Original title: Wall Street "magic operator": the US stock market is expected to adjust again before the end of the year.

Michael Wilson, chief investment officer of Wall Street, expects a slight correction in US stocks, but remains firmly bullish on US stocks, and believes that the rise in share prices will be driven by cyclical stocks, with more investment opportunities for small-cap stocks.

Why is Wilson the most accurate forecaster?

Morgan StanleyMichael Michael Wilson, the chief U. S. equity strategist, is Wall Street's most accurate forecaster.

This is because in the past year, Wilson has done what almost no one in the industry can do: he can not only accurately predict the market trend before the market occurs, but also accurately predict the inflection point of the market.

He was bullish on the market at the height of the epidemic in March, when most people in the industry were bearish.

He remained bullish until more than a month before US stocks tumbled in early September, when he warned that he was "ready for a very difficult trading environment over the next five weeks". Then technology stocks tumbled in early September, confirming that his prediction was correct.

Two weeks later, he believed that "the uncertainty of the election results, the possibility of passing fiscal stimulus policies, and the impact of the second wave of COVID-19 epidemic made investors not optimistic about the market." as a result, he predicted that the US stock market would usher in its second 10% correction in months, followed by a 9% drop in the S & P 500 index.The index and the Russell 2000 index fell 10 per cent and 7 per cent, respectively.

Once again, his prediction proved to be accurate.

In early November, he changed his bearish view, predicting that "our expected adjustment is now basically over and suggest increasing our holdings in the event of further weakness in the stock market this week."

Since then, the S & P and NASDAQ have risen 13.5% and 10.8%, respectively, hitting record highs when Pfizer IncThe Russell index soared 16% on the news of the pharmaceutical industry. It proved that he was right again.

The stock market is at risk of falling again in the short term, but is firmly optimistic about the performance of US stocks.

Ahead of the news of Pfizer Inc's vaccine, Wilson said the S & P had fallen below his expected price range of 3150-3550, but he was still "firmly bullish".

The index's record gains over the past two weeks have eased, and it seems that most of the "good news" related to vaccines has been digested by the market.

At this point, however, Wilson is still bullish on the long-term performance of U. S. stocks. As he said in Morgan Stanley's latest Sunday Start, he expects the S & P to rise another 10% over the next 12 months:

"Corporate earnings continue to rise sharply as a result of improved revenue growth next year and increased operating leverage, which is typical of the economy coming out of recession in the first year."

Therefore, in terms of earnings prospects and markets, he remains firmly optimistic about the future.Us stocks performed for 12 months, saying that "the new bull market that coincided with the new economic cycle lasted for several years, and the business cycle was more important than other cycles."

But at the same time, he warned that the stock market was at risk of falling again in the short term, which would be the third 10 per cent correction since September. Because the market will be aware of the "bad news", that is, "the number of cases and deaths are increasing, but vaccines cannot be supplied on a large scale within 3-4 months".

He pointed out that once this small correction does occur, the Fed's December interest rate decision or further easing is expected to boost the repair of risk appetite.

The rise in stock prices will be driven by cyclical stocks, and small-cap stocks will have more investment opportunities.

However, Wilson's most important point is not that the stock market is likely to pull back slightly before a big rally, but that he firmly believes that US stock yields will stage a record 10-fold rise, which could continue to hit technology and other stocks, while supporting cyclical and value stocks.

Here's what he said:

Economists maintain their forecast of 7.5 per cent nominal GDP growth next year, and from a 12-month point of view, the pricing of 1 per cent of 10-year Treasuries looks very wrong, which has an impact on stock valuations, especially for long-term stocks such as the Nasdaq and the S & P 500.

On the contrary, affected by faster growth andShorter-term cyclical stocks will rise sharply as a result of higher interest rates. As a result, in the past few months, as the market has responded to a full economic recovery, stock market money has flowed from Nasdaq to Russell 2000 small-cap stocks. We believe that if we are right about the economy and interest rates, this rotation will continue. "

This means that "the real opportunity for investors next year may be in small-cap stocks, as they are more sensitive to the possibility of a very strong economic recovery." Similarly, financial, consumer services, materials, industrial stocks and cyclical technology stocks should also perform well. "

Overall, Wilson expects share prices to rise 10% from their current levels, but the gains are not driven by technology stocks, but by cyclical stocks.

While Wilson's insight is indeed remarkable, zero hedge analysts point out that it is hard to imagine how the market would rise if some important holdings in the hedge fund industry emerged. These important positions are generally sought after by investors and have been heavily sold in the coming quarters after leading the market to an all-time high of the past decade.