22 BARRON’S October 19, 2020
while 50% consider valuations fair.
The valuations help to explain
why even the bulls predict only
muted gains in coming months.
Based on their mean forecast, bullish
money managers expect the Dow
Jones Industrial Average to end the
year about even with its current
level, at 28,433. By mid-2021, they
see it topping 30,000—barely—for
a potential increase of 5% from
Friday’s close.
The bears see the Dow losing
about 12% through the remainder of
2020, finishing at 25,202 before
ticking up slightly, to 25,356, by the
middle of 2021.
The Big Money managers seem
more sanguine about the longer-
term outlook, with just over half
expecting U.S. equities to return 6%
to 10% on an average annualized
basis over the next decade. Another
5% foresee 11% to 15% gains.
Sixty-four percent call equities
the most attractive asset class, far
ahead of those who favor gold
(11%), fixed income, cash, and real
estate (each the choice of 7%), or
commodities (4%).
“Long term, our view is that eq-
uities are still the best place to be—
especially considering the current
fixed-income environment,” says
David Osborn, president of Osborn
Williams & Donohoe, in Cincinnati.
“Current low interest rates and the
potential for rising rates at some
point down the road could lead to
negative returns in bonds in real
terms.”
Jim Hemphill, president and
chief investment strategist at TGS
Financial Advisors, in Radnor, Pa.,
says that rock-bottom interest rates
make stock valuations appear more
reasonable. But he likens the cur-
rent atmosphere to the late stages of
the 1990s tech bubble, when new
investors were pouring into the
market and buying profitless com-
panies’ shares simply because they
were rising. “There is a nontrivial
chance that something bad happens
over the next couple of years,” says
Hemphill. “And we’re just not get-
ting paid well enough for the poten-
tial downside.”
Barron’sconducts the Big Money
poll, a survey of professional inves-
tors, twice a year, in the spring and
fall, with help from Beta Research
of Syosset, N.Y. The latest poll closed
Investor
Sentiment:
1.Describe your
investment outlook
forU.S.equitiesin
thenext12months.
Bearish 13%
Neutral 33%
Bullish 54%
2.Wheredoyouexpectthese
market measures to trade as of
Dec.31,2020,andJune30,2021
if you are...
Bullish Dec. ’20 June ’21
DJIA 28,433 30,011
S&P 500 3443 3661
Nasdaq 11,201 11,996
Bearish Dec. ’20 June ’21
DJIA 25,202 25,356
S&P 500 3015 3089
Nasdaq 9385 9581
3.IstheU.S.stockmarketover-
valued, undervalued, or fairly
valued at current levels?
4.What will U.S.
equities return on
an average annu-
alized basis over
the next decade?
Return
6% to 10% 53%
1% to 5% 36
11% to 15% 5
-1%to-5% 4
5.Are your clients bullish, bear-
ish or neutral about U.S. stocks?
6.What is the
biggest risk to the
stock market in the
next 12 months?
Coronavirus pandemic 26 %
U.S. election 17
U.S. recession/
depression
12
Corporate profit collapse 7
Excessive valuations 7
Fiscal policy blunders 6
Monetary policy blunders 6
Civil unrest 5
Investing:
1.Describe your current portfolio
allocation and forecast your
allocaiton in six months.
In Six
Current Months
Equities 67% 69%
Fixed income 21 20
Cash 8 6
Other* 4 5
*Basedonwrite-incomments,“other”
primarily includes gold, real estate,
commodities, and private equity.2.Which asset class do you
consider most attractive today?
Asset Class
Equities 64%
Gold 11
Cash 7
Real estate 7
Commodities 4
Treasuries 2
Non-U.S. bonds 2
Other 3
3.Which major
equity market
will perform best
in the next 12
months?
U.S. (S&P 500) 43 %
Emerging markets 27
China (Shanghai Comp) 15
Japan (Nikkei 225) 8
Europe (Stoxx Europe 600) 7
4.Doyouexpecttoincreaseor
decrease your net holdings of
the following assets in the next
six months?
Asset Increase Decrease
U.S. stocks 60% 40%
European stocks 53 47
Japanese stocks 36 64
Chinese stocks 52 48
Emerging
67 33
Markets stocks
5.Whichsectorwill
performbestinthe
next six months?
Perform Best
Technology 25%
Health care 13
Industrials 12
Consumer Discretionary 10
Energy 10
6.Whichsectorwillperformthe
worstinthenextsixmonths?
Perform Worst
Energy 24%
Technology 24
Financials 17
Utilities 11
Real Estate 10
7.Name your
favorite stock
for the next 6-12
months.
Recent
Company / Ticker Price
Amazon / AMZN $3363.71
Apple / AAPL 121.19
Alphabet / GOOGL 1563.44
Chevron/CVX 72.95
Nvidia / NVDA 563.81
8.Name the stock
you consider most
overvalued.
Recent
Company / Ticker Price
Tesla / TSLA $461.30
Zoom Video / ZM 509.25
Snowflake / SNOW 243.18
Nikola / NKLA 24.11
Apple / AAPL 121.19
9.Predict the levels of the
followingasofJune30,2021.
Estimated
Price
Oil (Nymex, per bbl) $42.16
Gold (per troy ounce) 2,025
CBOE Volatility Index (VIX) 25.73
10.PredictthelevelofS&P500
earnings in 2020 and 2021.
2020 2021
S&P Earnings $139 $161
The Economy:
1.Predict the growth
rate of U.S. GDP in
2020 and 2021.
2020 2021
-20% or worse 0% 0%
-15% 5 0
-10% to -6% 30 0
-5%to-1% 48 1
0% to 1% 5 7
1.5% 4 9
2.0% 3 12
2.5% 2 6
3.0% 1 14
3.5% 0 10
4.0% 1 17
4.5% 1 8
5.0% or more 1 16
2.In what year will U.S. GDP
returnto2019’slevelof$21.4
trillion?
Year
2022 57%
2021 27
After 2022 16
3.What will the 10-year Treasury
note yield one year from now?
Yield
0% 2%
0.25% 5
0.50% 16
0.75% 33
1.00% 22
1.25% 10
1.50% 8
1.75%ormore 4
50% 44 6
Fairly Valued Overvalued
Undervalued
Bullish
60% 23 17
Neutral Bearish
2020 BIG MONEY POLL