CFRA raised its S&P 500 year-end target to 8,050. That's up from wherever it was before. Doesn't matter where it was before. Could've been 5,000. Could've been 12,000. The revision reflects "a confluence of fundamental, technical and historical factors." That's three different ways to say "we changed our mind."
Technical factors. The chart went up, so they predict it will continue going up. This is the same analytical framework used by golden retrievers watching tennis matches.
Historical factors. The market went up in the past. Therefore it will go up in the future. By this logic, I should be getting taller because I got taller between ages 2 and 18. I'm 47 now but any day I'm shooting up to 9 feet tall. Historical factors support this.
Fundamental factors. Company earnings exist. Revenue happens. These numbers go into a spreadsheet. The spreadsheet spits out 8,050. Could've spit out 6,200 or 11,400 but it chose 8,050. Very scientific. Very precise. Definitely not a number someone pulled from their ass and then worked backward to justify.
Some retail trader in Wisconsin just saw this headline and moved his entire Roth IRA into leveraged ETFs. He's texting his brother-in-law right now. "CFRA says 8,050 bro. Get in before the conference call." There is no conference call. CFRA isn't calling him. They don't know he exists.
The best part is when the S&P hits 7,800 in December, CFRA will issue another report explaining how they were basically right and 7,800 is essentially 8,050 when you account for revised Q4 volatility assumptions.
Next week they'll downgrade it to 6,400 and cite the exact same confluence of factors.
Photo by Markus Spiske on Unsplash
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