Is the stock market rally nearing its end?

Struggling market prices caused by premature interest rate reductions, a strengthening US dollar, and early tapering. Contrary to popular belief, Christian Kahler, a financial strategist at DZ Bank, believes otherwise.

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2025 September 12 . 1:08 AM

2 min read

Has the stock market's surge come to an end?

Is the stock market rally nearing its end?

In a recent analysis, Christian Kahler, an analyst at DZ Bank, has predicted that the stock market rally is likely to continue into 2022. Kahler's optimistic outlook is based on the strong earnings of several companies and the improvement in their fundamentals.

The S&P 500 has reached 48 new highs this year, although the gains are smaller than in 2020. Kahler notes that many quality companies have seen their valuation multiples decrease, creating further upside potential. Among these companies are five stocks identified for a summer rally in the US and Frankfurt markets, eight companies expected to become market leaders by 2030, and Pulmonx, whose analysts see over 400% potential based on the company's margins and expenses outlook.

Kahler also highlights the potential of Ethereum, with solid fundamentals and a predicted price increase towards $7,500-$10,000 by the end of 2025, driven by institutional interest and regulatory progress. Another company to watch is Comet, whose CEO expects an upward price movement around year-end based on the company's prospects.

Despite some uncertainties, Kahler believes that the stock market uptrend is likely to continue. However, he questions the applicability of historical relationships due to the fall in interest rates over the past 40 years and their expected future low levels. Kahler uses the Shiller P/E ratio to argue that expensive markets can become cheaper and vice versa.

Kahler advises against leaving the stock market at this point, citing the strength of the rally. He suggests that waiting for major setbacks on the stock market does not seem like a sensible strategy, given the moderate volatility and continuing uptrend in earnings.

Investors who have been buying at almost every small dip in recent years are now seeing high returns, as per Kahler. The analyst does not see conditions for hard corrections at the moment, and the prevailing mood does not indicate strong overbought conditions or excessive optimism.

It is worth noting that the S&P 500 has rarely fallen below its long-term average since 1990, with exceptions being the 2008 financial crisis, the dot-com crash, and the sell-off caused by Corona in spring 2020. Kahler's advice against leaving the stock market at this point, citing the strength of the rally, remains relevant.

Kahler's analysis supports the notion that the stock market is currently offering opportunities for investors, particularly those who are willing to take a long-term view. However, it is essential to conduct thorough research and consider seeking advice from a financial advisor before making investment decisions.