The bull market is officially two years old, and as investors head into the third year, Yardeni Research President Ed Yardeni explains what could lie ahead.
Yardeni expects earnings to continue to push the market higher, especially as valuations are “already stretched.” He adds that if valuations increase, it may spark a melt-up, which he tells Yahoo Finance, “You can make a lot of money still from here. But then you got to figure out when to get out. And then you have to get out pretty significantly.”
Overall, he expects earnings to drive market growth and support a bull market: “I’m thinking that the market goes up on earnings and that earnings, which were probably about $250 a share this year, go up to $275 a share next year, and $300 a share the year after that. By the way, by the end of the decade, I think we could be at $400 per share, which times a 20 multiple or so gets us to 8,000 on the S&P 500 (^GSPC). So I think it’s still a bull market.”
With this market backdrop, Yardeni explains that he is Overweight on technology (XLK), industrials (XLI), and financials (XLF). On the other hand, he is “not too keen on” utilities (XLU) and other interest-rate-sensitive areas: “We don’t think interest rates are going to come down as much as the market has been discounting.”
Watch the video above to hear what Yardeni thinks about the bond market (^TYX, ^TNX, ^FVX).
To watch more expert insights and analysis on the latest market action, check out more Market Domination Overtime here.
This post was written by Melanie Riehl
