Stock Market Predictions For 2016

Stock Market Predictions For 2016At this point, I have been asked to give some stock market predictions for 2016, which I am more than happy to do.  The market has been going to ever new heights on a daily basis after our little correction last month.  I keep reading a ton of articles declaring that doomsday is right around the corner.  I have stated in my articles that this just is not going to happen…yet.  But I have stated that because of the enormous amount of money that the governments of the world are throwing at their respective economies, it would be hard to have a huge downfall in market prices.  I fully expect the market to keep on cruising as more and more governments announce quantitative easing and thus allow for more artificial market appreciation.  Heck, my portfolio loves it when they make these announces, on what seems to be a daily basis of its own.  But how about some real stock market predictions for 2016 and beyond?  I think I can answer this one with a pretty good amount of certainty.

Stock Market Predictions For 2016You have to sit back and take a long hard look at what is driving the stock market to new all time highs.  Is it because productivity is increasing to incredible rates and thus the market is rewarding investors?  Nope.  Is it because we are able to secure a ton of great resources at ultra low prices that allow companies to capture all time high profits?  Nope.  Is it because the governments of the world can’t let the market react in a natural cyclical way as it is suppose to and thus it keeps getting artificially pushed higher and higher?  DING DING DING!  We have a winner.  This is not to say that some companies are actually doing a great job and their stock prices are rising above normal market returns, such examples would include one Home Depot (HD), which has returned over 300% since 2008.  But truth be told, do you think we would really be here at this point if it wasn’t for all of the government interventions?  The truth is no.  we would probably still have close to double digit unemployment and the S&P 500 would probably be around 1100-1200 right now.  But that is neither here nor there at this point, because the easy money has been flowing for almost 6 years now and the all important question is what is going to happen in the stock market in 2016?

Stock Market Predictions For 2016We are now seeing the S&P 500 hitting the 2000 level, give or take a few points, and starting to form a tough barrier to cross.  But a ton of people are starting to get very nervous about this market heading into Spring 2016.  There are quite a few stocks out there that are looking to be a steal at this point.  Let’s take a look at the energy stocks that you can buy.  Take a look at the oil stocks and see what you think of those.  They have been crushed by a ton as of late and are now in major correction area.  I realize that many of these companies may not be here if oil prices stay low, but if we can find the survivors and buy them now, we can make a small fortune.  But when everyone is scared to buy a or an industry in particular, this is exactly when you want to buy them.  I feel that this is the moment to jump on these oil stocks.  You are seeing oil go above $40 a barrel I added a nice position in VLO to my portfolio and look forward to the profits going forward.  Looking at the market overall though, it is absolutely overpriced at this point and that is eventually going to change.  But the big question is when will the market go into major correction mode?

There are a few charts that have been floating about that are starting to point to some sure signs of a correction.  You can see them down below.  These will help with understanding my stock market predictions for 2016.

Stock Market Predictions For 2016This first chart shows how the earnings expectations are not even going to come close to what was expected.  Usually if the market is continuing to do well, you will see the EPS go higher through time, but we are not seeing this here.  This tells us that the market should be going a bit lower to make up for this, but we are not seeing this.  This chart is pretty revealing in the fact that you can see the point that it is trying to make with the market being way overvalued.Stock Market Predictions For 2016

Then you have this chart down below.  It measures how optimistic everyone is with this market.  As of the writing of this article, the VIX is trading very close to an all time low and this is very dangerous going forward.  People get in the “Nothing can go wrong” mode of thinking and then you have a huge correction, wiping out tons of profits.  I would suggest buying those puts to protect yourself from a possible downside run.  The VIX is getting to scary low levels and coupled with overpriced stocks, stock market predictions for 2015 could be as much as 20% lower.

Stock Market Predictions For 2016You can see from the chart up above that the market is way overpriced with a price to earnings ratio of about 21.94.  The long term average is roughly 15 and that means that you are looking at this market being about 50% overpriced at its current value.  When looking at stock market predictions for 2016, I am not predicting that the market is going to crash this next year.   But we are easily due for a major correction and there is a probability with it happening during the 2016 trading season.  So I would suggest buying some long term puts to protect your gains over the last 7 years of this very rare bull run.  The chart down to the left is the VIX to give you something to consider.  You can see that these charts point to overconfidence that can lead to massive losses if you are not prepared.

Now is the time to prepare for the worst and hope for the best.  Buying long term puts can help insure your profits don’t get wiped away in a flurry of downside activity.  My stock market predictions for 2016 will be something many of you are banking on.  I have been investing and counseling other investors for over 2 decades now and I am sure that most mistakes could easily be insured against and this is no different for 2016.  We have watched the market drop about 10% in a matter of a couple of weeks and then gain all that back in the same amount of time.  This goes to show you that you will not have a ton of time to get out of the market once it starts to fade.  Having a few put options will help to stop the bleeding and give you a chance to buy some stocks at premium levels when the correction does occur.  There are some fine articles out there that will point one up and a few that point down.  But, I have been investing too long to know that market is artificially inflated by worldwide government intervention.  At this point, I would suggest taking a bit of profit and lowering your risk as the market heads to even higher levels of uncertainty.

Now that you have my on the stock market predictions for 2016, you need to take a look at the following to really give yourself a chance at profiting.  This is a huge opportunity for my readers that will give you all a chance to earn some extreme profits for those that can stand the risk.  Let’s face it, most people are happy to get a 10% in a year.  I am not that kind of person.  This program here will help you earn triple digits in returns.  These are the kinds of returns that can drastically reduce your time until retirement.  Take a look and see how the pros are doing it.

How To Get Rich With Stocks

Stock Market Predictions For 2016

Speak Your Mind

*


Notice: Any information that is written on this site is for educational purposes only. It should never be considered as financial or investing advice. Anything you read on this site is just informational and that is it. I am no longer a registered financial advisor and licensed by the SEC. I am now just a blogger who enjoys writing about stocks and making money online. You should always seek a professional financial advisor for advice on investing and any stock you are considering. Remember that investing is inherently risky and you could lose all of your money. I am also an affiliate of some of the items discussed on this site. In other words, I may be paid for people buying stuff off of this site and the links on here as well. This is how I am able to keep the site up and running.