So what does bull Thomas Lee, chief U.S. equity strategist at JPMorgan Chase, see in stocks that the far more cautious Barry Bannister, chief equity strategist at Stifel, does not?
In short, Lee sees a stock market behaving in classic "bull market" fashion, with the upward bias likely to continue until a recession derails the rally by choking off economic growth and crimping corporate profits.
The bull market, which celebrates its fifth birthday on March 9, 2014, is likely to remain strong in year six.
"Stock market bulls are self-reinforcing," says Lee. "Historically, bulls get stronger. As (the stock market) goes up there is wealth creation, which creates more incentive to invest."
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In contrast, Bannister sees a stock market that has already enjoyed its "melt-up," which has reduced its upside potential for the time being amid an aging bull market, rising optimism among investors and swollen price-to-earnings ratios.
Caution, he says, is warranted in 2014.
"It's a little late to be bullish, but I am not bearish," Bannister says. "I expect a flattening out of the market."
The contrast in projected performance next year for the benchmark Standard & Poor's 500-stock market is stark.
Tom Lee, Chief U.S. Equity Strategist, JPMorgan Chase.(Photo: Todd Plitt, USA TODAY)
Lee sees the Standard & Poor's 500 hitting 2075 by the end of 2014,! which equates roughly to a 13% gain from Friday's close, on top of gains of 29% in 2013. Bannister, who expects the tired market to flatten out next year, has a current year-end price target of 1750, which is 5% below current levels. His official year-end target will be released early in January.
Lee's bullish thesis is multipronged, with equal weight given to improving business fundamentals and historical market performance. History, he says, shows that secular, or multiyear, bull markets that have lasted more than five years tend to perform well in year six and don't normally end until a recession occurs.
But with the global economy gaining strength and Fed policy expected to remain supportive, coupled with Lee's belief that companies will start deploying more of their idle cash and grow profit at a faster 9% clip next year, a recession is unlikely.
"Growth," says Lee, "could actually accelerate."
Stocks, Lee adds, will also get a lift from an ongoing shift of investor cash from bonds to stocks.
Barry Bannister, managing director at Stifel Nicolaus & Co.(Photo: Bill Denison)
Bannister, however, says given the big run-up this year, and the fact the bull is almost 58 months old and the market's price-to-earnings ratio based on the past 12 months of earnings has swelled from around 14 to almost 17 and back near historic norms, upside is limited.
The P-E on expected profits for the next four quarters is around 15, and over the past 23 years stocks have posted returns of roughly 3% in the coming 12 months, he says, adding that a less-friendly Fed may deflate P-Es.
"Are we very bullish? Not anymore," says Bannister. "At these multiples investors are late to the party."
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