S&P 500 Will Rise to 1,100 This Year, Leuthold Says (Update2)
By Rita Nazareth and Erik Schatzker
April 14 (Bloomberg) -- Steve Leuthold, whose Grizzly Short Fund returned 74 percent last year betting against U.S. stocks, said the Standard & Poor’s 500 Index will surge to 1,100 after valuations got to the cheapest levels of his career in March.
Leuthold, 71, who helps manage $3.2 billion as founder of Minneapolis-based Leuthold Weeden Capital Management, said most investors should have 65 percent of their assets in stocks.
“This market was about as cheap as I’ve seen in my 45 years in this business,” Leuthold said in a Bloomberg Television interview today. “We’re probably going to see the economy start turning upward, not now but toward the end of the year. The market is a lead economic indicator, so the time clock is about right for the market to turn up”
He said the largest U.S. companies are more undervalued than the smallest. Leuthold’s 2009 forecast for the S&P 500, which sank to 676.53 on March 9, represents a 28 percent gain from yesterday’s close of 858.73.
Leuthold also said that financial shares won’t be the stock market’s leaders. He favors technology and biotechnology companies and advised investors to avoid “defensive” consumer shares and utilities.
Investors should start buying gold over the next year or so because of the threat of inflation, Leuthold said. He started buying the precious metal three weeks ago.
‘Excess Liquidity’
“I would like to see the government pull back and mop up some of this excess liquidity that’s been thrown out there,” Leuthold said. “If that isn’t done and if it isn’t significant, I think there’s a real risk of monetary-debasement inflation, high inflation.”
Minutes of the Fed’s most recent meeting in March show that policy makers feared the U.S. economy might fall into a self- reinforcing cycle of rising unemployment and slumping business and consumer spending. That outlook prompted the FOMC to boost its open-market purchases of bonds by $1.15 trillion.
Prices paid to U.S. producers fell 1.2 percent in March after two months of gains, the Labor Department said today in Washington. The unexpected decline indicates the recession is keeping inflation under control.
To contact the reporters on this story: Rita Nazareth in New York at rnazareth@bloomberg.net; Erik Schatzker in New York at eschatzker@bloomberg.net.
Last Updated: April 14, 2009 11:36 EDT |
