Monday, April 26, 2010

SP500 Could Hit 3,000 By 2020

Interesting to actually see a bullish clip on Yahoo's Tech Ticker. This service typically rehashes the bear case over and over.

John Markham, Marketwatch columnist, has been bullish for a while and basically encapsulates our thesis. Lots of issues still exist such as the potential increases in capital gains taxes, sovereign debt, and so many other issues. Regardless though, the majority of investors remain rather bearish via pumping money into corporate debt. Almost ironic that after a debt bubble people would be so willing to lend money to debtors.

His points about the SP500 hitting 3,000 are very sound and logical though rejected by just about anybody. After a lost decade in stocks, everybody should be pouring money into equities but instead they are racing into bonds at historically low rates. What is the odds of a 2nd lost decade in stocks? Oddly most people would've been more comfortable investing in stocks in 2000 before the bubble burst then in 2009 when the market hit a decade long bottom. As usual investors chase performance instead of rotating out of hot sectors into the cold ones.

  • "It's still the right thing to be long," Markman tells Aaron in the accompanying clip, citing still-low interest rates, strong investor appetite for corporate bonds and stubborn disbelief from the bears. "This is the most morose bull market in history," says the author and Marketwatch columnist.
  • S&P 3000. Reflecting on financial history and last round of massive government stimulus in the early 1990s, after which the S&P rose five-fold, Markman says the S&P could hit 3000 by the end of the decade. Recalling "Something along those lines could happen again," he says.

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