Top money managers Laszlo Birinyi, Barton Biggs and Steve Leuthold may differ in their investing approaches, but reportedly are united on one point: The market is still heading up.
The trio expects that stocks will continue to advance as the economy gains momentum, and fast corporate earnings growth will encourage investors to put money into stocks instead of bonds.
Birinyi expects the rally will be a long one. In fact, his data show it lasting until at least April 2013.
"By any definition, it is a bull market, and there's no stronger force in the market than momentum," he told Business Week.
Biggs says stocks remain cheap relative to forecast earnings.
"I'm very struck by the level of bearishness everywhere I go," notes Biggs, who predicts the next move in the S&P 500 Index will be a 10 percent to 15 percent gain.
"I'm not obsessed with history. I'm bullish because I think the global economic recovery is on track and is going to be surprisingly strong.”
“The world was falling apart in 2009. There's been a tremendous change."
Leuthold finds investor wariness encouraging.
"Individual investors, as measured by mutual fund flows, have absolutely no current enthusiasm for equity investing," he observes. "As a contrarian, I view this environment of disbelief and skepticism as quite bullish."
Jeremy Grantham, chief investment strategist for Grantham Mayo Van Otterloo, dissents.
Grantham believes the market is now overvalued. Fair value for the S&P 500, he asserts, is 875, which is 25 percent below Wednesday’s close of 1,166.21.
"My recommendation to the typical investor would be to think outside the U.S.," Grantham says. "And when he thinks about the U.S., to be exclusively in defensive blue chips.”
“The chances of a softening again — not a big collapse, but a secondary softening in the economy — are higher than the market believes."
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