Many investors have turned bearish on stocks, as evidenced by the recent drops in the Dow Jones Industrial Average.
But Laszlo Birinyi, head of Birinyi Associates money management firm, isn’t one of them.
He expects stocks to gain 10 percent or more this year amid growing investor confidence and increases in corporate takeovers and share buybacks.
Even after last week’s market decline, the Standard & Poor’s 500 Index has rebounded markedly from its March low.
“The surprise is going to be on the upside,” Birinyi told Bloomberg.
“Most people are still fighting that this is a rally. Everyone is erring on the side of caution.”
U.S. companies, particularly those in the technology sector, are flush with cash, he says.
And that cash will find its way into mergers and share buybacks, he says.
S&P 500 companies gained $1.29 trillion in cash during the 12 months through September, according to Bloomberg data.
Birinyi said last May that the S&P 500 could hit a new record of 1,700 in the next two to three years. That would amount to a 55 percent gain from current levels.
Stock picking legend Bill Miller, who runs Legg Mason Capital Management Value Trust, also is bullish on stocks.
“I think there's a lot of value in the overall market right now,” he told CNBC.
Miller says the market may gain 20 percent this year.
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