๐Ÿ“ˆ TKer by Sam Ro

๐Ÿ“ˆ TKer by Sam Ro

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๐Ÿ“ˆ TKer by Sam Ro
๐Ÿ“ˆ TKer by Sam Ro
Don't be afraid of the market's bears ๐Ÿป
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Don't be afraid of the market's bears ๐Ÿป

Putting a bearish stock market forecast into context

Sam Ro, CFA's avatar
Sam Ro, CFA
Nov 15, 2021
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๐Ÿ“ˆ TKer by Sam Ro
๐Ÿ“ˆ TKer by Sam Ro
Don't be afraid of the market's bears ๐Ÿป
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Bears think stocks are going down. (Source: Getty)

Morgan Stanley, one of the most prominent banks on Wall Street, is telling clients that U.S. stocks are going down in 2022.

Specifically, their 12-month price target for the S&P 500 is 4,400. Thatโ€™s about 6% below where the index closed on Friday.

โ€œWe think that 2022 is really about โ€˜mid to late-cycleโ€™ challenges: better growth squaring off against high valuations, tightening policy, rambunctious investor activity and inflation being higher than most investors are used to,โ€ Morgan Stanley strategists, led by Andrew Sheets, wrote Sunday (via Bloomberg). โ€œWe see plenty of challenges, including downside to the S&P 500 and U.S. 10-year yields being well above forwards.โ€

Itโ€™s unsettling stuff. Whatโ€™s an investor to do?

I certainly donโ€™t think itโ€™s necessary to ignore these headlines. Investors would be fooling themselves if they donโ€™t think stocks can do poorly in the near-term.

In fact, long-term investors might find themselves relieved to see the stock market fall only 6% over the next 12 months.

How a 6% sell-off is arguably bullish

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