Tags: paulsen | stocks

Paulsen Sees Stocks Jumping 14% by Year-End

By    |   Tuesday, 26 June 2012 03:38 PM

Jim Paulsen, chief investment strategist at Wells Capital Management, hasn’t lost his faith in the U.S. stock market.

He sees the Standard & Poor’s 500 Index reaching 1,500 by Dec. 31, up 14 percent from around 1,320 recently.

And what makes Paulsen bullish?

First, he tells Yahoo he’s looking for solid U.S. GDP growth. The economy is currently expanding at a 2.5 percent rate, Paulsen says. And record-low mortgage rates, low inflation, a weak dollar, and falling gasoline prices could push the growth rate to 3 percent.

Editor's Note: How You Lost $85,000 During the Last Decade. See the Numbers.

Second, Europe’s crisis isn’t as dire for the market as it’s made out to be, Paulsen says. "We've seen how this works out, the euro fears flare, the market sells off, then they calm down, and we go on to new highs.”

Third, Paulsen sees a return to more rapid growth in emerging markets, a key source of revenue for U.S. companies.

Finally, with the market’s price-earnings ratio just under 13, based on 12-month trailing earnings, stocks are “cheap,” Paulsen says.

"We've never in the post-war era had multiples this low when interest rates and inflation were also this low."

Not everyone shares Paulsen’s bullishness.

Goldman Sachs last week recommended that investors short the S&P 500 in expectation of a drop to 1,285.

“[Economic] weakness has extended into June," Goldman analysts wrote in a report. "With incremental U.S. monetary policy on hold, the market will need to confront a deteriorating growth picture.”

Editor's Note: How You Lost $85,000 During the Last Decade. See the Numbers.

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Tuesday, 26 June 2012 03:38 PM
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