Despite expectations by many market strategists for gains next year, the stock market may not be the best choice for investors to make money.
Morningstar reported Monday that the S&P 500, after making up most of its losses from the August correction “once again looks fully valued.” And Marty Sass, a perennial stock market bull and chairman and CEO of investment management firm M.D. Sass tells ThinkAdvisor that he is now “questioning the sustainability” of the stock market rally.
It may, in fact, have already peaked. The S&P 500 index (SPX) is poised to end the year near where it started — with a slight loss or gain or no change at all. As of midday December 28, the index was down 0.26% year-to-date. And value stocks are trailing growth stocks — the S&P 500 value index (SPYV) is down 3% while the S&P 500 growth index (SPYG) is up just over 5%.
Sass, a well-known value investor who manages more than $7 billion in assets, says key drivers of the bull market in stocks, including price/earnings (P/E) multiple expansion and monetary easing in the U.S., are over, leaving earnings as the key determinant for stock prices next year.