by Dan Burrows | January 10, 2014 1:52 pm
There’s no shortage of 2014 predictions, from stocks to gold to the price of a barrel of oil. Most of these 2014 predictions will miss the mark, but investors can’t live without them. After all, that’s what trading and investing is all about: correctly guessing price directions.
Of course, some 2014 predictions look more likely than others. A group of market strategists surveyed by Barron’s have a 2014 prediction that the S&P 500 will rise to anywhere from 1,900 to 2,100, while the mean 2014 prediction puts the S&P 500 at 1,977, good for a 7% gain over last year.
That jibes with what usually happens after the market logs such an usually good year. After rising 30% in 2013, the S&P 500 should tack on another 7% to 10% in 2014, if history is any guide.
Then again, there are plenty of predictions that are so surprising or seem so unlikely, at first glance they look like they’ve got to be a goof. But then recent events have shown us that seemingly nutty predictions — the collapse of the housing market, the ensuing financial crisis — are sometimes right on the mark.
With that in mind, here are three of the more surprising 2014 predictions from some prominent Wall Street names:
Oppenheimer chief market strategist John Stoltzfus wasn’t trying to be cute when he slapped a year-end price target on the S&P 500 of 2,014. His price target was set using the midpoint between Oppenheimer’s dividend discount model and a price-to-earnings model. It’s just what the spreadsheet spit out.
Still, Stoltzfus had to plug some pretty optimistic assumptions into both models to come up with a 2014 prediction for S&P 500 2,014. It’s well above both the Street’s average estimate, as well as the most bullish 2014 predictions in the Barron’s survey.
On the other hand, if the S&P 500 ends at 2,014, it would represent a 9% gain over 2013, which is in line with historical performance following a red-hot year.
Economist Nouriel Roubini — also known as Dr. Doom — correctly called the housing market collapse and global recession. It made his career, transforming the New York University economist into a well-known talking head. After getting those calls right, Roubini stayed bearish throughout the post-recession period, so much so that he became known as a permabear.
But after missing the entire 170% rally in stocks since the market bottomed in 2009, Dr. Doom has finally changed his tune. Indeed, his 2014 prediction is actually bullish: “The good news is that economic performance will pick up modestly in both advanced economies and emerging markets,” Roubini writes, forecasting 1.9% growth for the world’s advanced economies.
Of course, Dr. Doom has been wrong for so long that maybe all those rosy 2014 predictions will prove to be horribly wrong, too.
Byron Wien of Blackstone Group always offers up a long list of surprising 2014 predictions, and this year is no exception. Wien is more bullish than just about anyone else on the Street, with a 2014 prediction for the S&P 500 to generate a total return of 20%. He also sees China’s economy growing by only 6% this year, oil prices topping $110 a barrel, and 10-year Treasury notes hitting 4%.
But perhaps Wien’s most surprising prediction is in the realm of politics:
“The Affordable Care Act has a remarkable turnaround. The computer access problems are significantly diminished and younger people begin signing up. Obama’s approval rating rises and in the November elections the Democrats not only retain control of the Senate but even gain seats in the House.”
Hey, stranger things have happened.
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