Chart of the Week: How Bullish Are Wall Street Strategists?

Business Week’s 2006-year end predictions are out, and they cover 75 or so Wall Street Strategists and Analysts. Over all, they seem to show a fairly bullish bias amongst the chattering pundits.


How Bullish Are Wall Street Strategists?
click for larger graph


Source: Business Week, Tim Iacono

As the graph above shows, the herding instinct is alive and well with the group clustered between 11-12,000 on the Dow, while advising 40-75% US Equity exposure. Note the outliers: 14,000/100% on the upside, and 6,800/15% on the downside.


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Quote of the Day:

"Courage is not the lack of fear. It is acting in spite of it."

~ Mark Twain

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What's been said:

Discussions found on the web:
  1. Jzeide commented on Dec 19

    Its nice to see you sticking to your guns in a world where most are comfortable just going with the flock… That is a nasty second half..does a nuclear bomb go off in July? What is the tipping point that causes such a decline?

  2. Norman commented on Dec 19

    You would think there would be a south-west to north-east regression line visible where DJIA predicition would be correlated to percent invested. Why not?

  3. B commented on Dec 19

    Well, that is interesting. 7,000 Dow? You are a BEAR! lol. Not exactly out of the question given we will likely break this tight yo-yo band before long. I know we aren’t going to sit between 10-11K for the next ten years and a shakeout of everyone chasing the same trade would be just what the market needs to cleanse itself.

    I just can’t believe Elaine G is at 14,000. That has to be wrong. More like 30,000.

    So, do commodities crater to assist in that projection with a drop in their respective equities? I think oil is done for quite a while. Crude sentiment is at a stupid level. 95% bullish? Hot money is going to likely take it in the shorts big time. Nothing would make me happier than to see OPEC and these hedge funds both hurl a little.

  4. Algernon commented on Dec 19

    The study saying that Roosevelt shortened the great depression is satire from the Federal Onion Reserve, right?

  5. anon commented on Dec 20

    i am “all in” for year 2006. (diversified stocks – primarily no bonds). I think economic data will come in squishy and fed rate hikes will be lower than anticipated, and the fed may even have to cut rates. I am about 67% sure of this.

    i see lots more m&a, share buybacks, and dividends in year 2006. I also see re-leveraging of balance sheets at some point in the future, which will likely boost stocks.

    one huge risk to this all in: international foreign relations. If GWB or others biff relationships with people round the world, and foreigners start dumping U.S. treasuries, interest rates may go up a lot more than people would like. It could be unpredictable on econ and stock markets.

    The DJIA never got hammered. It may or may not get ahmmers. Dunno. The DJIA is not nearly as important today in the U.S. Stuff like the Nasdaq and numerous other things start kicking in to offset any decline in the DOW.

    If 2006 is a soft year (stock market goes down), it will likely be easily recovered by 2008 or 2009.

  6. skoobz commented on Dec 20

    barry, if you really feel that strongly, your allocation should 0 or negative (short sales).

  7. b commented on Dec 20

    You might want to get yourself a subscription to Bob Brinker or Jim Stack or someone else that understands economic cycles, measures market strength, etc.

    Now is likely the most unsafe time in five years to be “all in”. If it does tank and recover, you might just be lucky to get your capital back in the time frame you are looking at……………………………………….IMHO

  8. mh497 commented on Dec 20

    How much did Tobin Smith pay to get included in that list?

  9. HBT commented on Dec 21

    Besides equity valuations, which are reasonable, I can only guess that the other main two reasons for such high equity allocations coming from WS is that for the 3rd (4th!??) year in a row nearly EVERYONE thinks rates will be going higher and they don’t want to tell their clients to pile into TR’s at “the top”, and the obvious fact that most of the managers in that survey are long-only biased. I definitely do not hate stocks, but the thing that makes me more-Bearish for the next quarter, is that this December seems very similar to last year- where I thought I was going to puke if I heard one more CNBC guest call 2005, a “stock picker’s” market, instead of telling us WHY the market as a whole deserved to go up/down.
    In reading the few forecasts that I have so far this year, I feel that if I interpret “between the lines” &/or if you look at the pitiful price-rise %’s for their Index targets, then I cannot find any reason to be “all in”.
    Furthermore ( I have to vent), when is it ever NOT a “stock picker’s” market !??- i.e., if you can REALLY pick stocks, then of course, you will make money & outperform the averages…
    One last thing, R.Bernstein of MER wrote a paper a few months ago in which he found “absolutely no empirical evidence between the growth of U.S. corp cash-on-the-balance sheet and subsequent capital spending…absolutely no correlation.”

    If anyone out there has stumbled across a refutation of his study, I would greatly appreciate if you would post the link…

    Have a great Holiday everyone &,
    Barry, thanks for sharing all of your hard work with this here duffer.

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