It seems like everyone is making predictions for 2014 for the stock market, particularly as it pertains to the Standard and Poors 500, or S&P 500. Not to be left out, and so I can point to this next December when I am perfectly correct, I offer my target.
As of today, December 19, the index stands at 1809.60. I expect it will move up a bit more to end the year at 1825 as a result of the Santa Claus rally we get most years. With a little bit of finality from the Fed, this seems reasonable.
For 2014, I expect another excellent year. I predict the year will end with the S&P 500 at 2360.05, a gain of 22.6%. A very good year and better than most "experts" are predicting.
Why? The primary reason is because of supply and demand. There is still a large amount of money on the sidelines (and more being generated each day) and there are very few other places for that money to go. It's like Joey said in Raging Bull, "They have to give it you, there's no one else."
CASH - Interest rates are still very low, and are expected to remain low for the year. There is no reason to keep money in cash that can be invested for a real return.
BONDS - If interest rates go anywhere, it will be up slightly, reducing the value of bonds, and their return.
GOLD - Seriously? Very few people invest anything more than a fraction of their portfolios in gold, and with the metals recent crash, even fewer will.
THE REST OF THE WORLD - I am sure some money will find its way overseas, and to Mexico and South America. But it's not going to be enough to draw money from the US. Most of the S&P has overseas exposure too.
There are always headwinds and the market will fluctuate. But until something comes along to offer a better alternative for making money, the S&P is the place to be.
No guarantees here, folks, and nothing here is a recommendation to buy securities. It's just my opinion. I'll be back to gloat in 2015.