Mitch Goldberg, president of investment advisory firm Melville, New York-based ClientFirst Strategy, believes the FOMO (fear of missing out) market will continue until sometime near end of March, at which point the stock market's strength will come down to earnings and revenue supporting the market's high valuation. Between the middle and end of March is when companies start making earnings preannouncements. Earnings start coming out in second week of April and expectations should be pretty high, he said.
"This entire year of positive strong returns in the S&P is based on P/E expansion, not earnings. That means investors are enthusiastic about stocks. Now corporations have to live up to the hype," Goldberg said.
He noted that March has marked the turnaround in stocks before, notably in 2000, another time when tech stocks were dominant.
After that first quarter earnings period, the election has more power to take hold of the market direction, Goldberg said, and that could include handicapping the Federal Reserve, which may be hard pressed to do anything so close to the election. "CPI has been steadily over 2% and I expect the Fed's preferred inflation measure to catch up. I think that presents an underappreciated risk, which is what makes it dangerous. If the CPI hits 3% and the Fed doesn't act to raise rates, the bond vigilantes will wreak havoc on the bond market, which should spill over into the stock market and the broader economy," he said.
Millionaire outlook by the numbers
14%: Increase since the Spring survey in percentage of millionaires who think 2020 economy will be weaker.
27%: Millionaires who think the economy will end 2020 stronger.
47%: Independents who expect a weaker economy.
54%: Millionaires betting on an S&P gain of at least 5% in 2020.
14%: Millionaires age 55 and under who think the S&P will be up by 15% or more. Only 2% of older millionaires think that.
4%-5.9%: What many millionaires expect their overall investment portfolios to return in 2020.
17%: Of millionaires say tech will be their biggest investment among sectors in 2020 (tech and financials are the sectors with the largest current allocations.)
40%: Say government dysfunction is the biggest risk to the economy in 2020, typically the most popular answer from previous surveys.
The CNBC Millionaire survey polled more than 700 people with investible assets of $1 million or more, including 301 Republicans, 200 Democrats and 247 independents. Respondents had to be the financial decision-maker or share jointly in financial decision-making within the household. The survey is conducted twice a year, in the spring and fall, and has a margin of error of plus or minus 3.5 percentage points.