For many investors, the ball can’t drop on 2018 fast enough. It’s been quite the roller coaster ride. Investors cheered the rally created by lower corporate taxes at the beginning of the year, only to watch their gains put in jeopardy by the summer swoon of the tech stocks and the overall market correction in October. Still, December brings to mind visions of a “Santa Claus” rally. Will this year deliver? History says yes, but some other indicators say maybe not.
Interest rates continue to inch up. Are they a big concern yet? No, but there seems to be no sign that the Federal Reserve will be pausing. The trade war and equally hostile rhetoric continues between the U.S. and China. Many still believe this will resolve itself quickly. Then again, they've been saying that for months. Oil is falling, which is great for consumers at the gas pump, but is it a sign that the economy is slowing? It may be too early to tell. And that's the real problem.
As 2018 comes to a close, there is a lot of uncertainty in the market. And since markets hate uncertainty, rallies can get choked off before they start. The S&P 500 is trading at a P/E ratio of 21.8, which is down from multiples over 25. The forecast is for the P/E ratio to continue falling. That’s bad news for some stocks, particularly those in the tech sector that have seemed overpriced. This makes them ideal candidates for you to sell as 2018 comes to an end. These stocks are not dogs by any means, but now may be a prudent time to take some profits and avoid further pain while the market finds a direction.
Click the "Continue to Slide #1" button to view the first company.
