A version of this post first appeared on TKer.co
In the fall of 2011, global stock markets fell amid growing concerns about high debt levels. Debt crises hit Greece, Ireland, Portugal and Spain. S&P even has its own independent credit rating of AAA.
The S&P 500 is down 19% from its July 7 high close of 1,353 to Oct. 3 to close at 1,099.
It was the kind of move you’d think would have Wall Street strategists tripping over each other as they crossed their market targets.
But, with the S&P at 1,154, then-BofA strategist David Bianco raised his 12-month forecast for the S&P to 1,450 from 1,400. This means an excellent return of 26%. In his letter, he also suggested that the market could rise by 15% from September to January.
At that time, his calls were like false hope. I even wrote that it was him “.” (Three days later, BofA and Bianco . He Deutsche Bank as their lead equity strategist. Today, he is CIO at DWS.)
Well, Bianco calls them both.
The S&P fell 15% from September to the end of January. And it reached 1,450 on September 13, 2012 – 12 months and two days after he set his 12-month goal.
I was reminded of this episode this week because Venu Krishna’s Barclays was aiming to end the year for the S&P 500 at 7,650. This, despite the market pulling back in the wake of the Iran conflict.
“Our premise is that concerns about AI disruption, private debt, and world politics present real and tangible risks, but those that will nevertheless fail to disrupt the current growth cycle at this time,” he said.
The main driver of his revised call is that he expects S&P 500 earnings to grow to $321 per share this year, from his .
it should be a salary. They are stock prices. And according to , the salary rates have been increasing significantly.
Like Schwab’s Kevin Gordon, we must distinguish between front-page risk and bottom-line risk. Front page news can cause market volatility. But those issues are important in the stock market only to the extent that they affect, or profits.
And so far, the earnings narrative continues to be bullish.
It is not the best news that the stock market behaves in unpredictable and sometimes counterintuitive ways.
Wall Street strategists had year-end S&P 500 targets.
As the Trump administration introduces its aggressive trade policy, , and . Almost all the strategists had them.
But to many people’s surprise, the S&P eventually recovered its losses and closed the year at 6,845, an impressive 16% gain. That closing price was actually higher than most strategists had earlier in the year.
Despite the policy windfall, , helping prices rise to new record highs.
To be clear, this is not me suggesting that you depend on Wall Street’s one-year guidance for stock market experts. .
And I’m not suggesting that the markets are guaranteed to be sustainable and rise above everyone’s goals. , and 2026.
All I’m saying is that a good analysis of the stock market sometimes reveals the opposite findings, whenever the latest price action point is the other way around.
The stock market will do unexpected things, especially in a short period of time like one year. So don’t be too surprised if we end up with better-than-expected results despite seemingly deteriorating market conditions.
A version of this post first appeared on TKer.co
