NEW YORK (CNN/Money) - Stocks are set to fall for three years running for the first time in 60 years, and to mark the occasion stock strategists are taking on the can-do optimism of Depression-era waif Little Orphan Annie.

Yes, next year is going to be different, just you wait and see. Strategists at all but two of Wall Street's big firms think the market is going to be at least 10 percent higher by the end of 2003.

"Earnings will recover and valuation multiples, which got crushed, will get back to where they were at the beginning of the year," said Prudential strategist Ed Yardeni, who expects the S&P 500 to hit 1,100 in the second half of next year.

Better earnings and a return to "normal" valuations are something of a mantra among many strategists. Goldman Sachs' Abby Joseph Cohen, for example, thinks that earnings will rise by around 12 percent but that because the market is, according to her model, undervalued, the S&P 500 should hit 1,150 (versus the current 910 or so) by the end of 2003 -- a 26 percent move.

Target Practice The targets Wall Street strategists put on the S&P 500 for '02 at the end of last year fell wide of the mark. Better luck next year? Strategist  Firm  2002 S&P target  2003 S&P target  Rich Bernstein  Merrill Lynch  1200  860  Abby Joseph Cohen  Goldman Sachs  1300-1425  1150  Doug Cliggott/Carlos Asilis  J.P. Morgan  950  800  Steve Galbraith  Morgan Stanley  1225  1000-1025  Ed Kerschner  UBS Warburg  1570  1025  Tobias Levkovich  Salomon Smith Barney  1350  1075  Tom McManus  Banc of America Securities  1200  1000*  Ed Yardeni  Prudential Securities  1300  1025   * Due to be revised  Source:  Firms

"Moderately attractive" valuations and a return to earnings growth make Morgan Stanley's Steve Galbraith think the S&P 500 will reach 1,000 to 1,050.

The problem, however, is that what strategists are saying about 2003 doesn't sound all that different from what they said about 2002.

Goldman's Cohen thought the S&P 500, buoyed by a resumption in economic and profits growth, would end this year between 1,300 and 1,425. Salomon Smith Barney's Tobias Levkowich, who sees the market rising 18 percent to 1,075 in 2003, saw it rising 18 percent to 1,350 in 2002 on the back of an earnings wave.

"We're going to shift from an interest rate-driven market to an earnings-driven market," Levkowich told CNN/Money last December.

The only strategist who came close to getting it right for 2002 was J.P. Morgan's Doug Cliggott, who had a (much-derided) target of 950 on the S&P. Cliggott is no longer doling out investment advice, having jumped ship for a hedge fund in February, but his replacement, Carlos Asilis, is continuing in the bearish tradition. With a year-end target of 800, Asilis is one of two strategists who think the market will see outright declines in the year ahead.

"The market is not cheap," he said. "Our valuation models tell us the S&P 500 should be somewhere between 680 and 900."

The big difference between Asilis and most other strategists is that he bases his valuation work on companies' reported earnings -- earnings according to generally accepted accounting principles (GAAP) -- rather than the operating earnings, which often exclude "one-time" charges, that companies tout on their earnings releases. Because reported earnings have been much lower than operating earnings, using them makes the market look far more expensive. Assuming just middling earnings growth next year, Asilis thinks the market's path of least resistance is down.

The two strategists still at work on Wall Street whose targets for 2002 came closest to the mark were Merrill Lynch's Rich Bernstein and Banc of America Securities' Tom McManus, both of whom thought the S&P 500 would finish the year at 1,200, just slightly north of 2001's close of 1,148. Both began the year recommending caution, but since mid-year Bernstein has become progressively more bearish while McManus has shifted over to the bulls' camp.

Bernstein has put a 2003 year-end target of 860 on the S&P 500, and is recommending clients allocate just 45 percent of their portfolio to stocks, compared with 60 percent at the beginning of the year. Like J.P. Morgan's Asilis, Bernstein also thinks investors should use reported earnings -- he thinks the continued use of operating earnings is a sign that the market, even after nearly three years of declines, is still speculative.

Another sign of speculation, thinks Bernstein, is that many of his counterparts on Wall Street continue to recommend that investors commit a large chunk of their portfolios (67.8 percent, on average) to stocks. Historically such bullishness among strategists has signaled poor equity-market returns.

Banc of America's McManus is one of those strategists that think investors should load up on stocks. Where he recommended investors put just 55 percent of their portfolios into stocks at the beginning of the year, now his recommended allocation is 70 percent.

"I think we've seen a significant market bottom," said McManus, who has a 12-month rolling target of 1,000 on the S&P 500, which he plans on revising later this month.

McManus doesn't have the same reservations about using operating earnings as Merrill's Bernstein and J.P. Morgan's Asilis. Although lately they have been much higher than reported earnings, he thinks operating earnings more accurately reflect potential earnings and growth. Under his current estimates for next year, S&P earnings will grow by 10 percent, giving the index a forward P-E of 16.5.

So bet your bottom dollar there'll be sun?

"I saw valuations as a real issue back in April, but they're not an issue now, really," McManus said. "I'm quite optimistic on the market. Positive. Upbeat."