Specifically, Kostin sees the S&P 500 rising 6% to 1,900 by the end of 2014, 17% to 2,100 by the end of 2015, and 23% to 2,200 by the end of 2016.
"Our [2014] return forecast reflects rising, albeit decelerating, profit growth and a slightly lower P/E multiple," said Kostin. "The linchpin of our market forecast is growth - in the economy, sales, and earnings. We expect 3.6% global economic growth. The US will advance at a 3% pace while inflation remains contained at 1.4%. China, Japan, and even Europe will all grow, expanding GDP by 7.8%, 1.6%, and 1.5%, respectively. Sales and earnings growth are a direct result of economic activity. We expect revenue growth of 5% (ex-Financials and Utilities) and overall EPS growth of 8% in 2014. Growth in these metrics should continue in 2015, 2016, and 2017."
Interestingly, this
"My personal guess is that the U.S. market, especially the non-blue chips, will work its way higher, perhaps by 20% to 30% in the next year or, more likely, two years, with the rest of the world including emerging market equities covering even more ground in at least a partial catch-up," wrote Grantham in his Q3 letter.
Grantham's 20% gain in two years is very close to Kostin's 17% gain by the end of 2015.
But that's where the similarities end.
"And then we will have the third in the series of serious market busts since 1999 and presumably Greenspan, Bernanke, Yellen, et al. will rest happy, for surely they must expect something like this outcome given their experience," he added. "And we the people, of course, will get what we deserve."
For those who already think stocks look frothy, check out this chart from Goldman forecasting the path of the S&P 500 through 2016.
Goldman Sachs