High profile pundits, seers, and gurus offer their latest predictions about where the market is likely headed next.
Warren Buffett sounded upbeat in this May 6 interview with CNBC’s Becky Quick:
‘I can remember when it was a big time when the Dow crossed 100 … Certainly in your lifetime, you will see markets that are far higher than these. The retention of earnings by American industry, the growth of the country will cause stocks to go higher over time. You’re not getting everything out of stocks in terms of the dividends they pay compared to the earnings. The retention builds up.’
Laszlo Birinyi, highly regaraded strategist, remains his positive self, predicting the four-year rally will roll on in the coming months.
‘The things that we look at still look good. We think it’s just another step. The more critical step was (1,600) on the S&P. I raised my target. I can see the market going to 1900, but I think it’s in a series of steps. The next step is 1700.’
Bob Doll, chief equity strategist at Nuveen Investments, says the path of least resistance is up.
‘I love the path of least resistance [and that] continues to be higher. We have ideal conditions in an economy that’s operating on five or six out of eight cylinders. That keeps the pedal to the metal on interest rates. And other other assets don’t provide much return. That’s why stocks are moving higher…If the fundamentals remain intact as they are, weak as they are, [a] correction won’t be that much. It will be a few percent.’
Doug Kass, founder of hedge fund Seabreeze Partners, and a well-known bear, admitted he got the market wrong. He had been calling for a correction since January, but now the S&P is up roughly 13 percent year-to-date. Still, he says this is a solely Federal Reserve-driven rally. In an interview with CNBC, he noted:
‘The earnings landscape continues to be challenging and the market hasn’t cared because global monetary policy is dominating the revenue and earnings lethargy. We’re in a P/E driven market and these are always far more difficult to assess than earnings driven markets.’
Byron Wien, Blackstone co-chairman remains worried about the market outstripping actual economic good news. In an interview with CNBC in March, he said:
‘Truly, things are not getting really good. They are just so-so, as they have been … Eventually the fundamentals, what’s going on in Washington, the earnings disappointments will take over and the market will become a more reasonable place. But right now it’s very excitable … It’s beginning to verge on the euphoric, and that’s always a danger period.’
Jeffrey Gundlach, DoubleLine chief and market guru, is downright Roubinian is his take on stocks. In fact, he’s calling for something akin to a catestrophic failure. In an interview with InvestmentNews in mid-April, he said the the developed world since 2005 has been living on a debt-financed economic upturn that is unsustainable.
“The private economy hit the wall in 2007, and the banking system would’ve collapsed in 2008 if the government hadn’t stepped in. Now we continue to have debt increasing [due to the central bank stimulus measure]. It’s simply at the point where you can’t pay it back.”
Short-term, he’s not big on the stock market. Instead, Gundlach started buying 10-year U.S. Treasury notes in February, noting at the time that stocks are ‘overbought.
Larry Fink, BlackRock CEO, has been telling investors to get into the stock market for some time. On May 7, he told CNBC the same thing, citing the 15.5 P/E ratio for the S&P 500, which he said makes equities merely fairly valued at this point — not overvalued:
“We just finished earnings season and earnings were pretty good. Despite this huge run up in markets, corporate earnings have kept pace. So I will repeat my view of the world, you need to be heavily invested in equities.’
Josh Brown, adviser, pundit and InvestmentNews contributor, believes the rally could trigger a rotation out of bonds and into stocks:
‘There are valuations that are buyable. Like half the market hasn’t done what the major averages have done, so this is still a great time to be selective, but you can still find things to buy despite the fact that we’re at new highs on the tape.”
Ken Heebner, co-founder of Capital Growth Management — and the king of extreme performance — tells Consuelo Mack’s WealthTrack that a housing recovery could push stock prices considerably higher.
‘In the United States, growth is going to get stronger because of the positive impact or rising house prices … When you talk about how much [the U.S. stock market is up], the staring point was 680 on the S&P 500, which was the lowest it had been since the Depression, practically. Therefore, that’s a really low base … If earnings grow for several years at 1o% or 15%, the P/E ratio could go up, and you could see the stock market two or three years from now 50% higher.
Source: InvestmentNews, May 13, 2013. Read original article here. Photos courtesy of Bloomberg.