Wednesday, February 27, 2013

S&P 500 Market Prediction 2027

The S&P 500 reached its all-time closing high on May 30th 2007 at 1,530.23 while it recorded an all-time intra-day high of 1,565.15 on October 9th 2007. The S&P 500 has rallied and now flirts with its all-time closing high which has bulls excited as they hope and pray for new highs. Of course they do as their trading strategy is based on hopes and prayers, far away from reality and analysis.

See, there has been a minor problem in the U.S., who decided to follow into Japanese footsteps when it came to dealing with the financial crisis, and therefore new highs are very unlikely. On the contrary we are starring down the barrel of a 50% correction and so much more. Bear with me for a moment here before you laugh away reality and immerse yourself in your dream world of higher highs.

Before we will evaluate the S&P 500 target at the end of 2027 let’s do some basic math really quick and compare the U.S. and its ugly step sister:

A Japanese first grader is given the following math problem:
2 +2 =?

The student solves the problem and arrives at the following equation:
2+2=4

An American first grader is given the same problem, how do you think it was solved?
2+2=4

Exactly, it does not matter where you are from the math is the same. Having said that, the same applies to policy missteps and therefore the U.S. economy and therefore its financial markets will suffer the same outcome as the Japanese economy did and still does and their markets.

The Nikkei 225 reached its all-time closing high on December 29th 1989 at 38,915.87 while it recorded its all-time intra-day high on the same day at 38,957.44. A devastating financial crisis hit Japan and thanks to its approach it has yet failed to recover while the Nikkei 225 corrected 81.9% and closed at 7,054.98.

The U.S. has followed its ugly step sister and made the same mistakes and therefore will face the same outcome, which brings us to our S&P 500 prediction for 2027.

The Last Bear believes the S&P 500 will close 2027 at 276.97. Allow a margin of error of 3% which would give us a closing range between 268.66 and 285.28.

Those who think the U.S. will face a different outcome fulfill Einstein’s definition of insanity which is doing the same thing over and over again and expecting different results. 

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