January 11th, 2012
Econintersect: Laszlo Birinyi (pictured), who manages investments of more than $400 million, says that U.S. stocks are entering the third of four stages that will eventually constitute the complete bull market following the bottom in March 2009. The year 2012 will be part of that third leg and see a gain of 8% if Birinyi’s analysis is born out. According to Bloomberg and Financial Analysis Magazine, Birinyi has been long since the market bottom and has held onto long positions through the 15% (2009) and 19% (2011) corrections which have occurred in the strong market since 2009. From March 9, 2009 to date the S&P 500 (without dividends) has risen 90%.
There are different opinions from other sources, though. Gary Shilling, who anticipates a mild U.S. recession in 2012, expects stocks to accumulate losses during the year, In October, Nouriel Roubini suggested that the probability of a recession in the U.S. in 2012 was 60% and that investment gains at the end of 2011 would “prove temporary.”
Bloomberg reports that another optimistic investment manager, Michael Shaoul of Marketfield Asset Management, said in a January 5 phone interview by Bloomberg that 2012 should see the U.S. market surpass the 2011 high. That high was 1370.58 (intraday May 2), nearly 6% higher than current value and more than 7% higher than the market closed on January 4 when Birinyi gave the 8% gain prediction for 2012 to Bloomberg.
Bottom line: Birinyi thinks the bull market will continue in 2012 but doesn’t see much change at year end from the 2011 high.
Disclosure: Global Economic Intersection Publisher Steven Hansen and Managing Editor John Lounsbury are both participants in Birinyi Associates Ticker Sense Bloggers’ Poll about the 30-day outlook for U.S. stock markets.