Beyond those historical trends, investors are torn over the prospects for 2018 and beyond, though most analysts are expecting tepid returns. Equity strategists surveyed by MarketWatch expect the S&P to end next year at 2,819, which represents upside of about 5% from current levels. Meanwhile, in contrast to the bullishness expressed by the AAII poll, a survey from the Boston Consulting Group pointed to growing caution.
“Overall, 68% of respondents think the market is overvalued — by an average of 15 percentage points,” read BCG’s analysis of its survey. It noted that the percentage of bearish respondents was “more than twice the 29% of investors in last year’s survey who thought the market was overvalued.”
Only 16% said it was undervalued. Furthermore, investors on average are expecting total shareholder returns (TSR) of 5.5% over the coming three years, “the lowest percentage we have recorded since we began asking about TSR expectations in 2010, and close to half the long-term average TSR of 10% that companies have achieved over the past 90 years.”
More than half the investors in BCG’s survey — 53% — say the next economic recession will occur over the next two years; only 18% say it is more than three years out.