Wednesday, December 27, 2017

What you should and shouldn't worry about in 2018

The end of December is filled with analyst forecasts for the following year. I would like to take this time to debunk some of the doomster myths about the stock market, and to outline some of the true risks that I worry about in the year to come.

One of the major myths that have been trotted out is the relationship between the Fed's balance sheet and stock prices. While this chart appears impressive, it is an illustration of the adage about correlation does not equal causality.

Instead, investors could be much better served to focus on earnings, with does have a direct causal effect on stock prices. Forward 12-month EPS is coincident with stock prices, and they are rising.

The full post can be found at our new site here.

No comments: