S&P 500 Will Rise to 1,100 This Year, Leuthold Says

Discussion in 'Wall St. News' started by aresky, Apr 14, 2009.

  1. aresky


    April 14 (Bloomberg) -- Steve Leuthold, whose Grizzly Short Fund returned 74 percent last year betting against U.S. stocks, said the Standard & Poor’s 500 Index will surge to 1,100 after valuations got to the cheapest levels of his career in March.

    Leuthold, 71, who helps manage $3.2 billion as founder of Minneapolis-based Leuthold Weeden Capital Management, said most investors should have 65 percent of their assets in stocks.

    “This market was about as cheap as I’ve seen in my 45 years in this business,” Leuthold said in a Bloomberg Television interview today. “We’re probably going to see the economy start turning upward, not now but toward the end of the year. The market is a lead economic indicator, so the time clock is about right for the market to turn up”

    He said the largest U.S. companies are more undervalued than the smallest. Leuthold’s 2009 forecast for the S&P 500, which sank to 676.53 on March 9, represents a 28 percent gain from yesterday’s close of 858.73.

    Leuthold also said that financial shares won’t be the stock market’s leaders. He favors technology and biotechnology companies and advised investors to avoid “defensive” consumer shares and utilities.

    Investors should start buying gold over the next year or so because of the threat of inflation, Leuthold said. He started buying the precious metal three weeks ago.

    Prices paid to U.S. producers fell 1.2 percent in March after two months of gains, the Labor Department said today in Washington. The unexpected decline indicates the recession is keeping inflation under control.

  2. 1100/676.50 = about 1.62 or 62 percent return. While this guy's prediction may turn out to be true, a 62 percent swing in one year feels implausible to me. Does anyone have any stats on the largest intrayear moves?
  3. The Dow went from about 100 to about 160 in 1938, and this year has been compared to that year a lot. So, it's possible. It would also be a very nice breakaway gap fill at ~1080.
  4. As long as we distinguish facts from opinions, we will be okay.

    In 2007, Kyle Bass (Hyman Fund) returned 600%.... made $6 billion betting against the sub-prime mortgage mkt. In 2008, he returned just 6%.

    There are thousands of variables influencing the mkt aside from just "valuation" models and producer prices paid.