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Given the broad spectrum of available market indicators, any decisions on the viability of any particular investment strategy can be onerous, to say the least. When analysts apply their predictive powers to the national or global economy as a whole, the process becomes even more complex and vulnerable to oversight. So, we get the widespread fallibility of all bold stock market predictions. Discerning investors can distinguish between valid insights and alarmist or overly optimistic predictions if they evaluate trends with careful reserve.  

Stock market predictions for 2018, along with predictions as to what impact this portentous year will have on markets in coming years, vary widely. We found many highly optimistic predictions that unfettered growth will continue indefinitely, but other forecasters have said that a recession is likely to rear its head in late 2019 or early 2020. As is often the case, both extremes are unlikely. A tempered future is the most likely outcome.

Product FAQ

1. What Are Stock Market Predictions?

2. What Do Stock Market Predictions Do?

3. How Do Analysts Come Up with Their Predictions?

4. Where Can I Find Stock Market Predictions?

How We Reviewed

To provide our readers with an assessment of some stock market predictions for 2018, we surveyed a wide variety of major publications on finance, including some published in countries other than the U.S. We reviewed data and analysis published by investment banks around the country, non-profit analytical organizations, and government institutions responsible for financial regulation.

What We Reviewed

  • Likeliest Outcome Is Sustained U.S. Economic Growth
  • Many Investors Will Remain Overly Diversified
  • The ASX Will Beat Wall Street
  • The Global Bull Market Can Run for Years
  • Most Stock Predictions Will Be Wrong
  • List A Recession Is Coming in 2020
  • Long-Awaited "Wobbles" Will Occur
  • Demand for U.S. Municipal Bonds Will Keep Growing
  • Volatility Scares Investors and Will Create Opportunities
  • U.S. Shares Will Stay "Overvalued"

Likeliest Outcome Is Sustained U.S. Economic Growth

road signs and car

About this Prediction

Expectations for market behavior in 2018 were marked by a general lack of consensus among analysts. The impacts of the new administration's tax cuts and proposed international trade tariffs presented the most obvious sources of uncertainty. The Federal Reserve's reluctance to raise interest rates came in a close second.

Optimism due to substantial gains in 2017 has been qualified by the weak market for government bonds in the aftermath. Investors are wary of political factors that could reign in earnings, which represent the strongest facet of the present market. In the end, 2017's gains were too strong to sustain, but 2018 now appears likely to end with moderate growth and minimal speculative bubbles, even if government bonds are sluggish.

Pros

  • U.S. corporate earnings are still solid          
  • Wild speculation is minimal

Cons

  • The Fed will have to raise rates eventually
  • Political uncertainty is a destabilizing factor

Risk

If rates climb to a level that makes lending less attractive, and especially if that event is accompanied by dissolution of international trade agreements, earnings could dry up and returns may nosedive.

Summary

The diverse factors influencing U.S. economic growth lead to unanswered political questions and constant concern over interest rates. These factors will hamper growth, but solid earnings should continue for the immediate future. Government bonds will almost certainly continue to under-perform.

Many Investors Will Remain Overly Diversified

stock market

About this Prediction

Many investors hold over-diversified investment portfolios, and the stock market predictions we reviewed did not include a vision of this changing in the immediate future. Diversification is essential to the security of an investment portfolio but, when investors are overly conservative, their portfolios may become as insulated against growth as they are against big losses. This trend does not preclude growth but it may contribute to holding growth at lower levels. Until investors have greater confidence in market stability, they will not be willing to make many riskier investments.

Pros

  • Diversification prevents astronomical losses  
  • Diversification stabilizes the market as a whole

Cons

  • Over-diversification can hold down profitability
  • Investors' yields are minimal

Risk

Risk is minimal with an over-diversified portfolio, but so is the likelihood of any substantial increase in value.

Summary

Over-diversification is a response to uncertainty in the market that serves as a safeguard against a substantial decrease in a given portfolio's value. As long as many investors remain over-diversified, yields may stay lower than anticipated.

