Tags: history | stocks | year | S&P 500

History Argues Against Further Sharp Gains for Stocks Next Year

By    |   Tuesday, 10 December 2013 07:46 AM

Stocks have been on a tear so far this year, with the Standard & Poor's 500 Index up 26.9 percent.

But judging by history, you wouldn't want to bet on that happening again next year, The Wall Street Journal reports.

The S&P 500 has gained 20 percent or more in 23 years since 1927, according to Birinyi Associates. The next year it averaged an increase of 6.4 percent, not much better than the average gain of 5.5 percent for all years since 1927.

Editor’s Note:
5 Reasons Stocks Will Collapse . . .

In only one of those 23 occasions did the S&P 500 rise even more the next year. Eight times it fell.

So it's not surprising that most stock strategists are calling for mild gains next year.

"We certainly don't expect any kind of return next year to be close to what we have seen so far this year," Scott Wren, senior stock strategist at Wells Fargo Advisors, tells The Journal.

He sees the S&P 500 rising to 1,850 to 1,900 at the end of 2014, up 2 to 5 percent from Monday's close.

Wren's calculations show the S&P 500 now stands 6 percent above fundamental fair value.

To be sure, many investors don't think a tapering of quantitative easing by the Federal Reserve will hurt stocks much

"People are getting more comfortable with the idea of tapering and the concept that the reason for the taper is that the economy is getting stronger," Walter Todd, chief investment officer of Greenwood Capital Associates, tells Bloomberg.

Editor’s Note: 5 Reasons Stocks Will Collapse . . .

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Stocks have been on a tear so far this year, with the Standard & Poor's 500 Index up 26.9 percent.
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2013-46-10
Tuesday, 10 December 2013 07:46 AM
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