Stocks: expect a sell-off

Strategists expect the S&P 500 to be up 16% by the end of the year. But this time last year the forecast was off by 45%.

"No one is calling for another down year in equities," says David Rosenberg of Merrill Lynch. The consensus among 12 top strategists is for the S&P 500 to be at 1,045 by year end, up 16%. "We had this exact same situation a year ago when the forecast was 1,640. It closed at 903 the experts as a group were only off by 45%."

"Bulls point out how cheap stocks have become," says Kopin Tan in Barron's, which compiled the survey. With more than 37% of mutual fund assets parked in money-market funds (see chart), the highest level since 1991, "there's ample cash for bargain hunting should stocks dip below a certain threshold". Falling energy costs, a gradual credit market thaw and aggressive government action to support the economy are also widely cited as reasons to be cheerful. Meanwhile, expectations are at extreme lows, with safety paramount, says Jason Trennert of Strategas Research, one of the most bullish analysts (with a target of 1,100). "People are practically paying the government to hold their money if that's not a sign of negative sentiment, I don't know what is."

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