Last year saw a nearly seamless ascent by stocks, with volatility at a minimum.
The S&P 500 index experienced no decline of more than three consecutive days. And the CBOE Volatility Index (VIX), which measures expected volatility in the S&P 500, hit a seven-year low in June.
But don't expect those conditions to continue this year, says legendary mutual fund manager Bill Miller, manager of the Legg Mason Opportunity Trust.
"We're likely to get a lot more volatility than we've become used to," he told
The New York Times. "Every time we get a correction or even close to it, everybody flips out. That's more of an observation than a prediction."
Already, the S&P 500 has endured a correction of 3.2 percent this month, and the VIX has fluctuated from a gain of 10 percent so far this year to a decline of 14 percent.
"It's going to be a lot trickier this year," Miller said. "But I'm very bullish on the U.S. economy overall." He expects the S&P 500 to gain from mid-single digits to 15 percent. "Absent some weird geopolitical thing, I'd be very surprised to see negative returns."
Ace money manager Ken Fisher is enthusiastic too. "In 2015 expect an S&P 500 and global bull market extension of 15 percent-plus," he writes in
Forbes magazine.
As for Fisher's reasoning, "third years of presidents' terms haven't gone negative since 1939. . . . Average third-year return? 18.5 percent," he says.
Last year, he explained that there are only two reasons bull markets die: "running out of steam after climbing to the top of the wall of worry, or an emerging wallop of big badness that surprises everyone."
"Today's sentiment is far from the euphoria in John Templeton's great wall of worry depiction, which holds that 'bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria," Fisher was referring to the legendary money manager.
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