The statistical forecasting model says:
December, 2022
Next 1 Month: +3%
Next 6 Months: -3.3% (No big deal. Models vary from +2% to -9%)
Probability of at least breaking even: 50% – 80% (Meh.)
Probability of at least breaking even: 50% – 80% (Meh.)
Back to publishing
During the pandemic I felt it would be a disservice to publish any forecasts. My models are statistical, based on the assumption that what usually happens will usually happen again. At least sort of. But, the pandemic hacked apart the normal economy, and the intervention by the Federal Reserve and the U.S. Treasury was incredibly massive. The financial intervention saved us from immediate financial destruction, but it made a joke of my silly little econometric models.
We are now in something of a post-war situation, trying to get the economy back to a more normal footing. Certainly high inflation, rising interest rates, and residual supply chain questions are real problems, but they are things the economy has faced many times before.
Going forward, as far as I am concerned, something like what usually happens will usually happen again. Phew.
One administrative note: during the course of the pandemic Google dropped the Feedburner service that had sent out subscribers notice each time I sent out a new post. I am not sure whether the new subscriber widget with MailChimp works. Please feel free to email me in the meantime at TomTiedeman@gmail.com.
Stocks Near Long Term Trend
The first chart shows the S&P 500 plotted with a long term performance model based largely on interest rates and Real Potential Gross Domestic Product. It shows that after flying above normal during most of the pandemic it has returned to fairly near normal
(Click on image to enlarge.)
After bubbling a bit during the pandemic, the SP500 average is now rather near what I calculate as its long term trend.
Weak First Half Year
(Click on image to enlarge.)
The chart above displays six-month market forecasts since I started publishing in 2007. Note that each dot reflects the forecast for the 6 coming months, so the red negative forecasts from the peak of the pandemic months are really pretty good — the market did in fact go down. Six month forecasts have again started to turn negative, but my short term models expect the year to probably start out fine.
Best Wishes to All!
Six Month Stock Market Forecast 