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The 7 trillion rally Wall Street dollars and buy and hold winners

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In this favorable environment, there are predictions that the S&P 500 will also set a new record by the end of next year

Το ραλι 7 τρισ. δολρ ων της Wall Street και οι κερδισμeνοι του « buy and hold

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From the Federal Reserve's aggressive rate hikes, economic and geopolitical uncertainty, shrinking corporate results to bank failures, Wall Street had plenty to contend with in 2023. And yet, the closing year is proving to be a great one for those they implemented the simplest investment strategy of all: Buy and just wait.

The S&P 500 hit its low for the year on Jan. 5 and has since rallied steadily, reaching an all-time high on Friday . This is a 7 trillion rally. dollars, according to Bloomberg estimates.

Wall Street's main index rose 0.2% over the past five days, ending its sixth straight week of gains, the longest positive streak since 2019.

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Fund managers and strategists had started the year worried about a recession, but eventually found themselves chasing the rally as the economy continued on a growth path.

Just before the year closes, the S&P 500 gains 20% and has already exceeded by at least 500 basis points the average target price set by Wall Street analysts in January.

Now, concern is starting to dominate the market again. Hedge funds sold shares in international markets last week, according to data compiled by Morgan Stanley. Goldman Sachs advised clients to seek protection against potential losses, while Bank of America's Michael Hartnett predicted stocks would suffer in the first quarter of the year.

What worries experts is that the valuations seem expensive, while the corporate profits of the American listed companies do not allow share buybacks. While expectations of rate cuts have been boosting stock markets of late, concern is fueled by the fact that this monetary easing is the result of a worsening economic outlook.

However, if the experience of 2023 has shown anything, it is that those who tried to time the market (ie buy low and sell high) lost. Buy and hold yielded bigger gains than the 22 other strategies Bloomberg examined.

And that's because while the stock market occasionally declines, over the long term it shows a persistent upward trend, which it rests on the ability of American companies to increase their profits. Earnings by S&P 500 companies returned to a positive trajectory in the third quarter and are expected to accelerate in 2024, according to data from Bloomberg Intelligence.

In this favorable environment, there are predictions that the S& P 500 will also set a new record by the end of next year.

Source: www.kathimerini.com.cy

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