The 10-year bull market could rage on well into 2020, say most analysts.
In fact, Invesco global markets strategist Brian Levitt believes the Dow could hit that milestone this year, as noted by Yahoo Finance. All thanks to sustained low interest rates, strong economic growth, earnings growth, and the fact we’re making big progress on the trade war with China.
Better, markets could care less about impeachment proceedings.
Most are betting President Trump’s case will be tossed by the Senate.
Granted, we’ll see potential downside and volatility by 2020 elections. However, investors won’t start pricing that in until November, in our opinion. Until then, as long as there’s further improvements to the economy, and hopeful progress on phase-two of the trade agreement, Dow 35,000 isn’t out of the question.
“It’s going to 35,000. I’m sure that didn’t surprise you. The reality of the situation is that the fundamentals are so strong you can’t stop it,” says Neil Hennessy, chairman and CIO of the Hennessy Funds, as quoted by Forbes.
Billionaires are just as bullish.
David Tepper, for example, still likes this bull market. “I love riding a horse that’s running,” he told CNBC. “We have been long and continue that way.”
Stanley Druckenmiller agreed with Tepper, and also noted he’s still “riding the horse.”
“I revealed a very bullish posture intermediate term since October when [Fed Chairman Jerome] Powell guaranteed he would not rescind the insurance cuts,” Druckenmiller said, as quoted by CNBC. “In addition, Trump’s election prospects have increased with two trade agreements and big win in Iran which the Democrats have responded poorly to.”
We may very well see further upside, as the U.S. and China begin work on phase-two of the trade deal. In fact, President Trump has said he would travel to Beijing to discuss a second trade truce shortly, per a Dec. 31, 2019 tweet.
He added that tariffs will end in phase two of the deal.
However, we will see pullbacks.
Markets never run up in straight lines. All have corrections along the way, which much be taken into consideration if you’re long without a hedge for downside.
“Since 2010, the Dow has experienced 22 pullbacks and 16 of them were drops between 5% and 10%. Those 16 took an average of only 35 trading days to recover lost ground. The other six pullbacks sank between 10% and 20%. But they only took an average of 120 days to regain their losses,” reports Forbes.
For example, we do expect to see pullbacks as we near the 2020 presidential election.
After all, markets hate uncertainty, which is why we typically see markets pull back prior to election results. It’s just something to keep in mind.
Remember, as Warren Buffett has said, “Be fearful when others are greedy.”