This damned recession should be upon us, but it's not. But the lack of a recession alone isn't reason for the surging stock market.
No, I didn't predict the 14%, six-month return for stocks, and neither did anyone else. Not anyone!
This damned recession should be upon us, but it's not. I asked former Richmond Federal Reserve President Jeffrey Lacker why we hadn't had a recession, and he said, "Because the Fed hasn't raised rates far enough." Throughout 2022, brilliant strategists explained higher interest rates were bad for tech companies, yet a handful of tech shares have been responsible for most of this year's gains despite higher rates.are up 86% on average year to date! Meanwhile, the other 493 companies in the S&P 500, in aggregate, have barely moved this year. Solid, blue chip, defensive stocks outside the tech sector have mostly languished.
The answer is that if your investment horizon was the six months ending this June 30, then you really messed up if you're not up 14%. But, if your horizon is longer term, you have to wait and see.Over many years, stock market returns have lots of periods of inexplicable volatility that fade into reversions to the mean. I suspect this period will be seen in hindsight as having been aberrational.
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