The Flinchum File
Thoughtful Economic Analysis and Existential Opinions

Consistent With History?


The Bank of America has an interesting forecast.  The current bull run in the stock market resulted from the relatively-sudden easing of geopolitical tensions, a decision on Brexit finally, and confidence in the November election, as well as highly supportive central banks (Fed & ECB).  The Bank believes these problems are not over, but merely “on hiatus.”  They believe the S&P will hit 3,333 by March 3rd, up from 3,265 now.

Then, reality will start closing in, with a listless stock market for most of the year.

Historically, the market loses steam and drops slowly during election years, until the market gains confidence in the outcome.

Remember:  There is an inverse relationship between stock prices and uncertainty.  As uncertainty goes up, stock prices go down, and stock prices go up when uncertainty goes down.

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