The stock market has been a challenging place to be during 2022. But I’m optimistic about the potential for positive returns over most time frames. Indeed, I reckon bull markets put down their roots in a bear market.
And we’ve endured 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’s impossible to predict wild-card economic and geo-political events such as the pandemic and the war in Ukraine. Anything could happen.
But in a bit of 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’d been observing for some time that valuations seemed to be underestimating 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 that’s created an opportunity for investors.
But the chance to pick great companies at low valuations is ongoing. And I’m expecting more stocks to pop up higher through December.
2. Santa rally
There will be a sustained Santa rally for stocks and shares.
Some of the most worrying events of the year appear to be losing some of their power. In the US and around the world, central banks appear 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 been saying. And commodity prices and shipping rates have fallen back from their scary peaks earlier in the year.
Meanwhile, many businesses continue to demonstrate their resilience. These are all ingredients that could 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 lead London index stands near 7,573. But my guess is the optimism and drivers mentioned in my first two predictions will lead to a higher Footsie. I reckon it will be nearer to 8,000 than it will be to 7,500.
But over the medium and longer terms, I’m also bullish on the prospects of the London market. I think we’ll see the FTSE 100 break into new highs and take off soon. Perhaps as early as during 2023.
As I’m welcoming in the New Year, I’ll probably think about this article and check to see if my predictions were correct.
However, whether they prove to be right or wrong, I’m optimistic that conditions are just right for me to invest in stocks and shares now to hold for the long term. And I’m working hard on my watchlist to identify opportunities. I could be wrong, but I’m going for it anyway!
