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Stock market predictions

Stock Market Predictions

Stock market predictions – like when a market might pull back or if it's a good time to buy stocks – sound like a great idea. Who doesn't want to know what's in store for their money or if there will be a stock market crash in 2022? But these forecasts, even from experts, can vary widely. How are both short- and long-term stock market forecasts made, where does the information come from, and what information should investors look at?

Leading Economic Indicators

Leading economic indicators can tell you where an economy is headed and provide information so that investors can make stock predictions. A leading indicator shows economic improvement or decline before the economy shows it.

These indicators include:
• Stock prices
• Average Earnings
• Consumer Spending
• Unemployment Claims
• Building Permits
• Product Inventory

Leading economic indicators tell investors whether an economy is expanding or contracting. For example, if unemployment claims are down and earnings are up, then it’s likely the economy is expanding.

Leading economic indicators also influence the actions of central banks. These banks may implement easing or lower interest rates if an economy is lagging. Interest rates, as they effect the cost of borrowing money, effect the economy.

These statistics and the policies which impact them tend to change before the economy changes. Experts can use these statistics to make stock market predictions.

Market Indexes

Just as leading economic indicators predict and reflect economic conditions, market indexes also predict and reflect economic conditions. Understanding the trends of these indexes can help experts forecast the stock market and estimate the future price of shares.

Looking at market indexes both in the short- and long-term can provide investors with information about momentum and mean reversion.

Momentum is the assumption that the market—or a particular share—will continue in the same direction that it’s going.

Mean reversion is the idea that the market will even out over time. Mean reversion may happen over many years or decades, and can be hard to observe at a given moment.

Over the short term, or 3–12 months, momentum provides some information for investors: stocks that are going up are likely to continue to go up. However, over the long term, or 3–5 years, stocks that have gone up are likely to underperform, or revert to the mean.

Martingales are another way to approach how market indexes might help predict future stock prices.

Martingales refer to the idea that past pricing trends have no effect on future prices, and that the best predictor of tomorrow’s market price is the current price plus a small amount. The inputs for martingales are stock-specific, and include the current price and the estimated volatility.

Martingales are about tomorrow’s price, momentum is about short-term trends, and mean reversion is about long-term trends. By following stock market indexes and by using one—or all three—of these methods, an expert can make a more accurate stock market prediction.

Value

Value investors don’t believe that share prices reflect all information available or that shares necessarily trade at their fair value. These investors forecast the stock market by including information outside of the market itself.

Value investors look for stocks priced less than their book value. Value investors believe that the market reacts to good and bad news, and that stock market prices might not reflect the intrinsic value, or valuation, of a stock. These investors look to purchase undervalued stock to buy at a discount, hold long-term, and sell later at a profit.

Examining a company’s financial performance, including their revenue, earnings, cash flow, and profit as well as their business model and market can all help an investor determine the valuation of a stock. Looking at a company’s earnings reports over time can also help investors analyze a firm’s financial health.

With this information, an investor can calculate the price-to-book ratio (P/B). This ratio compares the stock price with the value of the company’s assets.

Value investors look for stocks with a below average P/B ratio. Investors purchase these stocks when they can predict that the share price will rise to a more average position.

Predicting the Stock Market

To predict the stock market, understanding the health of the economy, as well as the policies surrounding that economy, are key. Examining your goals as an investor—such as knowing your time-frame and risk tolerance—will help you choose the right information to look at.

Additionally, unusual economic circumstances can make variations in stock profitability wider and much more obvious, and these variations can help investors observe trends and make long-term stock market forecasts.

Check out our free report "Protect Your Money from a Market Crash in Two Steps". This comprehensive guide covers everything you need to know to make it through a market crash.

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    EVgo Stock Price Prediction for 2022: 97% Potential Upside

    By Chris Wilcox, Contributing Analyst, Money Morning - January 5, 2022

    One EVgo stock price prediction for 2022 shows a 97% target.Here's why EVgo stock is different from other EV chargers and how it could double your money.

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Article Index

  • EVgo Stock Price Prediction for 2022: 97% Potential Upside
  • 2022 Tech Sector Forecast - The Best Tech Stocks to Buy
  • How to Play the Fed Announcement This Afternoon
  • How to Prepare for the Most Critical Earnings Season in Decades
  • Best Defense Stocks to Buy for Q4 2021
  • How to Play a Bull Market That Won’t Quit
  • Why a Stock Market Crash Is Closer Than You Think
  • Sell the News on the Tech Stock Correction
  • Why a Market Correction Could Be Next
  • Four Earnings Season Stocks to Buy Today
  • Six Stocks to Buy to Beat the “Biden Tax Bite”
  • Seven Stocks to Sell Immediately
  • The Best Stocks to Buy and Sell Right Now
  • Wall Street Is Worried About a Bubble - Here's How to Cash In
  • A Market Correction Is Coming - Here's What to Do
  • Why the First Quadruple Witching Day of 2021 Matters to Everyone in the Market
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EVgo Stock Price Prediction for 2022: 97% Potential Upside

By Chris Wilcox, Contributing Analyst, Money Morning - January 5, 2022

One EVgo stock price prediction for 2022 shows a 97% target.Here's why EVgo stock is different from other EV chargers and how it could double your money.

Read more...

