Consensus sentiment, particularly among professionals (who as a group are almost always wrong), tightly clusters around a 6% S&P 500 return for this year. When sentiment clusters like that my research shows stocks almost always do much better or much worse. Expect better!
Yes, this bull market has moved well past pessimism. But residual skeptics still temper the euphoria that classically death-knells stocks. More standard measures of optimism tend to hit halfway through a bull—and that should be sometime in 2014. Happy times, indeed! Can things go wrong? Of course. But don’t bet on it.
My biggest 2014 positive surprise? How well the world will work when quantitative easing finally dies. As I’ve detailed multiple times, virtually everyone gets this wrong and backward. QE isn’t expansive or bullish—just the reverse. When it ends the party finally gets going good, as yield spreads widen and bank lending, money supply and economic growth finally take off—the exact U.K. experience after they ended their dismal version of this idiocy. America’s broad money supply has grown slower in this expansion than any you’ve lived through. That loosens soon. Enjoy the ride.
Among my lousier 2013 picks: China Mobile (CHL, 52) (from Jan. 21 at $58)(CHL, Financial), which missed earnings estimates. Expectations are lower now. I like that. As China’s 8% growth keeps rippling inland, so will mobile demand. Expect moderate growth and a stock that performs almost exactly the same because it didn’t in 2013. It sells at 11 times my 2014 earnings estimate with a 3.8% dividend yield.
