Roaring Twenties?

I’m reaching for anything at this point to explain this market as prices march onward and upward with nary a pause in the action. Dr. Ed Yardeni, the lead at Yardeni research, predicts the markets will ‘roar’ throughout the twenties, mirroring the roaring twenties of old which precipitated the great depression that was set off by the market’s collapse in 1929. I guess that’s as good a reason to keep buying as any. Ed predicts a market melt-up towards the end of this year bringing the S&P up to 7,000 and a continuation of gains as the Federal Reserve cuts rates into 2026 following the reconstituted Fed board in President Trump’s wanting. The market continues to rise to the highest valuations on record and there doesn’t seem to be clouds on the horizon just yet. There are plenty of reasons to worry, but nothing seems to stick with this breed of investor enthusiasm. Plenty of pain potentially lies ahead, but why worry when the sun shines grasshopper? It would be a longshot to expect that future returns can possibly compare with the past fifteen years as this market has pulled forward future gains in my view. We will either experience a market crash of some level, or the market will trade sideways for a period of years returning low single digits as likely forecasts.

So will the roaring twenties mantra continue? Today’s government shutdown is just another test…it won’t be the last.

With interest rates coming down as the Fed eyes a few more cuts, it may be a good time to re-evaluate money market holdings. What was once a yield north of 4.5% will soon be closer to 2.5% to 3%. Locking in some longer term rates may not be a bad call right now for bond investors. And if the market does hit a pothole of significant size, many stock investors will, overnight, become bond investors as this happens any time investors lose a significant portion of their portfolios. Take a look at your fixed income holdings and decide if you want to make some changes while the rate cut window is open.

Trees don’t grow to the sky.