Downgrade This
Mike Zaccardi, CFA, CMT | Jul 18, 2022 03:48AM ET
This article was originally published at five consecutive quarters of negative real U.S. GDP growth.
I chuckled at the sequencing: It’s often said the stock market leads the economy by about six months, give or take. Perhaps that’s no better seen than in these two research pieces. Consider that stocks—big and small, domestic and foreign—are all down bigtime so far in 2022 , and yet it’s only now that we begin to hear economic downgrades from Wall Street research outfits, along with analysts lowering their year-end stock price targets.
Rarely is it the case that the professional analysts at large research firms accurately get ahead of major market moves. To me, these pessimistic outlooks should make investors more sanguine about stocks. Maybe downbeat prognostications from the pros are just what’s needed to set up the next bull market. We already see incredibly sour sentiment from consumers . Low valuations, analyst downgrades and general despondency are characteristics of buying opportunities, not a time to hide out in cash.
It’s hard not to be upbeat about the future—assuming you have a time horizon that stretches beyond the next few months. History tells us that returns are, on average, robust after a dismal six-month stretch like we’ve just endured, according to data gathered by Charlie Bilello . While everyone else shudders when they peek at their account balances, now might be the time to ramp up your monthly contributions to your low-cost stock index funds.
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.