Yes, it is once again that time of year! It is time for our Nepsis Top 10 Predictions for the Stock Market in 2019! Of course, to track with our historical performance (and we all know past performance is NOT indicative of future performance!), we were once again 10 for 10 in our predictions for 2018.
Remember, past performance is not indicative of future performance! However, I do like our odds of going 10 for 10 once again in 2019!
You may be asking yourself, why does Nepsis do these annual predictions, especially these types of predictions? The answer is simple. We live in a world that I believe has an addiction to prediction. We see day in and day out investors continue to make big investment decisions and mistakes as they listen to countless predictions, compare their portfolio to benchmarks without understanding how they work, and compare their portfolios to other portfolios without understanding how the returns were achieved and with what level of risk it took to achieve the returns.
My hope is that our predictions can provide a level of clarity and common sense for investors that will enhance their investment process, remind them of the perpetual industry noise that inundates them daily, and put a smile on their face.
Obviously, with the huge correction in the last quarter of 2018 in the markets, the predictions and arm chair quarterbacks have been out in full force! Of course, as I often like to say, “I never met an armchair quarterback that wasn’t right”. In other words, it is always easy for one to state the obvious after it has already happened! However, that doesn’t help the investor make decisions while in the midst of all of the noise and fear.
The reality is, investing is A PROCESS over time! With the continued growth in computer based trading and the growth of Exchange Traded Funds, volatility of late has been at extreme levels. BUT, have NO FEAR!!! Volatility CREATES opportunity to invest in great businesses OVER TIME!
Of course, everyone knows that there is no crystal ball, but people suspend their disbelief to latch on to a silver bullet or quick fix solution instead of being disciplined with their investment strategy. Let’s face it, there are a lot of people that love hearing predictions and unfortunately, I believe many people focus more on predictions than they do on what they own and why they own it.
So, in an effort to keep our streak going, I will once again be making my bold predictions for 2019.
As I mentioned earlier, do investors really pay attention to see how accurate the experts’ predictions are? No, of course not! Therefore, I am going to make it easy for you and let you know how we have fared in our predictions since we started providing them in 2012.
In the seven years that we have been making predictions, we are 7 for 7! That’s right, we have been right on every single one! I realize that may be an absolute surprise for some. However, as you will see from the past predictions, we do not go very far out on a limb. Instead, we look at what should be common sense combined with many of the ideas investors seem to focus their efforts. When all is said and done, when you are investing OVER TIME, it should be the investment philosophy and strategy that provides you with the confidence to stick to the investment process. Portfolio returns are relative to risk taken. Additionally, as we like to tell clients, you don’t make or lose money UNTIL investments are sold. Focus on process and achieving long-term goals, not a short-term number.
2019 Stock Market Predictions!
1. Most predictions on where the S&P 500 will end in 2019 (just like 2018) will be wrong with the potential consequence of investors missing out on great opportunities to buy great companies on sale!
2. Company stock prices, as well as the “stock market” will move up and down irrationally – as usual. Remember, you don’t invest in the “Stock Market”, you invest in businesses purchased through a “market”.
3. Many investors will continue to attempt to time the market and be wrong, missing out on great investment opportunities on sale. The fourth quarter of 2018, particularly the last week, should be enough evidence of that!
4. Focusing on short-term or historical performance will distract investors from making intelligent long-term investment decisions and focusing on their Financial Plan.
5. Some investors will allow their emotions to get the best of them and make investment decisions emotionally as opposed to fundamentally.
6. Stock market volatility will continue to scare investors and in turn, create great buying opportunities — Like they always do! Yes, we took advantage of this massive pullback and volatility!
7. Many investors will continue to focus on inaccurate portfolio comparisons with benchmarks focusing on fees and short-term performance vs the investment process – a symptom of poor investment Clarity.
8. Investors will continue to be overdiversified in their portfolio and not properly asset allocated leaving their portfolios inefficient.
9. Investors will continue to follow the headlines instead of the bottom line when making investment decisions. Just look at all of the recent headlines and predictions in the latest correction!
10. Investors will continue to have an unrealistic time horizon for their investments focusing more on short-term pain vs long-term gain – The tragedy of a short-term thinker.
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