With the new year about to start, I thought it would be good to share the fact that I’m tremendously bullish on the stock market moving into 2015. There are several reasons I’ve personally come to this conclusions.
The first is the housing market. I believe that the housing market and specifically housing builders will do fantastic moving into 2015 due to lack of inventory. In my area we’ve also crossed a critical point where pre-owned houses don’t really make much sense at all. You can build a more energy efficient semi-custom (model provided, you pick options) house for basically the same cost. You also don’t have to deal with updates, twenty year old windows and roofs, and you get to pick the house to your liking. So I’m very bullish on the housing market for 2015 (I’m long on XHB, a home-builder ETF). I would like to add I believe housing could take a beating long-term (5+ years), or at the very least the days of above inflation growth might be over or very limited.
The second reason is the GDP numbers recently released. Now people are already saying these numbers were manipulated, but I think it was minimal manipulation and five percent is amazing. These big macro numbers are very important, not just in the US but the global economy.
The third reason is oil prices. I’m convinced that oil prices are going to help the average consumer, which of course helps most businesses (usually). Of course oil prices going down as much as they did is a bit of a scare, but the scare is usually linked to a lack of demand, which is not the situation here at all. A glut of extra inventory of oils helps the global economy, except for countries directly related in the oil industry. It does toss a wrench into the Fracking industry here in the US, but we will retain those resources long-term.
The fourth reason is we’re heading towards presidential election time. It’s only 2015, but there is a lot of incentive to keep things status quo. Of course you could always have intentional disruption, but you also had a recent change in Congress that would also likely want to keep things relatively stable. Both sides could get blamed for something going wrong at this point.
You might read this and think, “man these are very specific and simple thoughts,” but I think when it comes to investing over a period of years or multiple years, macro is all you really can look into, because anything on a smaller scale is likely to be a very short term interest (days, weeks or a few months). It’s crazy how fast headlines cycle in the investment world.
Now I do believe the time will come for a meaningful pullback, but at this moment, December 28th, 2014 I am bullish. Like many others, I also believe that Dow 20k is likely in 2015.
Also as a side note, most people had the feeling that the market would head back up and have it’s “Santa Rally” from its recent drop, but I really didn’t see the speed to which that rally happened coming at all, but I’m thankful it did.