Out of curiosity, I was thinking if Excel could forecast the stock market. We know Excel’s Forecast is a function of making predictions by using the historical data and analyzing trends. Can the S&P 500 historical data shed some light on the future? Maybe or maybe not. I would like to think so because the price movement follows a pattern – when it gets too expensive, the price comes down, or vice versa. The equilibrium price is the price that buyers and sellers agree. Timing is something we can not predict.
I took the S&P 500 monthly closes from Yahoo Finance from 3/1/2010 to 2/12/2021 and put them in Excel. Here’s what Excel forecasts.
Ignore the timing factor even though it predicts an immediate sharp pullback of the S&P 500. However, the long term outlook still looks rosy.
The bigger question is whether S&P keeps going up from this point and then starts a major correction later this year or next year, or is a major correction imminent?