- Investing in stock over the next ten years will be difficult for those who just buy and hold.
- That's according to Stifel's chief strategist, Barry Bannister, who foresaw a decade-long loss of stock.
- This is how investors should prepare for 0% profit margins in the US stock market by 2031, according to Bannister.
The next decade will not be easy as the latter were investors in the US stock market,
Instead of the S&P 500's combined annual return rate of more than 13% by mid-2010, investors should prepare for a loss for the next decade, or a 0% return on the US stock market from the end of 2021 to the end of 2031,
While that may sound like crazy for the millions of investors who found the stock market for the first time during the COVID-19 epidemic and were put in a position to expect new highs after each sale, it did not come out of the question.
In fact, it has recently happened, in comparison, when the stock market introduced a combined annual return rate of 0.9% during the 2000s. That decade started at the top of the dot-com bubble and ended near the Great Depression.
"As long as the supply and demand laws are in place, we will experience disruption [supply chain], national disputes, fiat currencies, debt governments, populism, and [profit] pressure and regulatory pressure," Bannister explained.
Some of these have already begun to play in 2022, Russia's offensive against Ukraine escalates tensions in the country. These attacks have led to an increase in consumer disruption and an increase in prices for everything from wheat to oil to nickel.
"I would say that the closure of Russia's reserves was as big as when Nixon ousted the US from the gold standard in 1971. This told the rest of the world that they needed to get more money for their assets."
Political tensions could only get worse if China invades Taiwan, Bannister believes given.
"Xi Jinping will not die without trying [in Taiwan]," Bannister said, noting that given his current age the invasion of Taiwan could happen at the end of this decade. And moreover, Iran is likely to reappear as a hotbed of political turmoil by the 2020s,
So how can investors achieve a good return in the next ten years? According to Bannister, simply buying and holding the S&P 500, a strategy that has performed remarkably well since 2009, is not the answer.
"Buying and keeping it is a good strategy for the bulls ... but in the lower divisions, having an index will not bring good profits. Inactive investors will suffer,"
Instead, investors should allocate real and unique assets including assets, housing, and strategies for selecting long / short shares commonly used by hedge funds. Within the equity gap, stock prices should exceed growth shares, while international stocks could exceed US stocks,
In the short term, there is room for improvement in the S&P 500, with about 4,600 relief meetings. But those circles should be sold rather than purchased, because as in the aftermath of the dot-com bubble, a 20% opposition meeting in the market could occur amid a wide decline.
