Value Investing With Sven Carlin: Stock Market Projections for 2024

The start of a new year tends to bring predictions about the path of the economy. Many big bank CEOs have warned about a recession next year, which would typically be bad for stocks. However, their research departments are saying slightly different things.

That suggests that investors may want to consider being bullish for now, based on the economic data, but watch out for some dangers ahead.

For instance, with the S&P 500 just under 4,600, Deutsche Bank and BMO are predicting the market to rally to 5,100 next year.

That would be a gain of just over 10 percent, slightly above average for the market’s annual return since the end of World War II.

The estimate is based on several factors, such as the market’s current bullish momentum. But it’s also based on stocks trading at 21 times average earnings.

In order for that to play out, corporate earnings would have to soar over 30 percent next year.

It’s possible for many stocks to have that kind of growth. Even some big tech stocks could hit those numbers if investments in AI play out. But those rough numbers suggest a very bullish view for analysts going into next year.

It may be more prudent for investors to take a more cautious approach. Look for pullbacks to buy great companies. Buy companies that have been out of favor with this year’s market. And look for a pullback in the spring given the strength of this market’s recent rally.

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