Your Money
Today marked the 5th straight loss and a three-week low for the Dow Jones Industrial Average (DJIA.) In weak times like this, stock investors need to look through the noise and focus on the longer-term prospects of economy-wide profits and rising interest rates.
Short-term factors have buffered the economy since 2020; this year, long-term fundamentals should re-assert themselves as the most critical drivers of economic and financial performance. The economists at First Trust use their Capitalized Profits Model to forecast year-end fair value for the DJIA of 40,000 and 5,250 for the S&P 500, both low double-digit returns.
As usual, there are always some oversized game-changing items on the horizon:
- COVID and COVID-related rules
- Build Back Better, or...
- Mid-term elections
- Healing supply chains
- Federal Reserve actions
- Profits growth
- Invasions and sanctions
Welcome to 2022: The Winds of Change
by Robert Stein and Brian Wesbury
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