Split Perception By Alex Craner Comprehensive counseling with achievable and time-based goal setting for retirement and estate planning, without secrets or short-cuts, are ingrained features of Alex’s services. A. re you afraid? Good. That is the prominent attitude of the media these days, they want you to be afraid. They intentionally create narratives to be sensational and hyperbolic to get more eyeballs and clicks. It is that simple. Now, I understand that saying our media has a chicken little mentality is not anything groundbreaking, but I think it is an important reminder. This contant drip of troubled reporting is leading to an abundance of despair, worry, and doubt in our culture, even though there is still tremendous opportunity, growth, and prosperity to look forward to. This brings me to the title of this article, “Split Perception.” On an almost daily basis, I have conversations with clients where I am asked what the outlook is on the stock market and the performance of our portfolios through the end of this year and going into 2022. This question is not being asked out of simple curiosity. It is being asked because they are worried. Many are concerned with the policies they see coming out of Washington, D.C. that are creating inflation, excessive government spending, and other threats to our economy. Nevertheless, we are remaining bullish in our economic and market outlook. Rest assured, our optimism for the near future in the markets is not unsupported, it is simply unreported. When it comes to economists and their predictions, I think the most crucial consideration to make when deciding who to listen to is their actual track record of accurate forecasts. That may seem obvious, but there are a lot of economists who are consistently wrong yet consistently listened to. One of the economists that has earned our attention has been bullish since 2009 and has been consistently correct. When an economist is consistently correct, it is in large part because the models that they build for economic projections are precise and measuring correct parameters. One of these models is known as the Capitalized Profits Model. This model has demonstrated that the S&P 500 is undervalued and has been undervalued since 2009. It still shows this today. Here is the good news: we now have updated information for economy-wide corporate profits for Q1 <strong>2021</strong> and they are outstanding, up 9.2% from Q1 and up 15.8% from the pre-COVID-19 peak in late 2019. T h e s e figures allow the Capitalized Profits Model to be updated and show us something we love to see: the S&P 500 is still undervalued. The stock market is rising for a reason; profits are up and the threat from higher interest rates remains low. As a result, the forecast for the S&P 500 estimate is 5,000 points by year end. We are optimistic for higher markets through the rest of <strong>2021</strong> and even higher markets through 2022. I want to quickly outline the risk factors that could change this forecast , but I believe they are not likely to occur. 1) The US could “lockdown” the economy again over the variants of COVID-19. 2) The Federal Reserve could raise rates more quickly. 3) President Biden, and the Democrats, could push through major tax hikes. Even with these considerations, we are still in a bull market. Remember, the stock market follows a cycle that is largely removed from politics, and we are at a very prosperous point in that cycle. Stretch, take a deep breath, and remember that you are in a strategy for retirement that has endured for our clients over decades. Stay positive, trust in your plan, and do not let them get you down! Sources:First Trust 08.30.<strong>2021</strong> Monday Morning Outlook “5,000” and Bloomberg STRATEGIC PLANNING GROUP 10
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