(No forecast, just words.)

I am especially thankful that none of my forecasting models can read the newspaper, or even know what I think.

The only things the models know are long established reputable economic data series. Each data set has been publicly available for at least 10 years; most have at least 3 decades of experience. A few go back much further. Each variable has a proven statistical relationship to at least some stock market prices. (Mimimum 95% confidence level.) Nearly two decades ago the models started with about a dozen key economic variables, but now roughly 4 dozen macroeconomic variables are included along with millions of data elements from individual stocks. Variables still are almost entirely focused on the US stock market. Things started with a single macro model that went unchanged for years. Now there is an AI swarm of thousands of models, each with a slightly different point of view, and each having to prove its current value and accuracy profile. Each model gets refined on a weekly basis. Every forecast for any stock results from a minimum of 30 independent analyses.

I started these stock forecasting models because I was absolutely horrible at picking and timing stock purchases. My heart, emotions and hunches always got the best of me. Partly for that reason, there are no parts of the models that include my own expectations (like on interest rates or corporate profits in the coming month). Very pointedly, however, I do include a number of variables that do have a high ’emotional’ quotient. The VIX market ‘fear gage’ is one example. Numerous long-standing surveys make the cut as well.

My point in saying all of this is that over the next year or so it seems highly likely that individual stocks and the stock market will have an unusually high level of uncertainty. The stock market DOES read the newspaper and dwells on rumors and false trends. I expect to see unusually high volatility. Should that occur, the models reported on here will almost certainly predict a reversion back toward trend.

In the end, I trust the stock market will usually do what it usually does in response to changing economic circumstances. That’s what it has done for the past 17 years, at least. Who knows, maybe all of that will change, and pigs can start to fly. Perhaps, but I have no evidence of that.

We are in the early stage of what promises to be a major US stock market bubble. This is unlikely to be especially high and sustained real economic growth, just pure bubble. And it could last for a couple of years.