“Never make predictions, especially about the future.” -Casey Stengel
“The groundhog is like most other prophets; it delivers its predictions and then disappears.” -humorist Bill Vaughan
“The only thing we know about the future is it will be different.” -management consultant and author Peter Drucker
“The future ain’t what is used to be.” -Yogi Berra
We are going to use this week’s edition of “Notable Quotes” to take a look at what some well-known market commentators and analysts have to say about their outlook for 2012, especially for the equity markets.
But first, one more quote from the prolific and departed Bill Vaughan, which pretty much might sum up feelings about 2011:
“An optimist stays up New Year’s Eve to see the New Year in. A pessimist stays up to make sure the old one leaves.”
There has been much commentary about 2011, much of it unprintable in a respectable venue. All we know for sure is that the market was basically flat on the year, with wild volatile swings and as many huge percentage up and down days as anyone can remember in recent history. It has been said that although the VIX did not reach the levels of 2008-2009, the “volatility of the VIX”, if that makes any sense, was even greater than that period.
“The Wild Ride to Nowhere”, as many called it, ended up with the S&P down 0.04 points, the smallest annual change on record, the Dow up +5.5% and the Nasdaq down -1.8%
So against that backdrop, what does 2012 have in store for us? Let’s see what they are saying.
Doug Kass’ going- in 2011 predictions essentially nailed the GDP, the flat finish of the year for equities, the disappointing housing market and the troubles coming in the back half of the year (although missing on gold’s direction), so let’s give him the honor of the lead-off spot.
“The U.S. stock market approaches its all-time high in 2012. The beginning of the New Year brings a stable and range-bound market. A confluence of events, however, allows for the SPX to eclipse the all-time high of 1527.46 during the second half of the year. The rally occurs as a powerful reallocation trade out of bonds and into stocks provides the fuel for the upside breakout. The market rip occurs in a relatively narrow time frame as the S&P 500 records two consecutive months of double-digit returns in summer/early-fall 2012.”
“The road ahead shapes up as bumpy and dangerous. Investors would be well-advised to proceed with all due caution, and then some.” --Alan Abelson, Barron’s lead columnist and the man who never met a negative data point he did not like
“We should have a decent but not spectacular year, unless there is a severe European contraction. Stay invested in large dividend-paying stocks with strong balance sheets. I generally like tech, energy, retail, healthcare, fast food and some overly beaten down European companies. Avoid financial stocks, especially banks. A Republican win helps the stock market. Don’t be surprised by one or more major bank failures in Europe which will drive the market down temporarily and represent a great buying opportunity.” --Jim Cramer
“America will be a tad cheerier than Europe in 2012-but it should be so much better still. Can America provide a locomotive for global growth? Sadly not. Even if U.S. politicians can avoid mutilating the economy, it is doubtful they will do anything to help it.” --The Economist outlook
“Real emergency action is needed. Europe is headed for another recession. If its banks implode, we’ll have 2008-09 all over again or even worse. Merkel and the ECB hold the keys and must act now. “ –Steve Forbes
“Most people think a real Eurozone solution will add 25% to the S&P.” -Ken Fisher
“We have already seen the peak for equities for this cycle, back in April 2011. We should have a range of 1000-1350, with more room to the downside than the upside. The Presidential cycle will not apply this time.” --Bob Farrell, ex-Merrill Lynch analyst and forecaster
“Market strategists predict the S&P will stay in a range of 1100-1500. The finish for 2012 in this range depends on how investors balance economic growth, fiscal policy, corporate earnings and the European debt crisis, as well as the potential for change after the November election.” --New York Times outlook
“Pessimism is often overweighted in asset class prices, which makes widespread gloom a bullish indicator.” --Warren Buffett
“Buy and hold is not dead. Everything is already discounted except the complete collapse and disintegration of the European Union.” --legendary fund manager Bill Miller, who beat the S&P for 15 straight years until running into a losing streak five of the past six years
“Our message: be careful. The fat tail event risk is still out there.” --Bill Gross of PIMCO
“If you have a long-term view, now is a terrific time to buy into the housing market.” --Karl Case of Case-Shiller fame
“Efficient market theorists would say that all the future bad news and pessimism is already priced in. One big question for 2012 is whether the record high asset class correlation will continue in 2012.” --James Stewart, NY Times columnist
“Forging a consensus among FOMC voting members may well prove impossible. But the more clarity the FED offers, the better.” --Harvard Prof. Gregory Mankiw, a Bush economic adviser and now in the Romney camp
“Need to see if the ‘enormous disconnect’ of earnings to the value of the S&P continues in 2012. 3rd Qtr. 2011 earnings were at record levels, yet the SPX declined 14% over that period.” --Howard Silverblatt, S&P senior index analyst
“What we hear from fund managers is that they expect company fundamentals and earnings to really matter again.” --Rachel Carroll, Russell Investments
“The economic risks of the Eurozone are enough to suggest 2012 will be a bad year for the global economy. Only if European leaders surprise us with a comprehensive plan will the economic outlook improve by this time next year.” --Chris Giles, Financial Times 2012 Outlook
“My prediction is that people will buy stocks more than gold in 2012.” --Larry Kudlow
“Waiting until after the November elections to really tackle the deficit and unemployment is just irresponsible.” --Christina Romer, now professor and former Chair of the Council of Economic Advisers
“The ‘Golden Cross’ of the DOW 50-day MA moving above the 200-day MA has been a bullish signal in 13 of the 20 times it has happened in the past 50 years and we are starting to see this now.” --Bespoke Investment Research
“I expect equities will outperform gold without any question. And I think U.S. equities will outperform the rest of the world. The key is that the new ECB borrowing window kicks the can down the road considerably.” --- newsletter writer, fund manager, and commodities expert Dennis Gartman
“The 4th Qtr. S&P profit outlook is now for +8.
