Peter Tanous says investors are getting impatient about a stock market recovery.
The excitement has arisen from the Standard & Poor’s 500 Index’s 18 percent surge from its March 6 low.
But stock bulls are jumping the gun, says Tanous, president of Lynx Investment Advisory.
He writes in The Wall Street Journal that the most important question is not whether the stock market has hit bottom.
“More important to investors is how long the recovery will take,” he writes. “How long will it take for investors to recoup the losses they suffered since October 2007, when the S&P 500 index reached a record high of 1565?”
“Here's a clue: It will take longer than you think,” Tanous writes.
The average annual return for the S&P 500 over the past 83 years has been 9.7 percent. “If the market rose at that historic rate, it would take more than nine years to get back to the October 2007 highs,” Tanous says.
“A five-year recovery period is probably wishful thinking.”
Bottom line: “The recovery in stock prices is likely to take much longer than we had hoped, and investors should taper their expectations accordingly,” he says.
Tanous isn’t the only expert who is cautious about stocks. Morgan Stanley is telling clients to sell stocks now.
“We cannot see large upside for the S&P 500,” the firm’s equity strategist Jason Todd wrote in a report cited by Bloomberg.
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