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The good times are not over yet for U.S. stocks, according to John Stoltzfus, chief investment strategist at Oppenheimer. Stoltzfus predicts a 14 Percent Rally in 2018.

"Improving fundamentals are likely to support higher stock prices and P/E multiple expansion next year," said Stoltzfus.

John Stoltzfus is the biggest bull on Wall Street. His' 3,000 target on the S&P 500 is the highest among major Wall Street strategists and implies 13.8 percent upside.

Bear Capitulation Starting

"In our opinion skeptic and bear capitulation appears to have just begun in the fourth quarter of 2017 and contributed to the number of this year's equity benchmark record highs. We believe that it is early in this process and multiples could expand further than we currently anticipate should the capitulation gain momentum," said Stoltzfus.

PE Expansion

Stoltzfus seeks PE expansion at a time median PE ratios are the highest in history.

John Hussman, in his October details Why Market Valuations are Not Justified By Low Interest Rates.

Negative Returns for 10 Years

"Current market valuations are consistent with negative expected returns for the S&P 500 over the coming 10-12 years, with a likely market loss of more than -60% in the interim," stated Hussman.

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Historically, Hussman says:

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The most historically reliable valuation measures are obscene here. We expect the market to lose nearly two-thirds of its value by the completion of this cycle, while still posting negative total returns over the next 10-12 years. In my view, Wall Street is completely out of its gourd. Research, evidence, and historically-informed analysis can fight ignorance only when people value knowledge. The problem is that human beings are wired to chase what they associate with pleasure, and to shun what they associate with discomfort. Recall the dot-com bubble. Recall the housing bubble. Investors, given enough pleasure in the moment, will find rationalizations that allow them to maintain ignorant bliss, even if the long-term consequences are repeatedly devastating.

The more investors speculate, the more they tend to become impressed by the outcomes of their own speculation, which temporarily results in self-reinforcing bubbles. Prior market cycles offered extremely useful signals before that self-reinforcing process collapsed.

For more on price/revenue ratios, we’ve reprinted Bill Hester’s article on the subject from 2007, just before the global financial crisis. I’ve added a brief epilogue at the end. Our hope is that this work encourages investors to review their risk exposures and tolerances in a historically-informed way.

Not Again!

Every time I refer to Hussman, some of my readers warn me to stay away. In this post, I presented two views.

Take your pick as to which one makes the most sense over the long haul.

Readers may also wish to consider a bullish viewpoint disguised as a bearish one: Vanguard Warns of 2018 "Volatility": Translation 3-5% Gains.

Volatility Refresher Course

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To balance things out with another bearish viewpoint, please consider Carrot Top: Generational Chance to Sell Equities?

Mike "Mish" Shedlock