Long range stock market forecast

Stock Market Outlook Next Ten Years

It’s difficult for any investor to make confident stock buying and selling decisions without a clear, long term vision of the economy. You want some certainty about the 5 year outlook and the 10 year long range outlook.

This long range outlook is about more than the Dow Jones forecast, S&P Forecast or NASDAQ forecast. And this week’s stock market predictions won’t you understand how to ensure your wealth 10 years from today. But knowing what the 6 month and 5 year trends are helps build a more solid view.

Unfortunately, there are very few long term forecasts from research firms, however we can take a closer look at the future right now. Please bookmark now for updates and share with friends.

There’s a lot affecting the stock market outlook and the business sector right now that’s both positive and negative. After this stock market bull run and the 2022 recovery, we’re into a period of uncertainty domestically and globally, and the risk of a stock market crash.

Much of the lift for the economy in the coming years is primarily via debt spending at the same time as titanic trade deficits. That does appear ominous for the United States future, against a backdrop that will see US production costs rise strongly and import prices rising.

Short Term Projections Don’t Help Enough

Short term volatility, short term data and current economic prospects don’t help you understand the 10 year outlook.

For the 10 year stock market forecast, you’ll need to understand global outlook factors, political contenders and policies, social unrest and consumer confidence, interest rate trends, GDP forecasts, US demographics and more to really get a clear 10 year prediction.

Technology improvements could significantly improve business output but are Americans now in a mood for big productivity gains? Will unemployment ease? Will housing prices and inflation fall?

Employment is projected to grow from 153.5 million to 165.4 million jobs from 2020 to 2030 — BLS.gov

The jobs outlook by BLS is promising, yet we know residential real estate is grossly overvalued and will weigh down the economy significantly going forward. A lack of competitiveness of US businesses is a big concern, yet a weakening dollar due to QE should help ease that issue.  Demand from millions of Millennials and Gen Z’s who are trying to start families will give the US economy a boost. But there’s another side we discuss below.

After studying the ten year outlook, you’ll be in a better position to choose specific stocks, sectors, and bonds that will outperform all the rest. And that outlook will help decide when to buy or sell your home.

Despite the issues of consumer satiation, rising interest rates, and ultra high government debt, some economists give positive predictions for the 10 year outlook.

Positive or negative, in the end, it’s all about choosing the right stocks. Are your best bets EV stocks, Faangs, 5G stocks, or Bitcoin? How about AI stocks? Which financial companies will survive the next ten years given the decentralization trend of currency?

Will the US Government Steer the US Economy Masterfully?

First question: Are the Democrats masters of economic growth? Will they still be around after 2024? Change will happen.

A 10 year forecast is instrumental in the government’s redevelopment of the economy so it will thrive right through 2030. Ask yourself whether the Democrats have a workable long term plan and are communicating this to America’s investment community.  Are the extensive environment, real estate, tax, and tech regulations going to hurt US competitiveness and GDP more than other countries?

What effect will the rise of cryptocurrency have on the US banking system and the value of the US dollar as a store of value? Will Bitcoin become the dominant currency?  Is China’s unfair trade advantage going to crush American export opportunities? Some advisors are suggesting global diversification of your stock portfolio (meaning get your money out of the US).

Are the Democrats supporting American leadership in technology? Will AI utilization determine whether the US can thrive in the next ten years?

Investors with 401ks or wealthy Americans with investments will need to answer these questions or they’ll need to keep hopping from stock to stock. Stock picking and timing never seem to work out well for most investors. Those who see the big picture and use an investment strategy that will outperform the S&P, NASDAQ and Dow Jones indexes will protect their portfolio value.

Expert market advisors are talking global diversification, but that will hurt US GDP and capital investment. That outflow of money to Asia or Europe will give them a competitive advantage.

A report from Schwab investments gives a more sobering look at the next ten years: :Market returns on stocks and bonds over the next decade are expected to fall short of historical averages, according to our 2021 estimates” from a Schwab report.

In the Schwab report, Veeru Perianan presents an interesting model that explains the lower expectations. The key factors behind the reduced outlook for stock returns are historically low interest rates, tepid long-term economic growth prospects, and elevated equity valuations.

However, higher interest rates will only stimulate the finance sector, which might be a good place to park your money, if you should find the companies/banks which can last.

Scwab’e economic forecast suggest stocks and bonds will likely fall from their normal historical yields. They believe U.S. large-capitalization stocks in the next nine years leading up to December 2030 is 6.6%, compared to the usual historic level of 10.8%.

Schwab’s economists and market analysts use earnings estimates and macroeconomic forecast data to forecast two key cash-flow drivers of investment returns: recurring investment income (earnings) and capital gains generated by selling the investment at the end of the forecast horizon of 10 years.

Schwab believes interest rates will be lower in the next decade. However, with the US and Europe in such steep debt positions, how could they keep interest rates low? With an ailing economy, higher interest rates (paying down debt) will suppress economic output. Some estimate that earnings will diminish over time and that does not lend itself to a strong economy going toward 2030.

GDP is strong currently, but can it sustain this or slip back to normal growth rates?

Perianan cites economist’s expectation of 2.3% GDP growth per year, on average versus historical average GDP growth of 3.1% per year. The latest estimates for August have it GDP around 5% due to lingering Covid Delta virus issues. After the pandemic passes by next spring, US GDP will surge perhaps even to 10%. The 2022 stock market forecast is excellent due to the reopening surge plus trillions in stimulus.

What brightens the 10 year forecast is the prospect of continuous stimulus infrastructure spending, however, there are questions about what its being invested in, and whether that will improve economic prospects.

New construction permits are strong given supply constraints. Screenshot courtesy of Trading Economics.

US housing construction needs to grow strongly to keep up with new immigration volumes and a growing group of Gen Z’s and Millennials who are wanting to form their own households.  Lack of affordable housing will weigh down the economy and increase demand on social programs.

The biggest dangers to the 10 year stock market outlook are volatility, political changes, debt ceilings, commodity prices, internal trade deals, taxation, and competitive advantage for certain countries. The flight of capital to more lucrative markets is no small matter either.  Investment companies often advise investors to diversify to foreign markets and often go with fast growing economies. This starves out investment for America.

Starting in 2023, volatility will increase as the government is unsure of how to direct the economy and political struggles with the Republicans grow. As interest rates rise, tax increases, and demand begins to fall, there is less room for optimism.

Take a closer look at the stock markets for next week, 3 month outlook, 6 month forecast, 2022 outlook, and the 5 year outlook.

It takes quite a bit of effort and insight to look down the road and understand how market factors will play out. Much of it is political, and based on the confidence of all Americans in their leaders intelligence and strategy. However, ideology-based plans disconnected from reality in a highly politicized business world gives us all pause for thought about the next ten years.

Take a another look at the current stock market forecast, and find stocks with staying power. Avoid gambling with day trading and short term price outlooks and set your 401k up for a solid 10 year gain.

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