Psy, this is especially for you, quoted from an Andrew Kashdan article.BTW, is Richard Bernstein related to Jake? <<-- Listen to the Sell Side
Not all sell-side analysts have sailed away to the land where the bong tree grows. Richard Bernstein, of Merrill Lynch, voices an unusually skeptical attitude about sell-side research despite his employment circumstances. Last week, Bernstein looked at what he calls the "Sell Side Indicator" and saw that Wall Street strategists, as a group, are recommending investors hold nearly 70% equities for a "balanced" portfolio. (Since 1985, the Sell-Side Indicator has averaged 55.4%; it broke out of its previous upper range of about 60.7% only after the market peaked in 2000.) Bernstein, who interprets the data as a contrarian indicator, says it points to a total return for the S&P 500 over the next 12 months of a negative 22%. Over the past 16 years, the indicator has predicted about 40% of the variation in the S&P's total return for the year ahead (R-squared = 0.40), which is about 10 times the predictive power of Treasury bond rates and nearly three times that of the P/E ratio.
Sounding like Warren Buffett, Bernstein says that stocks should return about 5% to 6% a year for some time to come. The rest of the Street apparently hasn't gotten the word.>> end quote |
