No Extrapolation Necessary
If you thought you could simply multiply the first month’s stock market return by 12 and get a projection of the year’s return, think again.
The S&P 500 was up 5.6% in the first month.
This is a furious start, but not sustainable largess. Because of the new tax package, prospects have improved, but not by 12 times 5.6% better (67.2%).
Likely, at this point, is an increase in volatility and some marking of time. It would be normal for investors to now take a wait and see attitude toward how beneficial this new tax regime actually is. A dose of realism is called for here. Nevertheless, prospects have improved, and results should be good this year; just not this good.
Stay steady my friends.
El Solo Toro