The ASX Will Beat Wall Street

asx stats

About this Prediction

A strong field of stock market predictions suggests that the ASX, the Australian Stock Exchange, will end 2018 outperforming the New York Stock Exchange (NYSE).  This bold call is based on an easing of political pressures, which will allow the government to focus on economic concerns rather than hastily managing various crises. Australian lenders had a rough 2017 but they are rebounding by cutting costs and getting cash back to their investors. This strategy has kept short-term returns to a minimum while pushing long-term yields higher.

Pros

  • Political stability can produce
  • An efficacious strategy in trying circumstances

Cons

  • Short-term investments are hard to come by
  • Lingering political uncertainty

Risk

This model for growth is dependent on interest rates staying where they are: extremely low.

Summary

The improving political climate in Australia, coupled with the savvy of the country's largest banks, has produced a solid market opportunity amid continuing uncertainty.

The Global Bull Market Can Run for Years

The Global Bull Market graph

About this Prediction

Stock market predictions suggesting that the bull market can roll for years to come count on the simultaneous growth of the world's three largest economies: those of China, the United States, and the European Union, over the course of 2017 and the first half of 2018. This growth has been facilitated by central banks' improved understanding of "quantitative easing" strategies used to address the 2008 recession.

While the Fed is intent on raising rates in the U.S., Japanese and European governing bodies have every intention of keeping rates as close to zero as possible, a move that will counteract the negative impact of higher rates in the U.S. The other major concern for American firms is decreasing earnings as some appear to be approaching their ceilings. Fortunately, investment opportunities are still abundant in the global economy.

Pros

  • The global economy has a ton of capacity          
  • Quantitative easing is widespread
  • Ubiquitous growth among major players

Cons

  • Earnings in the U.S. are unsustainable
  • U.S. interest rates are bound to increase

Risk

U.S. investors must be wary of a climate in which earnings are stagnant and yet interest rates increase.

Summary

Opportunity and security are available in the global economy. The most burdensome factors for investors in the United States are the potential for static earnings and uncertainty about the Fed's future behavior.

Most Stock Market Predictions Will Be Wrong

stock market index

About this Prediction

The assertion that stock market predictions are broadly shaded by ignorance is a strong bet in any year, and 2018 is no exception. The specificity of predictions as to market timing and long-term expectations wreaks havoc on investment strategies that promise unsustainable growth rates. A cautious outlook may steer investors away from a few lucrative opportunities but this will prove the more sensible perspective in the long run.

Pros

  • Skepticism informs a solid long-term investment strategy 
  • Market behavior is invariably inconsistent

Cons

  • Lucrative short-term investments can be very profitable

Risk

Any investor who ignores all potential market insight risks passing on a lucrative option. Still, healthy suspicion also improves the likelihood of a desirable long-term outcome.

Summary

Market predictions are notoriously unreliable. All of them should be considered with reservation. This may lead to missed opportunities but investment conservatism is profitable in the long-term.

A Recession Is Coming in 2020

wall street

About this Prediction

With the U.S. economy projected to grow at approximately 3% by the end of 2018, capping off the second-longest period of economic expansion in U.S. history, the ubiquity of pessimistic stock market predictions may seem confusing. This incongruity exists precisely because economies are at their most vulnerable during the later stages of a period of growth.

In the U.S., this dilemma is evident in the relationship between unemployment and wages. Some predict that employers can only raise wages so much before they are forced to reign in hiring or start cutting jobs.

Pros

  • The dissolution of international trade agreements portends recession  
  • The Federal Reserve will raise rates
  • Unemployment is likely to increase

Cons

  • International markets continue to present opportunities
  • Current growth rates are not unsustainably high

Risk

If the stability and growth of international markets is sufficiently reflected in American investment portfolios, the market may be able to overcome adverse factors within the U.S. economy itself

Summary

Given the history of the market's responses to growth, a recession is likely at some point. The best chance investors have to avoid this eventuality is to effectively manage their exposure to burgeoning foreign markets.

