Many Wall Street strategists have raised their year-end targets for the S&P 500 in recent days.
Thomas Lee, former chief equity strategist of JPMorgan Chase, shares their bullishness, but perhaps for different reasons.
Lee, who has founded his own research firm, Fundstrat Global Advisors,
told CNBC that underperforming fund managers will give equities a lift. Fund managers' "beta chase" will push stocks 5 to 6 percent higher next quarter, he said.
Editor’s Note: New Warning - Stocks on Verge of Major Collapse
"Beta" represents the market's volatility. So the idea is that fund managers who have trailed their benchmarks will buy stocks just to get in line with the overall market's gains.
"This year fund manager performance is the worst since 1997 versus their benchmarks," Lee said. He said just 10 percent of fund managers are topping their benchmark by at least 2.5 percentage points, compared to the long-term average of 26 percent who have beaten their benchmarks.
Lee has a year-end target of 2,100 for the S&P 500, which would represent a 5.8 percent gain from Monday's close of 1,984.13.
Some market participants are wary of stocks after their recent gains. The S&P 500 hit a record high Sept. 4.
All the positive sentiment "is kind of scary, isn't it?" Jim Cahn, a Minneapolis-based financial adviser with Wealth Enhancement Group,
told The Wall Street Journal.
"When no one's fighting about which way the market's going to go, it's dangerous. If they turn out to be wrong, everyone runs for the door at the same time."
Editor’s Note: New Warning - Stocks on Verge of Major Collapse
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