The first half of the year has come and gone. The S&P 500 ground its way higher and finished the first half up 9.3%. Unsurprisingly it has been robust S&P earnings that drove the markets to new all-time highs. Reported earnings were up 18% year over year. Despite the new administration's failure to pass new tax policy so far, analysts weren't expecting much movement in 2017 so earnings estimates haven't disappointed in the least. In fact, companies have continued to beat expectations on the top and bottom line and we expect more of the same in the second half. This has the Runnymede investment team optimistic heading into the second half of the year. As the market continues to hit new highs, there seems to be a guru warning of the next crash on a weekly basis. Just ignore the noise for now.
Five Reasons The Bull Market Is Likely to Go Even Higher
There's been a lot of chatter recently. The “fat, ugly, bubble.” Is the “bull running out of steam?” Goldman strategists “are becoming more cautious about stock markets.”
At Runnymede, we are neither perma-bulls nor perma-bears. Rather our perspectives on the financial markets are based upon research, and our market outlook is reflected in the positioning of our clients' portfolios. In fact, we have been bullish on the market since July 2016. So where do we stand right now with the bull market having recently celebrated its eighth birthday? After much thought and careful reflection, here are five reasons why the bull market is likely to go higher.
Happy Birthday! Bull market in stocks turns 8.
The bull market in stocks celebrates its eighth birthday today. As it turns out, it's also my birthday. This got me thinking about what was happening in the world when I turned 8. In 1980, the Pac-Man arcade game was released. Camcorders and fax machines were cutting edge technology. A whole lot of people were watching TV to find out Who Shot JR? on the popular soap Dallas. The yearly inflation rate in the U.S. was 13.6%. The average cost of a new house was $68,700. The average cost of a new car was $13,650. I'll also mention that a (government subsidized) hot school lunch cost $0.65 and milk was $0.05. Okay, enough about me.
Wall Street’s biggest bull turns bearish
For years, Tom Lee has been known as Wall Street's eternal bull. His S&P targets were virtually always the most bullish on the street. When I reviewed what other strategists were predicting this year and Tom Lee hadn't released his numbers, I just assumed he would be the most bullish on the street, again. Perhaps we should check to see if Tom Lee has been abducted by aliens and replaced by a clone because Tom Lee is the most bearish strategist on the street with a S&P target of just 2275.