Have we popped the champagne before the fireworks?That’s the question of the final story in my two-part overview of forces that will drive the stock market in 2021.
Last week, I discussed the strongest tailwinds that could blow stocks into a monster rally next year. (Read it here.) Today I’ll change into my bear alter ego and look at some of what could go wrong.
In fact, some Wall Street analysts go as far as to say there’s a 100% chance stocks will lose value in the next 12 months. And that has little to do with whether the economy recovers or not.
Stock prices reflect much more than expectations in business metrics like earnings. Investors’ frame of mind (aka market sentiment)—such as the desire to take risk and the level of overall optimism—influence them nearly as much.