Long-Awaited "Wobbles" Will Occur

man thinking

About this Prediction

Stock market predictions of a calamitous meltdown are probably overstated, but the long-awaited wobbles are inevitable. Unprecedented stability in major market indicators over the course of 2017 will not last. At some point in the coming months, the Federal Reserve will increase interest rates and, when interest rates do go up, investors will sell off government bonds and junk bonds in large quantities. This wobble will likely be contained by robust economic health in the country overall, however.

Pros

  • Wage inflation may remain largely unchecked     
  • The Federal Reserve will likely raise interest rates

Cons

  • The dissolution of international trade agreements could further inflame U.S. domestic concerns

Risk

If the Fed continues to "taper" interest rates, wage inflation could be less pronounced, preventing or mitigating this wobble.

Summary

Wage inflation and increased interest rates are a perfect recipe for an economic "wobble," but widespread financial health should mitigate the impact and facilitate continued growth.

Demand for U.S. Municipal Bonds Will Keep Growing

graph

About this Prediction

The municipal bond market is strong in the U.S. because bonds offer investors a stable opportunity to earn tax-free income while investing in the infrastructure they use regularly. Prevailing stock market predictions indicate the market for municipal bonds will continue to grow because foreign investors often purchase investment products that provide exposure to U.S. infrastructure spending.

Pros

  • Rates on government bonds are likely to increase  
  • The market for municipal bonds has strong growth potential

Cons

  • Bonds could be sold off quickly in a time of economic consternation

Risk

If a poorly timed rate hike prompts investors to sell off government bonds en masse, the international market could evaporate quickly.

Summary

Despite uncertainty regarding interest rates, the market for U.S. municipal bonds is soaring among international investors with limited local options who want exposure to infrastructure spending in the U.S.

Volatility Scares Investors and Will Create Opportunities

statistics

About this Prediction

Ironically, the proliferation of market predictions indicating anything between a wobble and an all-out recession promise to provide bold investors with great opportunities to buy certain stocks at bargain prices. As the market braces for an anticipated downturn at the end of 2019 or the beginning of 2020, many high-quality investments will become undervalued and available at prices that do not reflect their potential.

Pros

  • Presents a number of unique opportunities 
  • Investors can acquire shares cheaply

Cons

  • Any downturn can cause unforeseen ramifications

Risk

While volatility creates opportunities, investments are not sold with insurance policies for good reason: Anything can happen, especially in a bear market.

Summary

The impending economic slowdown in the U.S. is bound to cause uncertainty, which will lead to lower-priced shares. Low-cost investment is an exciting opportunity for brave investors but a disaster for the ill-informed.

U.S. Shares Will Stay "Overvalued"

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About this Prediction

A relatively weak dollar and strong growth both in and out of the country have driven US stock prices to record highs, making certain investments look disproportionately expensive to foreign traders. However, as rate hikes take their toll on growth in the U.S., investors will look to foreign investments for greater returns, a move that will threaten overvalued domestic shares.

Pros

  • The U.S. has a large, stable base of committed investors    
  • The U.S. dollar has remained fairly weak

Cons

  • Foreign investments will begin to look more attractive as the U.S. economy cools
  • Interest rates are slated to increase in the U.S.

Risk

The primary factors that may threaten the high values of U.S. stocks are impending interest rate hikes and the possibility that U.S.-based investors will begin sending more investment capital abroad.

Summary

The stability of the U.S. stock market suggests a major decrease in valuation is unlikely. However, some mitigating factors will qualify growth in the very near future.

The Verdict

Fortunately for investors, stock market predictions portending a disastrous recession in the next year or two are probably excessive in their pessimism. On the other hand, predictions of a raging bull market seem equally unlikely. A market disruption of some sort in the coming months is the most feasible eventuality, but mitigating factors in the U.S. and global economies should continue to support a stable, balanced economic outlook. This is because inflation in the U.S. will be largely counteracted by stability elsewhere in the world and increasing opportunities in still-developing nations.

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