‘The Market Is Telling Me I’m Wrong’: Morgan Stanley Market Bear Michael Wilson Admits His Stock Predictions Were Off
Well, you can be right all the time. RIght now it seems like star Morgan Stanley strategist Michael Wilson might have predicted wrong.
“Wilson, the firm’s chief U.S. equity strategist, has repeatedly warned that investors could be caught in a “rolling bear market ” for the next several years. In February, he said that the long-awaited earnings recession had arrived but that investors were still too optimistic,” CNBC reported.
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Optimism won out as the S&P 500 has had its best start to a year since 1998. In fact, the index gained 13.1 percent in the first quarter. This has been its strongest quarterly performance since 2009.
“I did not expect us to be at all time highs by April,” Wilson told CNBC. “We’re probably going to 3,000 in the next couple of weeks.”
So is Wilson changing his mind? Not exactly.
“He has maintained a leaning toward pessimism for much of the year, making the case that equity markets were too richly priced and noting that ‘risk-reward remains unattractive,’” Market Watch reported.
Still, the degree by which equity indexes have climbed has surprised Wall Street.
“Since the three main indexes put in their lows on Dec. 24, the Nasdaq has climbed 31%, the Dow has gained 22.4%, while the S&P 500 has gained nearly 25%. Notable, is the fact that the burden of the move thus far in 2019 has been equally shouldered by industrials XLI, -0.19% consumer-discretionary XLY, +0.32% financials XLF, -0.13% and communications XLC, -0.50% and technology XLK, +0.22% all of which are up by 20% or better,” Market Watch reported.
“The market is telling me I’m wrong because the breadth is improving,” Wilson told CNBC.
However, Wilson contends there is still an earnings recession on the horizon.
“The earnings profit recession is real,” he told CNBC.
“The mistake was not the Fed tightening last year. The mistake was … the timing of the fiscal policy stimulus, which overheated the economy last year.”
Wilson is hardly ever wrong. “Wilson was the most accurate Wall Street strategist tracked by CNBC in 2018. He’s issued a streak of bearish calls about the S&P 500 and earnings performance over the past year,” CNBC reported.