Ed Yardeni, president of Yardeni Research, said Wednesday that opportunities to buy stocks during price dips are currently wishful thinking [1].
Yardeni's assessment suggests that the market may be entering a phase of rapid acceleration, making traditional entry strategies based on temporary price drops unrealistic for investors.
Speaking in a Bloomberg interview on May 27, Yardeni said the current upward trajectory of the market is due to a phenomenon he termed "FEMO" — fabulous earnings momentum [1]. He said this momentum is the primary driver of a stock melt-up, rather than the cyclical dips that investors typically wait for to build positions [1].
This perspective shifts the focus from timing market corrections to recognizing the strength of underlying corporate profits. Yardeni said the upward thrust is being powered by this momentum, which may prevent the kind of significant pullbacks that dip-buyers rely on [1].
While cautious about the availability of low-entry points, Yardeni remains bullish on the long-term trajectory of the U.S. market. He has set a year-end target for the S&P 500 at 8,250 [2]. Looking further ahead, Yardeni said the S&P 500 could climb to 10,000 by the end of the decade [3].
His analysis indicates that the market is not merely speculative but is being supported by actual earnings growth. This fundamental strength, he said, creates a scenario where the market continues to rise even without the typical periods of consolidation [1].
“"Dip‑buying opportunities in this market are wishful thinking."”
Yardeni's 'FEMO' theory suggests a market environment where strong corporate earnings create a self-sustaining rally. For investors, this implies that waiting for a significant correction to enter the market may result in missing substantial gains, as the fundamental growth of companies outweighs the typical volatility that creates 'dips.'
