Wall Street Boys Cautiously Bullish - Barron's 9 comments
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Barron's interviews a dozen big-name Wall Street strategists, who predict a recovering stock market in 2009 - despite a deteriorating economy. With stocks already 18% higher than their late-November low, the group sees the S&P 500 closing 2009 at about 1,045 - tacking on another 18%.
So why should stocks rise in the face of such ambiguity? For a start, the strategists hope that a stock market that has already fallen 52% from its 2007 peak to its Nov. 20 low has discounted much of the deterioration still to come. With more than 37% of mutual-fund assets recently parked in money-market funds, the highest level since 1991, there's ample cash for bargain hunting should stocks dip below a certain threshold. Hopes run high that cheaper energy costs will support consumer spending, and -- most important -- that the deep freeze in the credit markets triggered by Lehman Brothers' collapse will continue to thaw. And everyone is counting on the government's aggressive policies to help stop the rot.
Not that they foresee a steady upwards trendline. In fact, most think we've still got a test of the Nov. 20 low in our not-so-distant future (February), after investors have had a peek at messy Q4 earnings. Some also predict another 'surprise' - such as a big failure, or debt defaults by a sovereign power. Still, with sentiment now so firmly and unswervingly negative, most feel the bias has shifted to the upside. "Just as we're surprised by the crisis' depth and severity going in, we might be surprised by how sharp the rebound can be going out," James Paulsen of Wells Capital Management says.
The speed with which markets reverse will depend on how swiftly financials recover. Some analysts think writedowns have already peaked, and predict we may even see (gasp) 'write-backs.' Conversely, if government policy fails and financial markets collapse further, all bets are off - and the S&P could see 400 before 1,045.
The bubble markets - commodities, real estate, hedge funds and private equity - were inflated with cheap money. The next bull, Barron's says, is more likely to be led by defensive segments like consumer staples and healthcare. 10 of 12 favor healthcare, five like tech (all buy-side), four like financials (all sell-side), two pick energy and only one materials. Here's a complete table with their picks (.pdf).
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- Elsewhere this week, Barron's Tech Trader Eric Savitz is decidedly less enthusiastic. Here's a summary of what he has to say.
- Kingsley Anderson asks: Which Way Will the Market Break?
- Unlike Barron's, Babak thinks sentiment still isn't negative enough.
- FP Trading Desk looks at some stocks best poised to benefit from a 0% fed funds target.
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This article has 9 comments:
YEP!
Bottom line: Human beings are easily fooled. We just aren't that evolved yet - as much as we like to think we are. Commenter after commenter pretending he or she is brighter than others with no proof whatsoever. And that includes EVERYONE. Nothing - and I mean NOTHING - is as it appears. But we need to fill up our lives doing SOMETHING, so why not waste it reading endless market yammerings that are worthless? lol. Don't be too hard on the predictors et al. Just doing the silly human being thing. Illusions, and all that.
I'm not sure which of us is more stupid: those who insist on predicting that which they cannot know OR the rest of us who read and comment on the predictions. Round and round we go....
On Dec 21 05:02 PM hernje wrote:
> Who in their right mind would put any credence in what these know
> nothings say? The fact that every one of these 'experts' was completely
> blind sided by the biggest financial meltdown in the last 100 years
> shows that they are just a bunch of talking heads, with absolutely
> no special insight.
I am compelled to note, that most of the banks in the country are doing a lot better than what most bailout headline articles would have us believe.
Take for instance the "small" FirstBank in Colorado... It has done just fine. Why? Here are some highlights from their website:
- FirstBank is well capitalized according to all regulatory guidelines. FirstBank's assets total $9.3 billion as of September 30, and deposits were $7.9 billion. FirstBank continues to experience solid growth in both assets and deposits.
- FirstBank reported outstanding results for the first nine months of 2008. FirstBank’s net income was $95,146,000 through the third quarter of 2008, up 29% from $73,631,000 last year.
- While most banks can only insure up to $250,000 of your money through the FDIC, FirstBank’s 25 separate charters make it possible for your deposits to be insured up to $6.25 million
- FirstBank does not originate, hold, or purchase subprime mortgage loans or securities. Continued focus on credit quality has enabled them to succeed in all economic cycles.
See all the details of why I am a long time customer of this Colorado bank [url=https://efirstbank.com/advt/ib...]right here[/url]
It is also worth noting that a recent report, shows that it is only a [b]few very large institutions[/b] that are in financial difficulty and it is those firms that are having a hard time obtaining credit. (and need bailouts!)
However, there are a huge number of banks out there (like FirstBank) who didn't make bad bets, who didn't get involved in the subprime markets, and they're doing just fine with [b]no credit problems at all[/b]: [url=mast-economy.blogspot....]More details here.[/url] Lending is actually up among these banks. (and has been all year!)
Let's figure out how to claw back that some of those $Billions to bail out the bad management at the large institutions and somehow reward those good bankers in the second tier banking market who didn't (and still don't) make risky bad bets.
I could be bullish on that too.
[url=mast-economy.blogspot....][b]Good News Economist[/b][/url]
On that note... don't take the other recommendations with any amount credulity.
Never trust a Wallstreet pundit, is my 2009 credo.
Merry Christmas people.