Bull Market to Continue Rest of Year: Byron Wien

The bull market in stocks will continue the rest of the year despite the outsized gains already in the first quarter as more equity “disbelievers” are converted, the economy improves and more companies follow Apple’s lead in paying a dividend, well-known Wall Street strategist Byron Wien says.


“I actually thought the S&P 500 could reach 1500 based on the generally achieved (but not last year) multiple of 15 times and operating earnings of $100,” wrote Blackstone’s Wien in a strategy note to clients Tuesday, which reviewed his classic “Ten Surprises” outlook for the year. “Estimates have been trimmed somewhat, but, at this point, I still think 1500 is likely.”

“Over the past three months the pessimistic mood has changed to optimism,” continues Wien, formerly the long-time chief investment strategist at Morgan Stanley. “Ordinarily, optimistic sentiment readings presage a market correction, but there are so many investors looking for an opportunity to increase their exposure that even a minor downdraft gets cut short by a flood of buyers. This could continue for a while.”

So far this year, the S&P 500 is up 12 percent to above 1400, Wien’s original 2012 forecast for the U.S. benchmark. Federal Reserve officials made note Tuesday of the strengthening economy in minutes released from the central bank’s March meeting.

“Over the past few years the work of the Economic Cycle Research Institute has gained some respect,” stated Wien, now the Vice Chairman of Blackstone Advisory Partners. “Its index peaked in April 2010 and April 2011, warning of slower economic activity to follow.

The S&P 500 subsequently declined 15% in both of those years. The index is currently rising and there are enough positive economic factors influencing it to believe that it won’t peak soon.”

In a rare instance of discussing a specific company, the strategist singled out the tech giant’s declaration of a dividend as another reason to be bullish stocks.

Apple paving the way for a greater focus on dividends will help the indexes move ahead.”

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