Equity Bull Market
Belski says the S&P 500 will climb 11 percent to 1,400 in 2012. He forecast the index would rise 5.4 percent last year to 1,325. When he gave his prediction, the average strategist projection for the end of 2011 was 1,379, according to Bloomberg data.
"We're at the cusp of the next great equity bull market," Belski said in a telephone interview on Dec. 28. "The U.S. is not just the best house in a bad neighborhood anymore. It's the best house period. This has all been led by the structural change that corporate America has undergone in the last 10 years."
The S&P 500 had the tenth-best performance in 2011 among the world's stock markets. China's Shanghai Stock Exchange Composite Index and Brazil's Bovespa slumped 22 percent and 18 percent respectively. Japan's Topix lost 19 percent, while the DAX Index of German stocks erased 15 percent. Ireland's ISEQ Overall Index climbed 0.6 percent, the only benchmark to beat the S&P 500 among 24 developed markets.
Corporate Cash
Companies built reserves as stocks sank and forecasts for growth in U.S. gross domestic product in 2012 slipped from 3.3 percent in February to as low as 2 percent in October. Cash at companies excluding banks, utilities, truckers and automakers rose to a record $998.9 billion in the third quarter, according to S&P.
Low investor expectations for earnings growth will help stocks rise when companies beat estimates, Citigroup's Tobias Levkovich said in a Dec. 27 interview on Bloomberg Television's "Street Smart." He sees the S&P 500 climbing to 1,375 in 2012.
S&P 500 companies have beaten Wall Street profit estimates for 11 straight quarters. An average of 73 percent of corporations in the index exceeded analysts' estimates in the first three quarters of 2011, with earnings-per-share topping projections by 5.3 percent, according to data compiled by Bloomberg.
"Markets are going to be moving higher," Levkovich, the New York-based chief U.S. equity strategist at Citigroup, said. Clients who are money managers speculate earnings in 2012 will be about $95 a share, he said. "So if it's comes in at about $100, that's better than what investors believe."