A decade of zero price gains, two busted bubbles, and successive credit crises have left stock investors as disillusioned as they were at the end of the 1970s, but that could set the stage for a multi-year bull market, says Tobias Levkovich, chief US equity strategist at Citi Investment Research.
Six forces, including a housing recovery and energy independence, will align to spark the start of a bull market at some point during the next 12-18 months, Levkovich believes.
"The investment community is distracted by having lost 50 percent-plus in stocks twice since 2000, the plunge in home prices, peak-like profit margins, employment challenges and a potential European sovereign debt/banking crisis," Levkovich wrote in a note to clients this week. "While we do not expect the markets to react to these drivers in the near term, their coalescence could generate a much more impressive rally over the next few years."
Levkovich has a 2012 price target of 1375 on the S&P 500, which represents a 13% increase from the benchmark
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