I’m supposed to make a big deal out of Mike Wilson’s new price target for the S&P 500.
You know the drill. “Wall Street’s Most Famous Bear Capitulates.” “Wilson Throws In Towel As Rally Rolls On.” Etc. Etc.
Wilson’s among the biggest names on the sell-side. Contrary to popular belief, he’s not always bearish. Rather, he’s sometimes cautious. In everyday life, we’d call that healthy skepticism. On Wall Street, where you’re supposed to be bullish, it’s called pessimism. In the financial media, it’s called being a bear.
So, Wilson’s a bear. When he’s right (e.g., 2018 and 2022) he’s a genius — a seer and a “strategist” with no peers. When he’s wrong (e.g., 2023) he’s a dissenting voice in an echo chamber of milquetoasts. Either way, he’s good for headlines. Wilson’s click-bait.
That’s surely not why he got into the business, and that’s not what sell-side research is for. But that’s how it turned out, and that’s what happens when you send your analysis to reporters whose job is to news-ify everything.
I’ve said this time and again: I like Mike’s notes. I imagine I’d like Mike. What I don’t so much like anymore, though, is pretending that sell-side research constitutes news. That charade’s more than tiresome by now. It’s the bane of my existence, and on days like Monday, when there’s plenty of real news to debate and discuss, I have an extremely difficult time going through this particular motion.
Without mincing words, sell-side research isn’t “news.” Again: No sell-side commentary of any kind is news. To the extent I’ve perpetuated the notion that it is over the years, I greatly regret it now, because part of my daily mandate is feeding you “news” that isn’t actually news.
Some of you won’t be enamored with that woefully belated mea culpa. Maybe you’re here for that “news” and that news only. If that’s you, don’t worry: I’ll get to the specifics of Wilson’s latest (which, as these things go anyway, is actually chock-full of good analysis) in a separate piece. And there’s been no change in editorial policy, which is to say I plan to summarize and highlight all the best the sell-side has to offer in perpetuity.
But it’s long past time I told you the unvarnished truth, and that truth is that in my opinion, nothing’s gained (and time’s lost, irretrievably) by packaging paraphrased quotables from top-down sell-side research notes as “news.”
With that, here’s a newsflash: Mike Wilson’s new 12-month S&P target (so, June of 2025) is 5,400. To get there, Mike applied at 19x multiple to a 12-month forward EPS forecast (so, June 2026) of $283. He elaborated in a 48-page update released on Monday.
[More to come. This is a developing story…]
Nobody is right all the time. It takes a good analyst to admit when they were wrong and change their view- if necessary. Hats off to Mike Wilson for this. Neil Dutta and Torsten Slok have done this with economic calls- I think more of these analysts not less for their reversals.
Yeah, but the point is: Who cares? How’s it possible to wake up on a day like Monday, when Ebrahim Raisi’s just crashed into the side of a damn mountain, and pretend to care about this? Even if nothing was going on — i.e., if Raisi hadn’t crashed into a mountain — how’s it possible to think these notes are meaningful? How do you make that case? I don’t know. I really don’t. And I felt like I should just put that out there in the interest of honesty now that I’ve been around in this incarnation for — checks notes — nearly a decade. None of these notes have ever mattered and they never will.
That Wilson says S&P 500 to X,000 isn’t interesting, it’s not like he’s Mary Meeker in 1999.
The data, reasoning, insights etc that he uses to get there are, possibly, interesting.
I guess if he flips from a bearish to bullish target or vice-versa, and lots of other similarly situated analysts do same, that’s a sentiment data point – but there are plenty of those.
On Raisi, how big a deal is his death – can changes in Iran’s strategy and behavior be predicted as a result? Or will one piece in a black box simply be replaced by another?
I wrote all about it. You should read that article.
Well I care if for no other reason than to understand the narratives going around wall street, now that I am not sitting on a trading desk all day. I agree on data point or opinion is not earth shattering but it can be useful to hear.
Yeah, I get it. Which is why I still cover it all. But the older I get (and the wiser I get), it occurs to me how much time I’m spending on that coverage at the inevitable expense (because there’s only so much time in a day) of meaningful commentary I could be penning re: geopolitics, socioeconomics, domestic politics and so on.
The problem isn’t the analysts — they’re just doing their job obviously. The problem is that readers are likewise time constrained, and if they (readers) have to choose between somebody’s updated price target and a lengthy geopolitical piece, they might choose the former and they’d be less informed for that choice. Not because there’s anything “wrong” with a price target update, but rather because stocks just aren’t very important relative to all of the things going on in the world.
I don’t like being a contributor to shrinking attention spans and the generalized disappearance of serious debate and discourse. And that’s what it feels like sometimes when I have to write — you know — “Sally Jones Says SPX 6,000 ‘Real Possibility’ By Year-End.” It’s not a knock on Sally, it’s that… well, again, Sally’s just not very important in the grand scheme of things, bless her heart.
Do you feel that way about McElligott?
No. But that’s different. Charlie’s on the sales side, not the research side. That’s a different ball game. In fact, it’s almost an entirely different dialogue.
My view of whether and why the markets are interesting:
I personally think they are super interesting, complex, unpredictable, shifting, scary, funny, predictable, the best and most entertaining puzzle to which most of us have ready access.
Whatever you’re interested in, whether macro-economic, geopolitical, micro-industry, technology, resources, environment, fashion, whatever – you can find an outlet for your interest and insight in the markets, and the prices help you keep score in addition to putting a bit of bread on the table.
I studied physics in school, ended up with a degree in mathematics, had a career as a lawyer – all of that was boring compared to the markets.
Does what we do meet someone’s criteria for being really “meaningful”? Don’t know, don’t care. If you find interest in something, that’s meaning enough.
Flags, (and mainstream media-my augmentation) are proof that human beings are herd animals…
…Einstein