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Bull market to run at least three more years, Goldman Sachs says
Michael Babad

This article was published more than 6 years ago. Some information may no longer be current.

Briefing highlights

  • Analysts project ongoing bull market
  • But ‘the bubble continues’: Rosenberg
  • Markets at a glance: Dow tops 26,000
  • Magna forecasts through to 2020
  • Citigroup sees $18.3-billion loss on tax charges
  • Bitcoin plunges on crackdown fears
  • Yellow Pages cutting 500 jobs

We keep hearing questions about how long this bull market can run.

Well, to borrow a Yogi-ism, stock analysts say it ain't over till it's over.

Which means they're not calling an end to it just yet, and don't even necessarily see an end in sight at this point, though we're constantly being reminded that it's getting long in the tooth.

This comes as the Dow Jones industrial average topped 26,000 today.

Here are some recent views:

David Kostin, chief U.S. equity analyst at Goldman Sachs, estimates the S&P 500 will gain 5 per cent this year, to 2,850, a further 5 per cent in 2019, to 3,000, and 3 per cent more in 2020, to hit 3,100.

From the depths of 2009, that would put the length of the bull market at 141 months, compared to the 147 from 1987 through to the dot-com bust.

"Earnings growth will be the dominant driver" of that run through to the end of 2020, he said in his forecast, subtitled "Up, up and away."

In a second, more recent outlook, Mr. Kostin and his colleagues noted that the S&P 500 returned 3.5 per cent in just the first two weeks of 2018, marking the best launch in 16 years.

"We expect the market will rise to 2,850 by year end, and recommend investors overweight the financials and industrials sectors," they said.

"Financials should benefit from tax reform, deregulation, capital return, and rising interest rates … Industrials should benefit from strong U.S. and global economic activity, as well as tax reform."

Deutsche Bank analysts, in turn, recently raised their 2018 forecast for the index to 3,000, from their previous projection of 2,850.

"It's still a bull market," Javed Mirza of Canaccord Genuity added in an outlook this week.

Tony Dwyer, Canaccord's U.S. strategist, projects 3,100 for the S&P 500 this year, while Canadian strategist Martin Roberge now sees 17,000 for the S&P/TSX composite in 2018.

David Rosenberg, chief economist at Gluskin Sheff + Associates, introduced a note of caution to all this.

"The bubble continues," Mr. Rosenberg said.

"I'm not talking about bitcoin. Whether you look at price to book, price to earnings or price to sales, this is one of the most expensive markets of all time."

He also rhymed off some exceptional numbers: Over the last 100 trading days, the Dow Jones industrial average climbed 19 per cent, the Russell 200 indexes 17 per cent each, and the S&P 500 15 per cent.

"The Dow, amazingly, has added 500 points per week for the first two weeks of the year – it hasn't done that in 18 years," Mr. Rosenberg said.

"Sentiment and multiples are off the charts, but there are few signs yet of a pullback," he added.

"Volumes have been rising. There are very few divergences. And we are seeing the likes of Facebook lag, as late-cycle performers like energy excel, along with the retailers and several of the banks."

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Markets at a glance

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Magna forecasts through to 2020

Magna International Inc. projects sales this year of $39.3-billion (U.S.) to $41.5-billion, and in 2020 of $42.7-billion to $45.7-billion.

It also forecast 2018 profit, attributable to the auto parts maker, of $2.3-billion to $2.5-billion.

"We expect to deliver above-market growth through 2020 and beyond driven by our portfolio of products tied to vehicle electrification, light-weighting, safety and autonomous driving," chief executive officer Don Walker said in a statement.

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