What’s my call for 2018?

It’s time to draw a line in the sand for so-called market experts like yours truly. My line in the sand is a bold one that will cause me a few concerns this year but hell, someone like me has to have the guts to make a call on important questions such as: “Should I stay long stocks in 2018?”

I am the entertainer…

Yep, that’s the sort of question that ultimately explains why people read this column, watch my TV show, listen to my daily radio show or go to my website. Sure, I’m an entertainer and do my best to make market stuff and economics interesting and sometimes even enjoyable but, at the end of the day, my followers want to know such important things as:

• Do I stay long stocks?

• What stocks should I buy?

• What other assets such as property should I invest in and when?

• Is my job safe in our economy?

• Is my business safe in our economy?

• When will interest rates rise?

• When will the next recession happen?

I act in your interest

These are all hip-pocket issues that are really important to real people out there so I take my prognostication calls seriously. They are never made and constructed to fill up space in a newspaper or website — they are a part of my ongoing narrative about key markets, critically important economies and crucial developments.

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Don’t listen

Right now there are the usual doomsday merchants out there telling us that this will be a bad year for stocks. There are negative experts tipping 10% plus corrections while others are 20% crash tipsters!

Time after time

Many of these people are the usual suspects who the media rolls out time and time again and who have been wrong for nearly five or six years of the past nine years of this bull market we’ve been in since March 2009 after the GFC crash.

A broken clock is right twice a day

One day, these ‘experts’ will be right and the media will forget how wrong they were for so long and how much money they have robbed their followers of but hell, that’s life, isn’t it?

The famous actress Ingrid Bergman said the key to a long life was “good health and a bad memory.”

A little concerned

Given this bull market hits the nine-year mark in March this year, it does make me a little nervous but I must admit that a 10-year run up for stocks is historically more worrying, when it comes to rules of thumb.

Against that, the US stock market really has gone up hard and strong and has been locked into record territory for a hell of a long time. This worries me a little but there have been mitigating circumstances, with the biggest being how low interest rates have been since the GFC.

I’d be worried about the USA and a market shake out if economic growth was not happening there but it is.

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I’m a believer

Even this week, the Dow Jones shot up over 150 points, cracking the 25,000-level on strong jobs data with the private sector, according to a report from ADP and Moody’s Analytics, adding 250,000 jobs in the month of December!

Throw in the fact that the Yanks are looking at the impact of tax cuts this year and there are good reasons to believe the positive US economic story. But that’s not all because the European economic story continues to beat expectations and ditto for Japan, which adds more momentum to the global economy.

A lot of this explains why commodity prices are sneaking higher and why some of our great mining stocks keep trending higher.

No worries on China

My biggest worry is not China and its debt because Communist countries that are not overseas borrowers can bury a financial problem, unlike a modern capitalist country, which is internationally interdependent. And anyway, the Chinese continue to grow nicely, so that’s another concern dismissed.

Here in Oz

For the local economy, I’ve consistently argued that we will have a better economic growth year in 2018 compared to last year, which puts me in the same camp as the Reserve Bank and increasingly more economists who are becoming more positive by the month.

So what’s my big worry?

No my biggest worry is how fast and furious Wall Street has risen but I explain this in terms of very low interest rates, the fact that the US economy has responded by growing, great tech companies such as Apple, Facebook, Amazon, Google, etc. have been killing it in this bull market cycle. And then there has been President Trump and his pro-business policies as well as the market excitement it brings.

Is a sell off overdue?

Despite all this, I have been worried by the S&P 500’ rise since March 2009 of around 240% over 106 months, which makes me think: “Is a sell-off overdue?”

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My tip

I tip we will see volatility this year, which is market code for big ups and downs for stocks but I still think we will see a rising trend.

And this work I did on bull markets keeps me positive that I’m on the money. I looked at US bull markets way back to 1871 and this is what I found:

Bull markets since 1871

• Average gain 178.9%

• Average life 67 months

• Median gain 123.8%

• Median life 50 month.

US Stock market now

• Gain 240%

• Life 106 months.

Bull market 1949-61

• Gain 413%

• Life 151 months.

Bull market 1975-87

• Gain 391%

• Life 153 months.

Bull market 1988-2000

• Gain 516%

• Life 153 months.

While the average numbers make you worry about Wall Street now, the big bull markets show that while the current US bull market has gone on for 106 months, the big bulls have run for 150 months plus.

And while Wall Street is up a big 240%, the big bull markets have ranged from 391% to a whopping 516% in the dotcom boom!

What do I recommend?

So when it comes to stocks, I recommend that you keep the faith but watch this space because if the facts change, then I’ll change my view. Have a great 2018.