Barry Bannister, Stifel’s chief equity strategist, believes that stock pickers may have an advantage over passive investors as the market is expected to remain stagnant for the next decade, with “easy money” now behind us and “hard money” ahead, adding that he has observed such a flat-range trading climate before, which tends to be slightly more inflationary, feature a weaker dollar, and have a compression of P/E ratios.
Barry Bannister, the chief equity strategist at Stifel, predicts that the S&P 500 will have the same trading level as in 2021 in 2031. The S&P closed at 4,071 on Tuesday, whereas on the last trading day of 2021, it was at 4,766.18. According to Bannister, the price earnings multiple from December 2021 will decrease by about half, and the earnings should more than double, leading to a flat market.
Bannister’s market strategy emphasizes value over growth, with an overweight on small caps. However, “Fast Money” trader Dan Nathan disagrees with this approach during a sluggish market, saying, “I do not think you want to be overweight small caps right here.” The Russell 2000, an index of small cap stocks, has increased by about 42% over the past three years and is currently off by less than 1%.