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Predictions

In the coming quarters, the strategist sees a "high probability" of "very large" negative revisions to earnings. "This wouldn't be a big problem if the market were cheap when valued on forward earnings as it was coming out of the 1990-91 recession," says Cliggott. "But now it is not. At 21.6 times consensus pro-forma numbers the S&P 500 looks very expensive." (J.P. Morgan U.S. Equity Portfolio Strategy, Jan. 22)

Cliggott foresees "a powerful rotation" back into defensive sectors (such as consumer staples) over the next three to six months, as earnings expectations are lowered in the tech, financial and consumer cyclical sectors. (J.P. Morgan U.S. Equity Portfolio Strategy, Jan. 14)

First-quarter consensus S&P 500 earnings expectations "look realistic" at $11.28 a share, 9% below year-earlier levels, says Cliggott. However, at some point between March and May of this year, the strategist thinks the earnings climate "will shift quite violently toward a much harsher news flow with a powerful bias toward earnings disappointment." (J.P. Morgan U.S. Equity Portfolio Strategy, Jan. 28)

For the full year's worth of predictions that formed the basis for this new pundit's ranking, click

here

.

Biography
Doug Cliggott made a name for himself in early 2000, when he correctly predicted that the year would be the roughest one for stocks since 1994. The S&P 500 index and Nasdaq Composite proceeded to close within a hair's breadth of his year-end price targets of 1300 and 2500, respectively.

Cliggott's prestige only grew in 2001, when he accurately forecast the demise of the winter and spring rallies. A breakdown in corporate profits had been caused by overzealous capacity expansion and exaggerated expectations of long-term demand both of which would take time to unwind, he explained. For such foresight, the strategist was named to Institutional Investor's 2001 All-America Research Team.

The son of a fireman and school secretary, Cliggott, 44 years old, grew up with modest means in Medford, Mass. He received his B.A. in economics from the University of Massachusetts before heading to New York's New School for a master's in the dismal science. Prior to joining J.P. Morgan in 1996, Cliggott worked at Merrill Lynch as manager of global investment strategy.

In Cliggott's view, the bull market of the 1990s won't soon be repeated. The reason: Corporate profits will grow half as fast over the next five years (by just 5% annually) as they have over the past five. Spending by businesses and consumers will likely grow much more slowly than in the late 1990s, when consumption outpaced income growth and corporate investment exceeded cash flow, explains the strategist.

One of Cliggott's regrets is turning bearish on stocks too soon, in early 1999. Now he risks making the same mistake twice: The strategist is predicting zero earnings growth and flat stock returns for 2002.