Seeking Alpha

The S&P 500 should post modest gains next year, says Russell Investments' Stephen Wood....

The S&P 500 should post modest gains next year, says Russell Investments' Stephen Wood. Unfortunately, right now we are engaged in a violent tug-of-war between the stuff we can measure, like positive economic and corporate data in the U.S., and the irrational fear of the unknown, Europe especially, that make forecasting a very difficult task. In the end though, it's the fundamentals, valuations and earnings that really matter, and the markets will stabilize. (video)
Comments (12)
  • It is not "irrational" fear. It is very well rational to be afraid of losing your life's savings!
    1 Dec 2011, 08:54 PM Reply Like
  • Totally agree. I would add that there is very little evidence to support the claim that fundamentals matter. What actually matters now, and has for some time post 2008, is government intervention, central bank activity, rumor and headline. If fundamentals actually mattered, this entire market would tank, we would experience creative destruction, and as a rsult a much healthier economy and maybe even an actual free market This guy sounds like another sell side pumper talking his book.
    1 Dec 2011, 09:07 PM Reply Like
  • So why would the gains be modest? Either fundamentals take over and the market soars. Or Europe plunges everybody into a deep recession and the markets struggle. Hard to see a modest gain scenario mainly b/c Europe can't kick the can for another 6-12 months. Either fix it or it'll blow up soon.
    1 Dec 2011, 10:20 PM Reply Like
  • i see where youre coming from topcat, but regardless of market behavior, only a fool will lose his life's savings. there are ways to preserve and profit in any climate.
    1 Dec 2011, 09:06 PM Reply Like
  • What happens in Europe is the mother of all fundamentals: a huge debt pile and a bunch of low-growth countries that can't pay their debts. The financial institutions that hold the bag are under the threat to become insolvent. We know what happens when banks don't trust each other: credit freezes. Thus, the credit can quickly become unavailable even to credit-worthy businesses and individuals. This situation has been deteriorating for the last two years and now we are at a point that many economists consider to be the endgame. We very recently went through this right here in the USA and we know what the consequences are. Our fear is not irrational but well-rooted in our very recent experience.
    1 Dec 2011, 09:09 PM Reply Like
  • After reading the above blurb, I keep thinking about "modest gains" ... Seriously, WTF are "modest gains"? if the market historically returns 7% year of year, "modest gains" implies (to me) about 1/2 this.

     

    Rather than having a stressful 2012 by simply going to cash, I’d be better off (were I a long term investor) simply buying a bunch of "modest" houses to rent out; to hell with the stress of a screwy market, by “real” property instead.
    1 Dec 2011, 09:16 PM Reply Like
  • Only the 1000th+ buy-side fund manager to say exactly the same thing over the last 3+ years.

     

    One thing that no one gets is that history has no analog. Throw out the comparisons to past recessions - they've all been pre-cursors to this mess.

     

    At no other time in history has then been so much debt; govt and personal balance sheets are completely lopsided; the US has only money printing as it's last tool - EU will soon join the race to the bottom there.

     

    The new normal is still forming.
    1 Dec 2011, 09:49 PM Reply Like
  • " In the end though, it's the fundamentals, valuations and earnings that really matter, and the markets will stabilize. "
    Yes, if I am presented with real, unbiased, accurate information and not one massaged. Further, when the developed world consumers and the governing agencies are up to their ears in debt, where would the earning or the growth come? Perhaps on the basis of the debased currencies?
    1 Dec 2011, 10:03 PM Reply Like
  • The stock market is not the economy.
    1 Dec 2011, 10:45 PM Reply Like
  • Best statement I've read in a while.
    1 Dec 2011, 11:29 PM Reply Like
  • the market wont stablize in a bubble economy that is poppin...that is a myth created to make people feel better about their lives....kinda like how religion was created.

     

    Its a crack of Shi*
    1 Dec 2011, 11:18 PM Reply Like
  • Same story from almost every market pundit year after year after year. Funny how they never have any avoid the market or time to sell, of course until it's far to late and the crash has already happened.
    2 Dec 2011, 01:14 AM Reply Like
DJIA (DIA) S&P 500 (SPY)