Birinyi’s prediction for S&P a jaw-dropper

Laszlo Birinyi, one of the first money managers to advise buying U.S. stocks before they bottomed in March 2009, says that the average length and size of bull markets suggests that the S&P 500 will rally to 2,854 on Sept. 4, 2013.

The forecast represents a gain of 124% from a close of 1,271.87 Jan. 3 and 322% from the 12-year low reached almost 22 months ago.

Mr. Birinyi said that given how long the advances that began in 1962, 1982, 1990 and 2002 lasted, this rally should continue another 32 months.

Historical precedent shows that gains are largest in the first and last quarters of bull markets, according to research conducted by Birinyi Associates Inc. The first of this increase ended in April, and the final quarter may start in July 2012, Mr. Birinyi said in a report e-mailed to clients last week.

“When we were up in the beginning more than 70%, that made us very comfortable in suggesting this was a market of duration, and we concluded that this was going to be a long-term secular bull market,” Mr. Birinyi said in a telephone interview.

The market is “following the classical pattern of run-ups, consolidation, people getting bored, and so you’re in for a very long period of rising prices,” he said.

Mr. Birinyi, who analyzes historical charts and patterns to make forecasts, said last month that the S&P 500 will climb to 1,333 this year. He cited higher earnings and valuations below historic levels.

Mr. Birinyi’s 2011 forecast compares with the 1,371 average of 11 strategists surveyed by Bloomberg.

His growth portfolio returned about 25% last year, while his conservative group was up about 21%, both beating the S&P 500’s performance, according to his January Reminiscences newsletter. Investors should look for stocks that aren’t correlated to the broader market, and buy names based on individual cases instead of buying companies based on market value or dividend yield, Mr. Birinyi said, using those themes as examples.