http://www.marketwatch.com/story ... -bullish-2012-07-04
Eisenstadt worried — but bullish
Commentary: Sam Eisenstadt projects S&P at 1,460 at year’s endStories You Might Like
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By Mark Hulbert, MarketWatch
CHAPEL HILL, N.C. (MarketWatch) — The S&P 500 on Dec. 31 will be trading at 1,460.
That, at least, is the 6-month forecast issued earlier this week by none other than Sam Eisenstadt, the former research director at Value Line Inc.
I doubt that anyone would be particularly upset if the stock market ends up at that level, since the S&P 500 /quotes/zigman/3870025 SPX -0.94% currently stands at 1,374. But Eisenstadt characterizes his forecast as implying “a tough climb until the end of the year.”
/quotes/zigman/3870025
SPX 1,354.68, -12.90, -0.94%
1,4501,4001,3501,3001,25012FMAMJ
Who is Eisenstadt, and why pay attention to him?
Prior to his retirement in late 2009, he had spent 63 years at Value Line. At the time of his retirement, its flagship publication, the Value Line Investment Survey, was in first place for risk-adjusted performance over the three decades the Hulbert Financial Digest had been tracking advisory performance.
Eisenstadt in retirement continues to update and refine a complex econometric model that forecasts where the market will be in six months’ time. The inputs to his model are monthly readings of numerous economic and financial variables over the last six decades — back to 1952, in fact.
I’ve reported in these pages before on the forecasts made by Eisenstadt’s model and, though by no means have they always been on target, I think it’s fair to say they have been good enough to justify our paying attention to what his model is forecasting now.
Consider:
•In a December 2009 column for MarketWatch, Eisenstadt forecasted a 20% return for calendar 2010. The Wilshire 5000 actually came remarkably close, gaining 17.2% for the year, after dividends. ( Read Eisenstadt’s Dec. 2009 column. )
•One year later, in December 2010, Eisenstadt’s model was forecasting a double-digit gain for the market in the first half of 2011, which translated into the S&P 500 rising to the 1,360 area. Again, this has to be graded as remarkably accurate: At the market’s high in late April of 2011, the S&P 500 was trading at 1,371, slightly above his forecast from five months earlier. ( Read my Dec. 2, 2010, column about Eisenstadt’s forecast. )
•Less accurate was Eisenstadt’s prediction in mid-2011 for the remainder of that year. Far from rising, as he forecasted, the market fell over the second half of 2011.
•His model returned to being on target for the first half of this year. Last December, his model was forecasting that the S&P 500 would rise 10% in the first half of 2012 — quite close to the 8.3% turned in by this benchmark. ( Read my Dec. 16, 2011, column about Eisenstadt’s forecast for the first half of 2012. )
Why does Eisenstadt characterize his current forecast as implying a “tough climb” for the market? Because the 6-month forecasts produced by his model have been steadily shrinking all year, and his current forecast is for a return that is only slightly higher than the average of all 6-month returns since 1952.
In an email earlier this week, Eisenstadt hastened to add that the message of his model “is still net bullish” — since its forecasted return, modest though it may be, is still for above-average returns.
I reported earlier this week that contrarian analysts were worried that the stock market over the very short term was vulnerable to a pullback. ( Read my Jul. 3 column,“Too many jumping on the bullish bandwagon.” )
Here’s one scenario in which both Eisenstadt and contrarian analysis turn out to be right: The market pulls back in the next couple of weeks, prompting many of the recent converts to the bullish camp to throw in the towel. That would create a robust wall of worry that the market could climb — thereby producing a modest net return for the entire second half of the year.
That would indeed be a “tough climb.”
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发表于 2012-7-7 12:43
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