S&P 500: Still Smiling (For Now)

Right. So, the market. Honestly, it’s been… baffling. You’d think, wouldn’t you, that oil at $100 a barrel, a bit of a kerfuffle in Iran, and the nagging feeling that the economy is about to do that awkward stumble-and-fall thing (stagflation, they call it, sounds terribly dramatic) would send everyone running for the hills. But no. The S&P 500 is down a measly 2% this year. Two percent! It’s like it’s deliberately trying to prove all those doom-mongers wrong.

Meanwhile, Japan, Saudi Arabia, South Korea – they’re all having a bit of a wobble. But not us. Not America. It’s… irritating, actually. All that careful budgeting, the sensible saving… and the market just sails on, seemingly fuelled by optimism and a complete disregard for common sense.

What is going on?

I’ve been trying to work this out. It’s like the market has its own internal logic, which bears absolutely no relation to reality. I mean, money, let’s face it, is fundamentally amoral. It doesn’t care about geopolitics or economic hardship. It just wants a return. A good return. And right now, apparently, that return is to be found… here. In the US. Which is… fine. If you’re a shareholder. Less fine if you’re, say, trying to fill up your car.

Units of Cryptocurrency Lost: 12. Hours Spent Watching Charts: 9. Number of Panicked Texts to Friends: 24. (It’s a surprisingly high number, actually. I need to cut back on the financial news.)

The oil situation is, obviously, a concern. Prices have shot up, and there’s all this talk of the Strait of Hormuz being… less accessible. Tankers taking the scenic route, apparently. Which adds to the cost, which adds to inflation, which… well, you get the picture. And the labor market is looking a bit wobbly too. Not collapsing, thankfully, but definitely not booming. It’s a lot. A lot.

But the market seems to be operating on the assumption that this will all blow over quickly. A short, sharp conflict, and then back to business as usual. Which is… optimistic. To say the least. I keep waiting for the other shoe to drop, but it hasn’t. Yet.

And then there’s the dollar. It’s suddenly become everyone’s favourite safe haven again. Which is ironic, considering how it was doing just a few months ago. Trump’s tariffs were dragging it down, and everyone was predicting its demise. Now, it’s soaring. It’s like the market just can’t make up its mind.

Oh, and Wall Street analysts are revising their earnings estimates upwards. Always a good sign. (Or a sign that they’re desperately trying to justify their optimistic forecasts. It’s hard to tell.) Ed Yardeni, who seems to know what he’s talking about, says earnings are at a record high. Which is… encouraging. Although, of course, past performance is no guarantee of future results. (I hate that disclaimer. It’s so infuriatingly true.)

The S&P 500 is trading at a reasonable multiple, apparently. Cheaper than it was earlier in the year. Which is… good. If you’re into that sort of thing. (I’m more of a “hide under the duvet” kind of investor, personally.)

Is it all just… naive?

The market is supposed to be forward-looking, isn’t it? Predicting the future. But sometimes I wonder if it’s just… making things up as it goes along. Hoping for the best. Ignoring the warning signs. Like a teenager who thinks they can drive perfectly well after only one lesson.

Has it correctly priced in a short conflict in Iran? Or is it assuming everything will be fine, even if it isn’t? It’s a difficult question. And the answer could have serious consequences. I keep thinking about all those potential downsides. A prolonged conflict. Higher oil prices. A weakening economy. It’s enough to give anyone a headache.

Will become disciplined long-term investor: 0%. Number of impulse purchases of scented candles: 3. (It’s a stressful time, okay?)

I suspect if the conflict drags on for months, the market will have a bit of a tumble. It’s inevitable, really. But Trump… well, he’s unpredictable. And the midterms are looming. He needs to show some strength. But he also needs to keep the economy afloat. It’s a delicate balancing act. And I have a feeling he’s not entirely up to the task.

The odds of the Democrats retaking the Senate have risen, apparently. Which is… interesting. The market seems to be factoring that in. Assuming, presumably, that a Democratic Senate would be less likely to support a prolonged conflict. It’s all very complicated.

If the US can wrap things up quickly, I think the market could rally. Return to those earlier highs. Even go higher. But a prolonged conflict is the big risk. The elephant in the room. The thing that keeps me awake at night.

Long-term investors shouldn’t make rash decisions based on short-term events. That’s what they say, anyway. Easier said than done, though. Especially when you’re staring at a rapidly changing world and wondering what’s going to happen next.

2026-03-22 17:13

What is going on?

Is it all just… naive?

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