There is one thing that analysts can agree about the coming year: 2016 confused expectations and expectations. By the way stocks would be executed to who would win the presidency, this was a bad year for people who tell us what tomorrow will bring.
Just as people take note of what’s gone and ask themselves what’s to come, is there something to put in to drive? Or is the rolling nut equally likely to produce a useful prediction?
As my colleagues wrote this month, end-year forecasts are useless, especially those that lead to choosing a sector that is going to rise or dictate how the stock market will work. But this apparently unnecessary useless, of course, does not mean that analysts will stop making predictions or that people will stop looking for meaning in various indicators, even if they have been mostly wrong or just by chance.
You will not have any forecast here. Instead you will get a look at three reasonable approaches – call them the 3 C – that investors can take to prepare for next year or any year.
The approach of society: this approach is not to guess where a stock price could end the year; It is about how companies are performing and evaluating their fundamentals.
The argument here is that the company’s core sales and the potential for gain can be analyzed. And while individual investors have been wary of investing money in the stock market in recent years, corporate earnings have continued to be strong.
“With so much negativity out there, you still have to put your money somewhere,” said Thorne Perkin, president of Papamarkou Wellner Asset Management. “We had a theme of American primacy, which we have had for years. American equity is the place to be.”
Some of the business approaches have their basis in how stock markets typically carry out. About three-quarters of the time, they go up. And consumers continue to buy things.
Of course, if there is any external shock – for example, a trade war or a foreign policy crisis – then it could affect how, when and where companies sell things. And this uncertainty is where the approach of society can have traps: what is known now is not all.
The Consumer Approach: If there is a popular barometer of how people feel, it is consumer confidence. In December the Consumer Confidence Index rose after the increase in November. A correlated indicator on consumer expectations has grown even more this month.
“Consumer confidence improved further in December, only because of the growing expectations that hit a 13-year-old,” said Lynn Franco, director of the conference’s economic indicators, following consumer confidence.
But there has been a caveat: “The post-election increase in optimism for the economy, jobs and income prospects as well as for stock prices that have reached the age of 13 has been more Pronounced among the oldest consumers. ”
Stew Leonard Jr., chairman and CEO of the chain of grocery stores Stew Leonard, operates in affluent areas of Connecticut and New York, has its own way of measuring the economic sentiment of its customers: it calls it the potato index.
The mashed potatoes that are prepared in the store cost about $ 4 a pound, compared to $ 1 a pound for potatoes. But with the old simple potatoes, you have to peel, cook and maccherate on your own.
Yet the price difference between the two is so great – about 400 percent – that when Mr. Leonard sees customers who buy more prepared grapefruit potatoes, he supports shelves with more high quality food. Customers feel bent with cash.
“There is not even a close parallel with regard to costs,” he said. “It saves time.”
This holiday season, he said, sold potato sales, which rose 31% over last year. Catering, she said, has also increased by 15% and sales of wine bottles over $ 20 have risen even after the election.
“We have these things in the store that I basked a bit,” said Mr. Leonard. “I do not bet on that ranch, but I keep an eye on it. I really think they’re a precursor to what’s coming.”
However, when Donald J. Trump starts his presidency, Leonard said, his main indicators will be less reliable. “I can not really read the month of January or February,” he said. “Everyone is in the diet.”
The control approach: For many wealthy investors, upset business numbers or evaluate sales of food