The stock market has been in a challenging place in 2022. But I am optimistic about the potential for positive returns over most time frames. Indeed, I think that bull markets put down their roots in a bear market.
And we’ve been through a bear market for many stocks and shares. So I think the roots are down and the next enduring bull run is just around the corner. Of course, I could be wrong. And it is impossible to predict wild-card economic and geo-political events such as the pandemic and the war in Ukraine. Anything can happen.
But for a little fun, here are my three biggest stock market predictions for December:
1. Positive updates
Companies will keep surprising the market with positive trading updates.
In recent weeks, many businesses have revealed good trading in their businesses. And such announcements have caused some dramatic and sudden share price rises.
I have noticed several times that valuations have underestimated the strength of many businesses. And on results day, the market has often made a hasty re-evaluation. As always, the market seemed to go too far with its pessimism and this created an opportunity for investors.
But the opportunity to pick up great companies with low valuations is ongoing. And I expect more stocks to be higher through December.
2. Santa meeting
There will be a sustained rally for stocks and shares.
Some of the most worrying events of the year seem to be losing their power. In the US it. And around the world, central banks seem to be starting to win the battle against price inflation.
The recession in the UK may not be as deep as feared, some commentators have said. And commodity prices and shipping rates have fallen back from their scary peaks earlier in the year.
Meanwhile, many businesses continue to prove their resilience. These are all ingredients that can combine to feed investor optimism as Christmas cheer gathers.
3. Index moves higher
The FTSE 100 Index will end the year higher than its current level.
As I write, the Lyde London Index stands at 7,573. But my guess is the optimism and drivers mentioned in my first two predictions will lead to a higher footsie. I think it will be closer to 8,000 than it will be to 7,500.
But over the medium and longer terms, I am also bullish on the prospects of the London market. I think we will see the FTSE 100 break into new highs and take off soon. Perhaps as early as 2023.
As I welcome in the New Year, I will probably think about this article and check to see if my predictions are correct.
However, whether they prove to be right or wrong, I am optimistic that conditions are just right for me to invest in stocks and shares now to hold for the long term. And I work hard on my watchlist to identify opportunities. I could be wrong, but I’m going for it anyway!
The post My 3 Biggest Stock Market Predictions for December appeared first on The Motley Fool UK.
Kevin Godbold has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. The opinions expressed on the companies mentioned in this article are those of the writer and may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
Motley Fool UK 2022