What current bulls were saying in December 2007

This blast from the past Bloomberg Business Week article from December 2007 “What the Pros are saying”, offers some useful insight into the forecasting abilities of some of today’s widely quoted market bulls. The usual suspects and still some of today’s favorites include:

Ralph Acampora— in December 2007 was expecting a 10% to 20% sell-off in the first half of 2008, followed by a rebound in the second half of the year “as economic growth, fueled in part by election year pump-priming, accelerates”. Acampora’s advice to investors in December 2007: “stick with the large-cap growth stocks that are currently in favor.”

Laslo Birinyi: in December 2007 said that the bull market that started in 2002 was still very much intact. “He expects the current economic expansion to continue, with 5% corporate earnings growth helping to propel the Dow to 15,000 by the end of 2008. The signs of a market top, which include speculative fervor and rising stock valuations, “really aren’t present,” he adds. At 15 to 18 times estimated earnings—the exact number depends on how you measure earnings—stock market values are neither cheap nor expensive.”

Elaine Garzarelli: in December 2007 was expecting “a 20% gain on the Dow and the S&P 500 stock index” in 2008. “While most analysts are worried about negative earnings surprises, Garzarelli is betting that earnings will hold up: She says they will rise some 7%, as lower interest rates reduce the cost of borrowing for corporations and a weak dollar fuels strong export growth. Of the 14 indicators Garzarelli follows, which measure everything from investor sentiment to stock valuations, most are flashing favorable signals. “Our models show the S&P 500 is undervalued by 25%.”

“Blue chip” dividend paying stocks proceeded to fall an average of 50% over the following 15 months.

Others like Bob Arnott, GMO’s Ben Inkler, and myself (here on BNN in August 2008 when the TSX was at all time highs) were recommending low stock exposure with defensive positions in cash and high quality bonds, and we are again today…food for thought.

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