In this twofer of a chartology packet, we take a look at Goldman's target for 2012, which David Kostin has as unchanged for the time being (unlike Morgan Stanley which went bearish off the bat [5]), as well as what one should expected from dividend stocks. First, regarding Goldman's 2012 target of 1250 on the S&P, or unchanged from last year, "S&P 500 finished 2011 flat in price terms and outperformed most global indices. We see similar returns in 2012 with a 12-month target of 1250. Recent strength in US economic data and less negative news from the Eurozone and Washington, DC is unlikely to be sustained, implying near-term multiple risk as investor confidence falters. During 4Q, analysts cut 2012 EPS estimates in all sectors. We forecast downside to US equities during 1H." So where should cash be parked according to Goldie? Why in the ever bigger dividend bubble: "Dividends accounted for 20% of the 7.2% annualized total return to US stocks since 1950, 40% of the 1.6% average total return during the past decade, and 100% of the total return last year. We forecast 2012 S&P 500 dividends per share will establish a new record high of $29.20, exceeding the prior peak reached in 2008. Dividend swap market implies similar dividend growth in 2012 compared with our forecast, but lower growth from 2013 through 2021. We expect 23% and 15% dividend growth for Information Technology and Financials, respectively." Incidentally, dividend parking makes sense in this environment of devaluing global cash: as capital appreciation becomes next to impossible with multiples contracting ever more and with earnings rolling over, the only way to generate an ROI is to extract as much cash from companies as possible...Of course assuming management will be willing to part with its cash buffer in light of increasing uncertainty. Net net this also means a decline in stock prices (ex-dividend) but who's counting.
So here is Goldman's weekly chartology.
And its forecast for the new year.