Good year so far
2024 is a very good year for the stock market so far. If we look at the leading index, the S&P 500, it is up +23% YTD. Of course this is mainly driven by the big techs like NVIDIA, Microsoft or Meta but well, tech is king because it’s generating both growth and cash flow.
How much longer?
Question is how much further can the rally go from here? Well if we look st history then we always had bigger corrections in between those rallies. Within the last decade we saw those drawdowns of -20% and more several times, 2018, 2020 and 2022. In average about every 2-3 years. In my view the next one is getting due. Maybe not this year anymore but I am pretty sure we will see some bigger downside in 2025 the latest. The exact timing abd the trigger is hard to predict but the probability of a bigger correction is rising higher with every new high.
So keep your cash ready. Stocks aren’t cheap anymore but they will get cheaper soon. That is only healthy, part of a normal cycle and will be a great buy opportunity for longterm investors.
