Stocks could see 50% upside if investor allocations track 1990s bubble

JPMorgan sees nearly 50% upside ahead for the stock market if investor allocations return to the levels seen at the peak of the dotcom bubble in early 2000. While retail participation has increased in recent years, overall equity allocation of nonbank investors is at the same level as in 2007 and "significantly" below the 54.6% global allocation seen at the market's top in the first quarter of 2000, the bank's analysis found. "Given the continued emergence of 'a new equity culture', a scenario where the equity allocation by investors globally keeps grinding higher over the next three years towards its previous 2000 peak, would imply 47% equity upside from here," strategist Nikolaos Panigirtzoglou said in a note Wednesday. That means the global equity universe would soar from $120 trillion