By David Forest, editor, Strategic Investor
Longtime readers know that at Casey Research, we believe in getting the big picture right.
It’s one of the most important factors in investing. It’s also what helps guide us when we make recommendations.
Every December, we make predictions for different key markets and economic indicators for the coming year. We also like to review our previous year’s predictions to see what we got right and what we got wrong.
Keep in mind, we don’t care about the exact price of these markets. Trying to determine an exact price is useless. Anyone that tells you otherwise is just seeking attention.
The point isn’t to get the price right. It’s getting the direction of the move right.
This Call Was Easy to Get Right
Last year, we called for the market to head higher. In hindsight, it was an easy call to make.
Coming out of lockdowns and the pandemic hangover, stocks looked poised to climb. That’s exactly what happened with the S&P 500 surging 32% over the past year.
Most of that gain was from the FAANG stocks – Facebook (now Meta), Apple, Amazon, Netflix, and Google – plus companies like EV-maker Tesla.
And as we said above, we don’t think it’s the end of the road for massive spending and stimulus plans. Once you go down that path, it’s hard to break the habit.
So today, we’re sticking with more of the same. So long as the government’s reckless money-printing is still in full effect, stocks are heading higher.
That doesn’t mean we won’t see corrections along the way. We will almost certainly see corrections, potentially of massive size.
When those corrections happen, it may feel like something is wrong. But we know even a small drop in the stock market has the Federal Reserve System in knots.
We know there are trillions of dollars more in spending packages on the way. We also know that the Fed’s funny money will continue to prop up investing markets.
It’s only when the Fed is finally backed into a corner… and Fed executives break that trend… that we’ll believe we’re heading for rough times.
Until then, there just aren’t many viable options for your money today.
As we detailed above, most treasury bonds – while giving higher interest rates than savings accounts – still can’t make up for the loss of value due to inflation. Which basically leaves the stock market as a place to park your hard-earned cash.
As long as that’s the case, the stock market looks set to march higher.
That said, stay alert. This is one of the most expensive markets in history. Things can change very fast.
Keep walking the path,
Editor, Strategic Investor