Barron's Semi-Annual Big Money Survey

by: SA Eli Hoffmann

Excerpt from our One Page Barron's Summary (receive it weekly by email by signing up here):

Fueling Up by Jack Willoughby

Highlighted companies: McCormick & Co. Inc. (NYSE:MKC), Kellogg Co. (NYSE:K), Proctor & Gamble Co. (NYSE:PG), General Electric Co. (NYSE:GE), Dell Inc. (NASDAQ:DELL), Genentech Inc. (Private:DNA), Johnson & Johnson (NYSE:JNJ), Coca-Cola Co. (NYSE:KO), White Mountains Insurance Group Ltd. (NYSE:WTM), Google Inc. (NASDAQ:GOOG), General Motors Corp. (NYSE:GM), Ford Motor Co. (NYSE:F), Chicago Mercantile Exchange Holdings (NASDAQ:CME), CBOT Holdings Inc. (BOT), Talisman Energy Inc. (NYSE:TLM)
Summary: Barron's semi-annual poll of institutional investors. Some salient tidbits:

  • 64% characterized themselves as bullish on stocks, vs. 57% in the spring and 47% last year
  • 20% were neutral on stocks vs. 29% in the spring
  • 85% felt the Fed is finished raising interest rates; 79% expect it to begin easing next year
  • More than 1/3 predict the Dow index will surpass 13,000 by mid 2007
  • Average crude oil predictions were $59 by year end and $58 by mid next year
  • Favorite investment vehicles: Large-cap growth (40%), large-cap value (19%), institutional stocks (7.5%), emerging markets (7.5%)
  • Around 30% saw the dollar advancing against the euro/yen; over 50% foresaw it weakening
  • Half felt the U.S. housing market will "weaken dramatically" over the next 6-12 months, and almost as many (46%) felt it would hurt the economy, but only 25% said it would hurt the stock market
  • Bears were rare: 16% call themselves bearish on stocks, on average seeing the Dow down to 11,150 by year end and 10,772 by mid next year. 20% foresaw a recession in the coming months.
  • Top sectors: Energy, financials, consumer cyclicals. Weak sectors: Defense, healthcare, consumer staples, tech
  • Favorite stocks: General Electric Co. (GE); also: Dell Inc. (DELL), Genentech Inc. (DNA), Johnson & Johnson (JNJ). Most overvalued: Google Inc. (GOOG); also: General Motors Corp. (GM), Ford Motor Co. (F)
  • Portfolio mix: 66% equities, 18% fixed income, 6% cash. Earnings expectations: stock market 10%, bonds 4.9%
  • Election predictions: Democratic Senate: 19%, House: 66%
Barron's bottom line: "If the Big Money pros are right, Wall Street will snap out of its funk in coming months as the Fed loosens credit and profits and P/E multiples rise... Dow 14,000, anyone?"
Quick comment: Seeking Alpha contributors chime in with their fearless economic prognostications:

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