Citigroup: Market Gains to Continue Until Individuals Jump Back In 9 comments
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By Simon Avery
When you can’t beat them, join them, says Tobias Levkovich, of Citigroup Global Markets Inc. (C)
Market momentum should remain positive until individual retail investors show up to the party.
After watching the willingness of investors “to chase equities” despite warnings on the corporate earnings front, Mr. Levkovich is raising his target on where the S&P 500 will end this year and next. His new 2009 target is 1,100, up from 1,000, and his new 2010 target is 1,150, up from 1,100.
(For the record, the S&P broke the 1,000 barrier in August and the 1,100 barrier last month).
While it’s not a dramatic adjustment, the forecast speaks to the pull of this market’s momentum, the analyst says.
“While we normally prefer not to respond to the market’s whims, we see little reason to expect any major correction in the absence of a substantive liquidity shift in the near term given recent commentary by the G20 and the Fed,” he wrote in a report.
Citigroup forecasts that there is a near 90% probability that stocks should be higher in six months and a 97% chance that the S&P 500 will be higher in 12 months.
The S&P’s 6% retreat between Oct. 19 and Oct. 30 may have been sufficient to address investor worries about earnings. Most data suggest that stock valuations are still reasonable. Investors may, however, choose to dump shares in early January and lock in gains. Any such dip would make a good buying opportunity, he writes.
Mr. Levkovich cites three key risks to his 2010 outlook, beyond general economic trends. First, policy mistakes by the U.S. Federal Reserve, such as setting rates too high or too low. Second, higher taxes to manage the runaway deficit, which could stifle growth. Third, trade protectionism to combat high unemployment rates.
And what will be the best signal that gains are coming to the end? When the individual investor re-enters the stock market.
“One sign that money managers should look for to indicate some greater concern for market trend would be a meaningful change to individual investor participation in equities,” Mr. Levkovich writes. “In particular, money flows to mutual funds have been distinctively focused on the fixed income side, with bond mutual funds garnering an impressive (and to some degree, shocking) near $268 billion year to date through September relative to a mere $2 billion flowing into equity funds. As long as the retail investors remain so frightened off from stocks, it seems likely that more upside is probable, but if they begin to feel very comfortable chasing returns, caution may become more appropriate.”
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I can't fathom how they calculate those percentages, but if you can't trust a Citigroup analyst, who can you trust?
While it’s not a dramatic adjustment, the forecast speaks to the pull of this market’s momentum, the analyst says.<
Can you believe the audacity of this prick? The sad reality that's driving Mr. Levkovich nuts is that the retail investor isn't chasing his pumped up garbage market. The only people buying this market are Citi, JPM and GS as they keep trying to suck in the "dumb money". They're buying and selling to each other, the silly bastards. The retail investor learns from his past mistakes. The banksters dont. The dumb money is a whole lot smarter than these pigs think.
.
On Nov 18 02:38 PM woollyB wrote:
> "Citigroup forecasts that there is a near 90% probability that stocks
> should be higher in six months and a 97% chance that the S&P
> 500 will be higher in 12 months."
>
> I can't fathom how they calculate those percentages, but if you can't
> trust a Citigroup analyst, who can you trust?
On Nov 18 05:17 PM luv2makemonies wrote:
> what about their stock?
Yup, that is the way wall street works. Atleast the guy is being honest and not mincing his words. If individual investors do step in to this market after pronouncements like these, then it is their fault. Can't say they have not been warned. But it does look like the so called dumb money has wised up some, and staying out of this Casino where house/street is rigged to win.
Seems like the bigger fools are reluctant to show.
Watch out below!!!
.
On Nov 18 06:09 PM cash wrote:
> >>Lol, that is funny. Yes, get the retail guy in and clock him with
> a >>massive decline. What a sordid game.
>
> Yup, that is the way wall street works. Atleast the guy is being
> honest and not mincing his words. If individual investors do step
> in to this market after pronouncements like these, then it is their
> fault. Can't say they have not been warned. But it does look like
> the so called dumb money has wised up some, and staying out of this
> Casino where house/street is rigged to win.