I hereby invoke Bob Farrell’s Rule #9: When all the experts and forecasts agree — something else is going to happen.
Let’s look at the forecasted year-end 2010 levels for the S&P500 and S&P500 earnings:
| Firm | Strategist | 2010 Close | 2010 EPS |
| Bank of America | David Bianco | 1275 | 73 |
| Bank of Montreal | Ben Joyce | 71 | |
| Barclays | Barry Knapp | 1120 | 66 |
| Citigroup | Tobias Levkovich | 1150 | 72.5 |
| Credit Suisse | Andrew Garthwaite | 1125 | 76 |
| Deutsche Bank | Binky Chada | 1260 | 77.8 |
| Goldman Sachs | David Kostin | 1250 | 76 |
| JP Morgan | Thomas Lee | 1300 | 80 |
| Morgan Stanley | Jason Todd | 70 | |
| Oppenheimer | Brian Belski | 1300 | 70 |
| RBC | Myles Zyblock | 1200 | 72 |
| UBS | Thomas Doerflinger | 1250 | 80 |
| Mean | 1223 | $73.69 | |
| Median | 1250 | $72.75 | |
| High | 1300 | $80.00 | |
| Low | 1120 | $66.00 |
Category: Analysts, Investing, Markets
Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.
Dude! what am I looking at??
Are there units to the numbers? What’s EPS?
And who is Bob?
Is this turning into a geek blog?
I’ll update above . . .
(You mean this hasn’t been a geek blog? WTF was I thinking!?!)
what happened to last year’s “Forecasts”?
always nice to ‘compare and contrast’..
also, are any of these geniuses forecasting Interest Rates? ForEx valuations? Commodity Prices?
You left our Rosie! He would pull the who average down by at least 50 points.
Moreover, what do you think Barry? What’s your target?
soooooo … I guess this means we can expect the S&P to close out 2010 at 1500?
I love the fact that there is only a slim difference — about 14%-15% between the anticipated high and low, or about 7% above and below the mean — have these folks no imagination?
Why not just put the same numbers for the high and low?
That’s an awful lot of reliance on “managed” markets.
And how much do these guys get paid to do this?
The high, low, median, and mean forecasts all turn out with a PE somewhere between 16 and 17. How is that multiple justified in an economy with anemic employment, massive government supports that will end and only one direction left for interest rates to go? I realize that these are “only” fundamental questions, but it really gives me pause. I guess it goes back to constantnormal’s reference to “managed markets”.
Are these Es in the EPS based on their paying back the TARP with mark-to-model toxic waste so blessed so they can save the real cash to pay cowboys and continue the Thelma and Louise playbook?
This is the talent we are always hearing about that must be paid boatloads of money or they will debark leaving our nation and the world adrift?
All together now! EPS estimates seem a bit high, no?
I like how all the forecasts are higher…talk about herding.
re “When all the experts and forecasts agree — something else is going to happen.”
So funny–and so true!
maybe its the point, but those are all Sell-side guys, what’s the Buy-side fraternity say?
I don’t see what the big deal is, I get the same result simply by recycling 2005 Operating Earnings (bottom up).
12/31/2005 1248.29 $20.19
09/30/2005 1228.81 $18.84
06/30/2005 1191.33 $19.42
03/31/2005 1180.59 $18.00
Things are just as they were five years ago. ;)
Don’t sweat the bailouts, unemployment or the value of the dollar.
www2.standardandpoors.com/spf/xls/index/SP500EPSEST.XLS
Predictions are fun, but useless.
Multiple Contraction is notably absent from these predictions… all these guys have P/E values between 15-20.
As BR has pointed out, most bear markets end with single digit P/E ratios, and we haven’t been there yet.
Another ratio LB likes to monitor is the following ratio. SPX dividend yield (2.1) v. the 10y yield (3.47). So that’s about 0.60. Last February this was 6.0/2.50 or so, or in excess of 2. Keep your eye on this measure.
High end housing is going to crumble in 2010, negative equity is going to be extreme for the homeowners, the remaining builders and the bag-holders for these instruments (regional banks and insurance companies who hold mortgages or prime MBS) are holders of US high yield debt and equities. Can you say liquidation?
Anyone want to bet that 2010 EPS will be higher than 2010 peak VIX?
[...] interesting note was published on Barry Ritholtz’s blog last week that compares some top Wall Street strategists predictions for earnings in 2010. [...]