2022 Tech Sector Forecast - The Best Tech Stocks to Buy

By Michael A. Robinson, Defense + Tech Specialist, Money Morning • @Robinson_STI - January 5, 2022

Michael Robinson has the best tech stocks to buy in his 2022 tech sector forecast.

Here’s where you want to concentrate your tech-investing dollars this year…

How to Play the Fed Announcement This Afternoon

By Shah Gilani, Chief Investment Strategist, Money Morning • @ShahGilani_TW - November 3, 2021

The Fed announcement today is going to generate big profit opportunities, and Shah has them all lined up.

And that means there’s a lot of money on the table for us, too. Here’s what to do about it…

How to Prepare for the Most Critical Earnings Season in Decades

By Garrett Baldwin, Executive Producer, Money Morning - October 12, 2021

The most critical earnings season in decades starts tomorrow, so Garrett Baldwin looks at the challenges we’re facing and shares a secret to best help you prepare for it….

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Best Defense Stocks to Buy for Q4 2021

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When it comes to defense stocks, the U.S. government is the cash cow.

It’s been that way for more than 240 years.

This longstanding relationship adds stability and, in turn, predictability when it comes to projecting the growth of these companies.

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How to Play a Bull Market That Won’t Quit

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The S&P 500 has doubled from its March, 2020 lows in the fastest, strongest bull run since World War II.

That’s got some people feeling nervous, but what everyone should be doing now is looking at ways to play an unstoppable bull market – Tom Gentile and his Money Calendar are seeing nothing but green for the foreseeable future.

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Why a Stock Market Crash Is Closer Than You Think

By Mike Stenger, Associate Editor, Money Morning - August 11, 2021

The "chicken littles" always find new reasons to say the sky is falling.

But whether we like it or not, a broken clock is right twice a day.

And with the market at all-time highs, what goes up must eventually come down.

Eventually is a keyword here.

But how eventual is the coming stock market crash?

Certain markers point to sooner than later.

Read more...

Sell the News on the Tech Stock Correction

By Chris Johnson, Quantitative Specialist, Money Morning - July 23, 2021

Folks have been piling into tech stocks, buying the rumor on another COVID-19 crash.

But when the inflated Nasdaq comes crashing back to Earth, these two "sell the news" plays could turn a record-setting profit.

Click here to get the full details...

Why a Market Correction Could Be Next

By Money Morning Staff Reports, Money Morning - July 20, 2021

The stock market finally remembered that owning stocks can be risky.

After Friday's sell-off, the carnage continued on Monday as the Dow plunged more than 900 points at one point during the day.

The biggest losers included commodity and financial stocks expected to benefit from inflation and rising interest rates.

Stocks fell by around 2% yesterday.

A drop of 10% or more from recent highs would mean a market correction, and that's a possibility investors need to take seriously right now.

Here are the exact numbers you need to watch to know what's coming next...

Four Earnings Season Stocks to Buy Today

By Shah Gilani, Chief Investment Strategist, Money Morning • @ShahGilani_TW - July 15, 2021

Alcoa's report traditionally kicks off the "official" earnings season, but experienced investors know the action has already started.

Shah Gilani's recommending four earnings season stocks to buy today - companies with a mix of great results and great expectations that could really move over the next few weeks.

As a special "kicker," he's recommending two inexpensive, low-risk/high-reward trades, too.

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Six Stocks to Buy to Beat the “Biden Tax Bite”

By Shah Gilani, Chief Investment Strategist, Money Morning • @ShahGilani_TW - June 11, 2021

The Biden administration just hit us with a $6 trillion budget, the biggest ever.

To pay for it, Biden says he’ll raise taxes on the wealthy and corporations, but the truth is, one way or another, everyone will feel the “Biden Tax Bite.” Shah Gilani has pulled together a list of the six best stocks to buy to beat that bite and stay ahead of the Taxman… .

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Seven Stocks to Sell Immediately

By Shah Gilani, Chief Investment Strategist, Money Morning • @ShahGilani_TW - June 1, 2021

Millions of investors own one or even all seven of the stocks Shah Gilani’s about to name.

That’s a problem, because these are seven stocks everyone should sell immediately, as in “today.” They’re pure portfolio poison.

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The Best Stocks to Buy and Sell Right Now

By Shah Gilani, Chief Investment Strategist, Money Morning • @ShahGilani_TW - May 18, 2021

For as many new investors that have entered the market, there are millions just waiting on the sidelines.

If that sounds familiar, Shah’s special session of Buy, Sell, Hold is for you.

And even if you’ve been in the markets for a year or more, this session is for you, too.

Shah’s covering it all today, from which stocks to own and how many of them to how many open positions to have.

It’s all here….

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Wall Street Is Worried About a Bubble - Here's How to Cash In

By Andrew Keene, Special Contributor, Money Morning - April 11, 2021

With the Dow above 33,500, the S&P 500 above 4,100, and the NASDAQ north of 13,800, it's no wonder you've been hearing Wall Street worrying about an impending bubble.

But Andrew's not worried about a bubble yet.

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A Market Correction Is Coming - Here's What to Do

By Money Morning Staff Reports, Money Morning - March 25, 2021

The S&P 500 just hit an all-time high last week, but today investors are bracing for a market correction.

If that sounds completely crazy to you, then you're not alone.

As always, we're here to help.

Let's break down a few of the big questions investors are asking right now, then get into what investors can do to protect and grow their money during this uncertain time.

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