This week Barrons Links:
A Ray of Sunshine?
Strategists suggest Dow may edge below 8000 and then move upward
By Michael Santoli
interactive.wsj.com
Excerpts:
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Marshall Acuff,
Salomon Smith Barney
"We've entered a multi-year period of declining earnings growth expectations. The big issue out there is that people increasingly realize that the world will grow more slowly. We've also got to correct this divergence [of the indexes and the average stock]. It won't happen by the broad number of stocks going up, so it will have to be bigger stocks that go down. This is not the end of the bull market that began in 1982, but a cyclical correction. It's going to continue to be a bumpy ride."
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Byron Wien,
Morgan Stanley Dean Witter
"I've been looking for a bad second half since the beginning of the year, and everybody laughed at me, but it looks like things are coming my way. The question is, is it worse than I thought. I'm not prepared to say that it is. This is not a bear market, but it is the most serious correction since 1990. I think we're reaching a point where we can achieve a temporary bottom and rally from there, but we need a stabilization of the geopolitical situation."
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Abby Joseph Cohen,
Goldman Sachs
"What happened to our stock market was an overreaction. We conclude that problems of great consequence to other nations have been largely responsible for recent declines in U.S. stock prices, and that these declines are notably out of proportion with the likely impact on the U.S. economy. Our year-end forecast for the S&P is 1150 and our rolling 12-month forecast is 1250."
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Douglas Cliggott,
J.P. Morgan
"We're focusing on a 12-month target of 1120 for the S&P 500, and are still comfortable with a 1065 target for yearend. I think the wild cards are still the same as they were early this year: what kind of earnings growth will we get and how much of a risk premium will investors demand because of heightened volatility. We've been out front in saying earnings stink but are moderately positive in a really tough operating environment."
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Elizabeth Mackay,
Bear Stearns
"In the first half of the year we had some irrational behavior on the upside. There were good fundamental reasons for a correction. Now there are signs of capitulation and a selling crescendo. It's no longer a perfect world. It's the highest-risk environment since 1994, if not 1990. But we can now expect much more normal historical returns from stocks."
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