The best part about working at Zacks has nothing to do with the Zacks Rank we keep bragging about. Nor is it about having more stock research at our disposal than 99.997% of other investors. (However, it is pretty cool having access to virtually every brokerage research produced).
No. The best part is the people.
Everywhere you turn is another intelligent, seasoned investor with keen insights on the market. Casual conversations spring up all the time to discuss the investment landscape. Quite often we have more formal conversations too. Not with the goal of reaching consensus. Rather to sharpen everyone’s mind on the key topics that move the market.
Such was the case this past Wednesday when I rounded up 8 of the best investment minds to talk about the Euro-mess, slowing Chinese growth, state of the US economy, why stocks were struggling earlier in the week? And most importantly, where will the market be 3 months from now???
I thought that many of you might enjoy a recap of the insights shared at this meeting. So here you go…
What They Said
First let’s take roll call:
- Kevin Matras, editor of Chart Patterns Trader and Options Trader
- Sheraz Mian, editor Zacks Top 10 Stocks
- Tracey Ryniec, editor of Insider Trader and Turnaround Trader
- Bill Wilton, editor of Home Run Investor and Small Cap Trader
- Todd Bunton, co-editor of Reitmeister Value Investor
- Dirk van Dijk, Senior Stock Strategies for Zacks.com
- Kevin Cook, editor of the newly launched Tactical Trader
- Yours Truly…all around good guy 😉
Now let’s roll into their key insights from the meeting…
Why Were Stocks Struggling Earlier this Week?
(Sheraz Mian): “It’s all Europe related. The expectation in the market was that the ECB was waiting for the EU leaders to come up with a framework for fiscal union in last Friday’s summit. They did and the stock market cheered them on at first. And then the ECB didn’t show up for the fight which pushed stocks lower.”
(Todd Bunton): “The market selloff this week seemed more like panic selling than a shift in fundamentals. Did last Friday’s summit “fix” Europe? No. Far from it. But I don’t see a Lehman-type event hitting our shores soon either.”
(Kevin Matras): “The market simply got ahead of itself. Volatility within this range is likely to continue until a clearer catalyst is seen. Fundamentally, nothing has really changed in the last few days. I chalk this up to technically related, directionless trading, until new fundamental information hits the market.”
(Kevin Cook): “This is a “retreat from risk” by institutional Portfolio Managers on the fear that Europe gets worse because it is clear that Germany & ECB will let it get worse. Throw some China softness and the ECRI recession call on top of that and growth prospects for next 2 quarters start to look shaky with 45% of S&P profits from abroad.”
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Where Will the Market Be 3 Months from Now?
(Sheraz Mian): “The bond market doesn’t need to see massive bond purchases from the ECB for Italian bond yields to come down. A mere commitment from Mr. Draghi will do the trick. They have to do that. Once the ECB comes out with that commitment, we will start a spontaneous rally pushing stocks up 5%-6% in a couple of days. And we keep trending up from there onwards.”
(Kevin Cook): “Still a bull, looking for S&P 1,175 to hold. And still calling for minimum 1,300 by year end. This current malaise and doubt is just the sort of fuel to get us there. 3 month target = 1,400.”
(Kevin Matras): “I believe the market will push higher between now and the next 3 months with my target price being 1,325/1,350 for the S&P. The most compelling reason for a higher market call is the US economy, which is finally seeing real improvement in its labor force, and growing evidence that the economy is picking up steam.”
(Dirk van Dijk): “I think we rally into year end. We have a nice wall of worry to climb. The U.S. might be the best looking horse in the corral of the Glue factory, but it is never the less the best looking horse. Other investments, such as bonds, cash and real estate, look very unattractive right now, and the money has to flow somewhere.”
And now the bears come out to play…
(Bill Wilton): “Maybe I need to get into the holiday spirit, but I just can’t shake this overall bearish tone. In 3 months I see the S&P around 1,125 – 1,150, or at least has hit that level by then. I think we are heading lower mainly because the best case scenario (mild recession in Europe) is still not that good and is heavily outweighed by the worst case scenario. We could easily see a debacle in the debt crisis in Europe. We also could find that China’s economy as a whole is a sham, or at least not nearly as stable as they want the world to think. To me it just looks like much more downside risk relative to upside gains. Why will people risk losing 25% to gain 5%? They won’t, so we will see some heavy selling in January, if not before.”
(Tracey Ryniec): “The Chinese economy is slowing for the first time in 3 years. Housing prices have plunged in Beijing and Shanghai. Manufacturing data has fallen to February 2009 levels, which was the height of the Great Recession. The Shanghai Index has retreated to March 2009 levels. China is flashing red for “warning.” I’m expecting a weak stock market to open up the year as the Eurozone crisis will be raging with few concrete “solutions” and China will attempt to engineer, in the best case scenario, a soft landing. Look for the S&P 500 to test the 1060 level sometime in the first quarter.”
What to Do Next?
The final scorecard from this conversation was that 6 believe the market will be higher and 2 think it will be lower.
Yes, I understand that most of you would have greater comfort if all 8 of us were in agreement on this vital topic. However, promoting consensus is promoting foolishness. Meaning that 100% agreement does not equal 100% being right.
The market is too complex and uncertain to get 8 intelligent people to fully agree on its outcome. Instead we cherish the independent insight of our commentators. And by getting the full unfiltered view from each of these folks you will come to the best conclusions on how to invest your money.
And the best way to get their full view on the market and their specific trades to profit in this environment is to have full access to all the subscription services at Zacks. That is exactly what you get with the Zacks Ultimate…full access to every one of our stock-picking services, even those currently closed to new members.
Now, we’ve made Zacks Ultimate available to try for 30 days and backed with the boldest guarantee we’ve ever made. You can get in on it until tomorrow, Sunday, December 18th.
About Zacks Ultimate.
Best,
Steve Reitmeister
Steve is the Executive VP in charge of Zacks.com and all of its subscription services. His personal mission is to help investors achieve life-changing investment success by harnessing the power of earnings estimate revisions. Over the years, he has developed a full array of services to help investors do just that. Discover all of these services now to find the ones that perfectly fit your investment style. Learn more about Zacks Ultimate Trader.
