The November 12 concern of Barron’s featured their “Outlook 2006” article. I all the time sit up for that concern as a result of Barron’s surveys a dozen or so of the highest strategists on Wall Street to get their market predictions for the approaching 12 months.
Whatever these strategists suppose is what the brokers of their corporations will probably be touting to the general public. And since regardless of the public is doing is normally the improper factor to do, a greater opposite indicator you’ll not discover.
Here are a few of my observations from the article…
- Of the 12 analysts surveyed, 10 suppose the S&P 500 index will likely be greater for 2006 than it’s now. Bullish predictions ranged from a low of 1300 (Chip Dickson of Lehman Brothers) to a excessive of 1530 (Ed Keon of Prudential). A extra typical bullish forecast was within the 1350-1400 vary. The median forecast was for a acquire of 9%.
- Only 2 of the 12 suppose the S&P will likely be decrease — Richard Bernstein of Merrill Lynch (a modest decline to 1225) and Abhijit Chakrabortti of J P Morgan (a bearish 1125). Mr. Chakrabortti was the one outright bear.
- They had been requested to decide on three of their favourite sectors for 2006. The hottest was well being care, adopted by know-how and financials.
- Only 2 of the 12 listed power. And none of them selected primary supplies (which would come with gold and silver mining and commodity shares).
- They had been requested to decide on key themes for 2006. They had been overwhelmingly a fan of development shares over worth shares and huge capitalization shares over small capitalization shares.
So if you wish to associate with the gang in 2006, you wish to be bullish on the inventory market. And your focus ought to be on massive development shares within the well being care, know-how, and monetary sectors.
But if you wish to earn money, you most likely wish to do one thing completely different. Like perhaps spend money on shares of small capitalization firms which might be good companies promoting at cut price costs. And so far as sectors are involved, Wall Street nonetheless appears to be ignoring the continuing bullish prospects of power and primary supplies. That bodes nicely for these sectors.