Investors are still really scared, and that could drive stocks higher

on Apr22
by | Comments Off on Investors are still really scared, and that could drive stocks higher |

With the S&P 500 sitting less than 1% from its all-time high and on track for its fourth straight monthly gain, cautious investors can’t help but wonder how long they can still ride on the back of this aging bull before everything comes crashing down.

So what does it mean for the market?

Looking at stocks’ forward performance since 1970, when the worry gauge was in the top quintile, the S&P 500 pulled off an 18.48% annualized return within three months, or 4.33% nonannualized, Paulsen said. What’s more, there has only been a 25% chance that of a loss within 13 weeks.

“As it has during much of this recovery, the stock market continues to climb a Wall of Worry,” Paulsen said.

To be sure, many factors are at play when projecting the market’s direction. While the fear-based investment actions point to more gains on the horizon, risks such as an accelerating earnings slowdown and Federal Reserve’s policy uncertainty could still weigh on the market.



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