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As the global economy has been grappling with the COVID-19 pandemic, investors and market watchers have been eagerly anticipating the start of a new bull market. In a recent article on Livewire Markets, investment strategist Michael Coppleson makes the case that this new bull market could start as soon as March 2023. Let’s dive into his analysis and insights to understand why.
Head Of Market Analysis Predicts A New Bull Market As The Global Economy Recovers From The Pandemic-Induced Downturn
Coppleson, who is the Head of Market Analysis and Research at Bell Potter Securities, begins by noting that bull markets tend to follow periods of economic and market weakness. The COVID-19 pandemic has caused significant economic and market weakness, leading to a steep market decline in 2020. However, since then, we have seen a strong recovery, with many stock markets around the world reaching new all-time highs in 2021.
Despite this recovery, Coppleson argues that the market still has significant room to grow. One key factor he cites is the current low interest rate environment. Central banks around the world have kept interest rates low in an effort to support economic growth, and Coppleson believes that this will continue for the foreseeable future. Low interest rates make it easier for companies to borrow money and invest in growth, which can ultimately lead to higher stock prices.
Another factor that Coppleson cites is the ongoing shift from traditional industries to new, innovative technologies. As new technologies such as artificial intelligence, robotics, and renewable energy become more prevalent, companies that are leaders in these areas are likely to see significant growth. This could lead to a re-rating of the stock market as investors become more optimistic about the future prospects of these companies.
Coppleson also notes that valuations in some sectors of the market are becoming more attractive. While some areas of the market, such as technology, have seen significant growth and are trading at high valuations, other areas, such as energy and financials, are trading at much more reasonable levels. This suggests that there may be opportunities for investors to find bargains in areas that have been overlooked by the market.
Inflation Decisions Will Give The Way
Of course, there are also risks to Coppleson’s bullish thesis. One of the biggest risks is inflation. If inflation continues to rise, central banks may be forced to raise interest rates, which could put a damper on economic growth and stock market returns. Additionally, geopolitical risks such as trade tensions and conflicts could also disrupt the market.
Despite these risks, Coppleson remains optimistic about the prospects for a new bull market. He believes that the ongoing economic recovery, combined with the factors outlined above, could lead to a sustained period of growth for the stock market. In fact, he suggests that the new bull market could start as soon as March 2023, which would mark just over two years since the pandemic-related market decline in March 2020.
So, what should investors do in light of this analysis? Coppleson suggests that investors should focus on high-quality companies with strong balance sheets and good growth prospects. He also recommends diversifying across different sectors and regions to minimize risk. Finally, he cautions against trying to time the market, noting that it is impossible to predict short-term market movements with any degree of accuracy.
In conclusion, while there are risks to investing in the current market environment, Coppleson’s analysis suggests that the prospects for a new bull market are strong. With the ongoing economic recovery, low interest rates, and the shift towards new technologies, there may be significant opportunities for investors to generate attractive returns in the years ahead. However, investors should remain vigilant and focus on high-quality companies with strong fundamentals to minimize risk and maximize returns.
