Turmoil Before The Year of the Bull

It’s here. 2024: The Year of the Bull! Yes, I’m forecasting a bullish year for the market — so there will be many opportunities to profit. But before that happens, we’ve got a little housecleaning to do. Let me explain… For a transcript of this video, see below. This transcript has been lightly edited for […] You’re receiving this email as part of your subscription to Andrew Zatlin’s Moneyball Daily [Unsubscribe]( [Moneyball Daily] Turmoil Before The Year of the Bull January 05, 2024 It’s here. 2024: The Year of the Bull! Yes, I’m forecasting a bullish year for the market — so there will be many opportunities to profit. But before that happens, we’ve got a little housecleaning to do. Let me explain… [CLICK HERE TO LAUNCH VIDEO OR READ THE FULL TRANSCRIPT BELOW »»]( For a transcript of this video, see below. This transcript has been lightly edited for length and clarity. Turmoil Before The Year of the Bull Happy New Year, folks. I hope you had a happy holiday season. As readers of Moneyball Economics, I’m sure you at least had a profitable past few weeks. After all, back in September, I encouraged you to go long and strong in the stock market… And what do you know? The market jumped 10% to close out the year! Now we head into 2024, a year that’s seen a bit of turmoil in the early-going. Let me tell you what’s going on, and why it’s happening… The Market is Overbought A few reasons stick out to me as to why we may see as much as a 5% pullback in the market. For starters, the market is overbought. The way I can tell is by analyzing a metric called the price-to-earnings, or P/E, ratio. Essentially, this ratio tells you the price you’re paying for the potential profits you’ll be getting in a stock. But there’s a twist… You can look at the P/E ratio as a historically-facing number, or you can look at it as a forward-thinking tool. In other words, the P/E ratio can tell you the price you’re paying today for tomorrow’s profits. Take a look at this chart: This tracks the S&P 500’s P/E ratio over the past decade. Generally, the S&P’s P/E ratio hovers around 15 to 17. If it’s at 15, for example, that means that investors are willing to pay $15 for every dollar of a company’s earnings. Right now, the ratio stands at 19. That’s far above the typical range. And it means investors are likely to sell off their stocks because the value just isn’t there. Of course, investors could also find another reason for selling… The Fed May Not Be Ready And that’s related to a misreading of our nation’s economy. You see, I think the economy is stronger than people think. So is the labor market. Having said that, I expect the Federal Reserve to keep interest rates higher for longer, at least longer than most analysts expect it to. And keeping these rates higher is going to spook the stock market. In fact, I believe it already has, which is why we’re seeing the market get off to a sluggish start. As for the third reason, I think the market’s early-year malaise is simply the consequence of a lot of typical year-end activity. For example, during the “Santa rally” to end the year, institutional investors repositioned. And individual investors worried about missing out on a bullish run and flooded the market. But all those things have tapered off. Market activity has cooled a bit, and it’s a reason we’ve experienced a slight pullback. A Little Turmoil Before the Bull Run Look, I’m still confident this will be a banner year for stock-market investors. The market is simply going through some corrective measures to start 2024. With that in mind, let’s look at what to do in the wake of this downturn. Should you sell your stocks? Bet against some companies or sectors? Maybe look to invest outside the public markets? Those are all possible strategies. But I know exactly what I would do… And I’m saving the details of my plan for my Pro subscribers. So be sure you’re one of them. 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