At any given time, the outlook for stock prices over the coming months is seldom clear, because relatively predict-able, long-term economic trends will likely be overwhelmed by comparatively large (and temporary) swings in investor sentiment. Somewhat similarly, the temperature forecast two weeks from now is rather uncertain, as the gradual movement toward spring and summer can easily be overwhelmed by short-term weather patterns. We think stock prices over the next three to five years can be estimated reasonably, just as we think temperatures over the next three to five months are likely to be within a given, warmer range. As these time frames imply, stock market cycles are much longer and less predictable than seasonal changes in the weather. Nevertheless, the interplay between long-term trends and unpredictable, short-term fluctuations is similar.
Mar 2019