This time last year, legendary investor Doug Kass published his 15 surprises for 2011. Prediction #4, his call on the S&P 500, is within points of perfection. From his note (via TheStreet.com via Abnormal Returns):
4. The market moves sideways during 2011.
While the general consensus forecast is for a rise of about 10% to 15% for the S&P 500 in 2011, the index ends up exactly where it closes the year in 2010. A flat year is a fairly rare occurrence. Since 1900, there have been only six times when the averages recorded a year-over-year price change of less than 3% (plus or minus); 2011 will mark the seventh time.
The sideways market of 2011 will prove to be a good year for opportunistic traders but a poor one for the buy-and-hold crowd as neither the bulls nor the bears will be rejoicing next Christmas.
The S&P closed 2010 at 1,257, and it’s at 1,267 today.
In case you were curious, here’s his S&P 500 surprise call for 2012.
Surprise No. 1: The U.S. stock market approaches its all-time high in 2012.
The beginning of the New Year brings a stable and range-bound market. A confluence of events, however (discussed further in the body of the 15 Surprises for 2012), allows for the S&P 500 to eclipse the 2000 high of 1527.46 during the second half of the year. The rally occurs as a powerful reallocation trade out of bonds and into stocks provides the fuel for the upside breakout. The market rip occurs in a relatively narrow time frame as the S&P 500 records two consecutive months of double-digit returns in summer/early-fall 2012.