Year End Targets Raised Again

There’s a lot of hooplah about the markets right now, with many differing opinions. Our job is to cut through the noise, which at times can be quite difficult. We will say that in many of our conversations with clients, the consensus is that a market pullback is due. Internal trading analysts would suggest the same, a pullback to the tune of 5 – 10% is not out of the question. While we would concur, we feel it is important to point out that attempting to call the market is a fool’s game. We’ve been psyched before. As a side note, it has been our experience that when your mother, brother, sister, cousin, and uncle are suddenly saying the same thing, it is often the exact opposite that occurs in the markets. At this time, the number one worry we have is if the negative sentiment strategists, the one’s who are always doom and gloom, start saying they’re bullish; we will take that as a sign to get defensive. 

 
With that said, we believe the market has done a wonderful job of transitioning from a momentum market, to more of an earnings-driven market. In fact, we have revised our 2021 year-end price target for the S&P 500 upward by 6.7%, calling for the index to finish the year at 4,800 from 4,500. This marks the second year-end price target increase this year. Clearly, we underestimated the earnings power of U.S. stocks again, and it could very well be that our estimates are too low once more; we shall see. This means our annual price target for the S&P/TSX is also too low. The new target has been revised upward by 7.3%, to finish the year at 22,000 from 20,500. Overall, we believe the TSX will trade at a discount to the more tech heavy S&P 500.

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