I realize they're not calling for double digit returns for the next 6 years (high singles), but what do you guys think? Personally, I think it's possible to have a very long expansion iff (geeks will get this word choice) capex increases meaningfully (enough to mean revert), deleveraging is steady, and valuations come down (either via correction/crash or by earnings growth outpacing price performance). All of that said, this time is never different and we will likely get a recession/contraction at a time when the market least expects it.
What do you all think?
Link - http://www.businessinsider.com/morgan-stanley-sp-500-3000-2014-9
I haven't heard iff since high school and I have a masters in engineering.
haven't used it since then either, felt like this was a good opportunity
How did you not encounter iff during Calc? The definition of continuity contains an if and only if.
I went up through multivariable in high school
The boom & bust cycle is the same as it ever was. Those maturities may have been pushed out but they haven't disappeared and the next issuance will almost certainly be under higher interest rates. Not to mention the hiccups in available leverage/capital for the financial services industry. The article also misses the fact that market cycles and economic cycles are loosely aligned. Could delve deeper into the subject but the short of it is, I question their conclusion.
GMO did an article on this a couple of years back, not on cycles, but that an economy's performance is not as closely related to market performance as the media would lead you to believe.
I would personally love it if you delved deeper, I'm genuinely curious
When I get some more time tonight or tomorrow I'll delve a little deeper.
how does multiple contraction help you get to S&P 3000?
reread my initial post, I should really proofread more often. was talking more to the "longest expansion ever" instead of S&P 3000.
I'm all about value, so selfishly I'd like to see some sideways price movement combined with rising earnings, meaning that multiples would come back a bit. I think that if these conditions happened, we'd be ripe for another few years of rising stock prices. I just think that trees can't grow to the sky and that without some sort of pullback, we can't have the longest expansion ever.
Link to the full report?
My thoughts on this topic, having not read MS take at all, is that US fundamentals are weak because of poor education, taxation, and regulation.
"Experts" claiming the vitality of our bull market will be unlike any bull market that has preceded it... otherwise known as "this time is different".... sounds totally reasonable and not at all an indication that the market is nearing the top.
I think they said the same thing in 01 and 07 too. something about a new paradigm?
http://seekingalpha.com/article/2465215-george-soros-is-betting-against…
Soros increases put position significantly. Soros was the highest earning HF manager in the world in 2013, earning $4B.
A lot of that was from endorsements, though.
[Deleted! No longer relevant.]
Sure..yeah...expansion. Totally.
Whatever... Forecasting of this nature is a rather silly game, especially when your forecast is a bit of an outlier. Furthermore, the co-author of this glamorous forecast is a guy (Adam Parker) whose record in the Spooz forecasting dept is, to put it charitably, mixed.
Nothing like some sellside shills talking up this joke of a market. Why such a low forecast? Why not 4000, 5000? Maybe match the Dow while we're at it??
delete
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