The Market Could Have More To Give. Here's Why.

Donald Trump is the 47th US president. The US stock market (S&P 500) crossed 6,000 for the first time earlier this week. And Bitcoin (BTC) also hit a new All Time High (ATH), hitting US$91,343 today. I probably should not have sold my BTC - argh!

And so here we are. Yet another unloved bull market. People are still talking about inflation, hard landing, and why BTC is not a store of value - shut up already. You were wrong.

Right now, the market is roaring ahead. Company revenues are growing. Company earnings per share (EPS) are also growing, and so too are the number of S&P 500 companies with positive 12 month change in forward earnings. Although profit margins have come down since 2022, we have seen a steady rate of growth of profits since 2023. All of these ingredients bode well for stock prices.

I'm not saying stocks are cheap. In fact, a breather would be welcomed. Although, I am not confident we'll see one this side of Christmas - looking forward to that Santa rally! Will we see the market take a breath in 2025? History says the odds are on.

I created this chart during the pandemic and was of the view that we could be in for a roaring 20's like rally. I compared the rally we saw during the Asian Flu crisis and the Spanish Flu to that of COVID-19. As you can see from the chart below, the 3 scenarios all look very similar to each other. I find this super interesting.

Its for the reasons above I'm still bullish, long-term. In fact, I believe we're in a secular bull market. As I said before, it doesn't mean we cannot have a decline in prices. Interestingly, around this time we saw a decline in stocks during the Asian and Spanish Flu as you can see in the chart above.

We're on track for a 30%+ return in the stock market in 2024. Don't get too excited, this stuff happens often enough. In fact, we see it once every 5 years, about 20% of the time. I wrote last week why perspective is important.

Downturns are temporary, new highs are permanent. Take the long view - stay invested.

I was on Ausbiz earlier this week talking more about this. You can watch the video here.