U.S. stock prices will double over the next decade, as pandemic-induced policy changes and an increasingly desperate hunt for real returns push investors to equities, Sanford C. Bernstein strategists said.

The S&P 500 index will reach 8,000, up from its 3,971 close on Monday, Inigo Fraser-Jenkins and Alla Harmsworth wrote in a note. Back in 2019, the two strategists had disagreed over the outlook, with Fraser-Jenkins giving a forward target price of 4,000 and Harmsworth 8,000 for the next decade.

“We are in a totally new policy environment where there is a case for higher (but not too high) inflation and also the possibility that real rates remain low,” Fraser-Jenkins said in an email, when asked about his change of mind, which now puts him in agreement with Harmsworth. “We see this higher forecast now as a confluence of policy changes and the needs of investors to achieve a given level of real return.”

Equities in developed markets have rallied after last year’s slump, fueled by expectations of a rapid economic recovery from the steepest recession in living memory. With vaccinations against the coronavirus progressing, the S&P Index has risen to record highs, against the backdrop of successive stimulus packages. Bernstein recommended buying U.S stocks in March last year, right before prices bottomed out. The S&P Index has gained some 60% since they released overweight position.

“Rates may not respond as quick to inflationary signals,” the Bernstein analysts wrote in the note. “This leaves us with the prospect of persistent low real yields which can justify market valuations.”

Still, even this bullish target for U.S. stocks doesn’t obviate the need for investors to diversify their portfolio from the classical 60:40 split between equities and bonds, according to their strategists, who recommend more reliance on long-short returns, such as value and carry and a greater allocation to such assets as gold and potentially cryptocurrencies.

This article was provided by Bloomberg News.