Jill R. from Reno, NV asks: Hi Mitch: After such a strong run-up in the stock market in the first three months of the year, do you expect to see a similar outcome in the second quarter?
Mitch Response: Thanks for writing, Jill. We did see a strong run-up in stocks over the first three months of the year, but keep in mind that this rally has actually been going on since last February. True, there has been a noteworthy bounce since the election took place in November, but the broader trend of gains has been going for some time now. And I expect that rising trend to continue. If you’re invested broadly in stocks today, my advice would be to hold.
You’ll notice, Jill, that I did not actually answer your question about what I expect stocks to do in the second quarter. That’s because I think there is folly in trying to predict short-term moves in the market. No one can say with certainty what stocks will do in the next week, month or quarter. Any tips you might receive about what stocks or the market may do over such a short time frame is likely to have just as much probability of success as it does failure. So, I’d avoid that trap.
It’s better to think about what you expect stocks to do over the next six to twelve months, and then position your portfolio accordingly. I expect some bumpiness in that time as policy proposals are debated in Congress and geopolitical uncertainties persist. But underneath it all, I think the global economy will continue to grow and that U.S. corporations should post solid earnings results over the next couple of quarters. Does that mean that stocks will be positive in the second quarter? Again, I can’t say with certainty. But it does, in my view, make the case for investing in equities to the degree that your investment objectives and risk tolerance allow. In other words, stay the course.
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