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Steve Leuthold earned an astounding 74% return for investors in his Grizzly Short Fund last year betting, as the name would suggest, that stocks were in for a grizzly beating -- which they were.But now Leuthold has turned bullish, and is predicting that the S&P 500 will hit 1,100 this year -- which would represent an increase of more than 30% from the the current price.
"This market was about as cheap as I've seen in my 45 years in this business," he told Bloomberg. "We're probably going to see the economy start turning upward, not now but toward the end of the year. The market is a lead economic indicator, so the time clock is about right for the market to turn up"
Leuthold also warned about the dangers of the excess liquidity that the Federal Reserve has flushed into the system, and expressed concern that it could lead to inflation if it isn't "mopped up" quickly.
The problem, of course, is that efforts to mop up liquidity right now would very likely hurt prospects for a quick, liquidity-fueled economic turnaround. Even if fighting off the ravages of inflation is the right thing to do long-term -- which most would agree it is -- it's probably not a politically expedient move right now given all the concerns about the availability of credit and job losses.But for investors, it's hard not to take some comfort in Leuthold's predictions. He's pretty much the opposite of a perma-bear, and is one of the few investors who has come out of this mess with their credibility stronger rather than weaker.
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Reader Comments (Page 1 of 1)
4-14-2009 @ 9:10PM
cmencer1 said...
He maybe right for the short term like the next 2-3 years, because the government has fought so hard to extend credit lines. But the underlined problems are still there 1 being business and personal debt and having to much of it. So here is an example if I had to much debt and could not afford to pay it, because I was using borrowed many to pay those debts. Eventually it catches up to me and I can't borrow many to pay those debts, and I start to go under. But lucky for me at the last minute I find someone who will loan me more money so I can survive, for now. But it is coming as long as my output is more than my input it is coming. This is how the entire country operates, every american, every business- borrows money to make there bills, and the government maybe able to help extend that credit- for now, but its coming-why because even the government is to ignorant to understand this basic concept- if you own a business and you have to borrow money to make payroll - you shouldn't be in business. If you are an individual and you have to borrow money, or use a credit card to pay your monthly bills you are living beyond your means and you should fail, or change the way you live. Nothing will get better unless every person figures this out.