Strategist Laszlo Birinyi was ahead of the curve in calling the big market rally that started in March of 2009. Now, he says the bull run has a ways to go — a long ways to go.
According to InvestmentNews.com, Birinyi said in a recent letter to clients that he thinks the S&P 500 — currently around 1,270 — will climb above 2,800 in less than three years. “Birinyi said that given how long the advances that began in 1962, 1982, 1990 and 2002 lasted, the current rally should continue another 32 months,” InvestmentNews reports. “Historical precedent shows that gains are largest in the first and last quarters of bull markets, according to research conducted by Westport, Connecticut-based Birinyi Associates Inc. The first of this increase ended in April 2010, and the final quarter may start in July 2012, he said in a report e-mailed to clients [on Jan. 4].”
Birinyi’s forecast implies an annual compound rate of return of more than 35% for the S&P from now through Sept. 4, 2013, when he predicts the index will be at 2,854. He says the market is “following the classical pattern of run-ups, consolidation, people getting bored, and so you’re in for a very long period of rising prices.”
But, interestingly, Birinyi’s not super-bullish on 2011. He forecasts that the S&P will rise to 1,333 this year, meaning that he thinks it will then more than double over the 20-month period beginning in January 2012.
Birinyi also says investors should target individual stocks that aren’t correlated to the broader market, rather than buying stocks based on market value or dividend yield.