Barry Bannister, managing director and equity investment stretegist at Stifel Nicolaus, has changed his end-of-year price target of the S&P 500 from 1850 to 2300. Mr. Bannister is expecting the S&P to rise over 300 points from its current level, a 15% increase, in 4 months.
Atlanta Fed President Dennis Lockhart believes that the market is highly valued but that the market would be more resilient in a downturn than in 2007. I don't think that the market would crash or that we will enter into a deep depression, but I don't see how the S&P will go up another 15% in 4 months or that the markets would be resilient to a correction.
Assets across the board are overpriced, and everyone is drinking the kool-aid that the Fed is providing in the form of low interest rates. Some drink by choice, others are forced, since there aren't a lot of alternative asset classes to grow our money and combat inflation. The Market is overvalued, the bubble will continue to grow, and if the S&P does miraculously reach 2300, it will simply be even more overpriced, not justified. It seems as though we are entering into the realm of ridiculousness as people continue to enter the market, and analysts continue to justify current and higher price levels. Interest rates may not be raised until summer 2015, but this doesn't mean prices can continue to blindly rise away from value. When the correction finally occurs, there will be blood in the streets, and the perfect time for value investors to scoop up businesses for pennies on the dollar.