March 22, 2018(904)

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

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