One of the hardest things to do is to try and time the market to the minute. And while I’ll take profit on some stocks and ETFs or funds, my overall portfolio is set to ride the market up, which happens seven to eight years out of 10. That said, if I thought a GFC sell-off that took stocks down 50% was in the offing, I’d seriously think about going to cash.

That said, I’ve never done that because it’s historically a hard call to get right.

To recap my view on stocks going forward, I expect:

1. Stocks to rise in 2025, thanks to falling interest rates.
2. 2026 could be a challenge with the Trump tax cuts to end.
3. I will become more defensive in middle-late 2025 but I could extend this changed portfolio stance into early 2026.
4. A recession in the US is possible but they could easily dodge it with interest rates falling.
5. Though excessively bullish, this bull market is still very young, if we take history as a guide.
6. Right now, I’m changing my individual investments primarily based on the rotation I expect to happen as rates fall, but my core diversified holdings remain in place

So, does history back my belief that this rally has legs?

Research from the Carson Group says staying long stocks for the moment makes sense, given how young this bull market is.

The table below computes how long bull markets have been over the past 75 years. And given the current one is only two years or so old, bailing out now looks premature.

“Although many might think this bull market has gone too far and is getting old, that isn’t the case at all. If you look back at history, bull markets last more than five years on average, making this one at two years actually young,” said Ryan Detrick, chief market strategist at Carson Group to CNBC.

OK, that’s a plus for remaining long stocks, but is there any other sign that will help us believe in this rally?

US-based Steve Depp of Nerad + Deppe Wealth Management has looked at what happens in the usually great December quarter, when the six months ending in October is surprisingly strong, like this year.

S&P 500 (Past six months)

The gain for the six months to October 18 is just over 17%. So, what’s the history for the next two months?

Running your eye down the second column certainly builds confidence that a strong run up into October augurs well for the final two months of the year.

Let’s see if November and December can be good if the six months ending in October are surprisingly strong, like it has been so far. Of course, the next two weeks ahead of the US election could be a problem but I still think history is telling us that the odds of a nice finish to the year is on the cards.

And I like Depp’s reflection on what has happened over the past two years and how history suggests we shouldn’t be too nervous that this bull market turns into a bear market. “In 2024, it’s very easy to want to take the money and run,” Deppe told CNBC Pro. “We’ve had an incredible two-year run; markets are overvalued; we’ve got an election on deck; we’ve got tensions rising in the Middle East; so, on and so forth.

“There’s every reason for somebody to want to press the eject button but when you see data like this, it helps support the idea that discipline with your investing strategy is more appropriate than acting on any emotional bias.”

I would add, short-term volatility is to be expected with the Middle East and US election bound to create challenging headlines. But we should be investing with a longer-term attitude.

Helping positivity for stocks is also the expectation that rate cuts are coming. Morningstar reminds us that on average, cuts are good for stocks. “On average, the S&P 500 was up 2.5% three months after the first cut, but that average belies rocky reactions to rate cuts in 2001 and 2007,” Joseph Adinolfi reports. “Three months after the central bank started cutting rates in 2001, the S&P 500 SPX was down 10.7%. And three months after the Fed cut rates in 2007, the index was off by 2.1%, according to Dow Jones Market Data. A year after both those cuts, the index had chalked up double-digit losses”.

Importantly, both 2001 and 2007 went with big US recessions (the dotcom and GFC ones) and that kind of scenario isn’t on the cards right now. In fact, along with others, I’ve seen it as a Goldilocks economic recovery of falling inflation and stronger-than-expected economic growth. Corporate earnings are also better than tipped, giving us a trifecta of reasons to stick with stocks.

So, given I’m not up for big changes with my core portfolio holdings, is there a stock that looks like it has upside potential and should be unaffected by the result of the US election or the Middle East crisis?

Paladin Energy (PDN) could be worth considering, given the likelihood that over time nuclear power is bound to win supporters for a variety of climate change reasons.

The consensus view is for a 9.7% gain but there are analysts who are even more bullish, as the table above shows. I see this as an interesting speculative play. Given its past stock price performance, at $12.91 it does look like a worthwhile ‘punt’.

PDN

This chart is staggering, isn’t it?

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