Market Predictions for 2007

by: Richard Shaw

BusinessWeek and Russell each recently released results of surveys of investment managers concerning predictions for 2007. Their results are close.

The Russell survey shows 1/3 of managers expect the stock market overall (presumably relating to their Russell 3000 index) to rise by 10% or more. That compares to the BusinessWeek survey where 20% of managers expect the S&P 500 to rise by 10% or more.

Russell found 80% of managers expect a positive return for the stock market overall in 2007, and BusinessWeek found that 85% of managers they surveyed expect a positive return for the S&P 500 in 2007.

The chart below shows the distribution of 2007 predictions for the S&P 500 in the BusinessWeek survey by 25 point intervals.

Frequency of year end spy predictions

The Russell survey indicates a relatively more bullish sentiment for Large-Cap Growth, Emerging Markets, and the Technology sector, and a relatively more bearish sentiment for corporate bonds.

The Russell chart below shows manager bullish and bearish sentiment for several asset categories:

Manager expectations by asset class