38.7. That means stock prices are very expensive, relative to earnings.  “Right now, the U.S. stock market is trading at more than double the post-World War II average price-to-earnings ratio,” said Randy Bruns, a certified financial planner in Naperville, Illinois. 

Also, when back tested to 1970, the Buffett Indicator has averaged a reading of 85%, which is to say that the aggregate value of all stocks has averaged about 85% of U.S. GDP spanning 55 years. In recent trading sessions, this ratio has pushed above 213%, equating to a roughly 151% premium to its mean since 1970. 

And Goldman Sachs is recommending value stocks with decent dividends.

 

 

[TonyDown]

@augustus  LPL Financial latest live Web event admitted pretty much the same thing, that "stocks are expensive." They also believe the bullish trend will continue, which many pundits on CNBC agree.

Remember "irrational exuberance"?  Do we need a new term?

I don't understand how so many asset classes can be finding new highs, yet we're told there is a lot of cash on the sidelines. 

Where is the cash coming from for buys?

Blame it on Crypto?  I don't know.  

Stocks are way up again today.

 

 

 

 

[+ augustus]

@TonyDown  I agree with you 100%.  Who knows.  But I do remember the 1999-2001 hi-tech crash when the Nasdaq fell 80%.  Ouch!