An article in this weekend’s edition of the WSJ presents the first round of predictions for 2014’s equity market performance. While most of those interviewed are moderately bullish, no one is anticipating a year as strong as 2013. The main reason seems to be statistical. Since the early 20th century only one 20%+ up year has been followed by another 20%+. The average followup year is around 6%-7%.
Most will recall the mood a year ago. Pending Sequester cuts, tax increases and a weak economy added up to an impending big selloff for most prognosticators. So far, 2013 has seen the S&P 500 post its biggest year in a decade. Wonder what those interviewed in the article were saying last year at this time?
We’re certainly not prepared or able to predict what the equity and/or bond markets will deliver in 2014, but then no one else is either.