What does that mean for stocks? As we stated earlier, we don’t expect the equity bull market to change in the near-term. We think the fundamentals favor equities on balance, and we expect stock prices will be higher in one year. Returns may be meager compared to what investors experienced over the last decade, but we still believe stocks will outperform bonds and cash over that same time period.
Sir John Templeton famously said, “Bull markets are born in pessimism, grow on skepticism, mature on optimism and die on euphoria.” At this point, it feels to us like this market is still in the optimism phase, meaning investors would still need to grow euphoric before we see its end. As such, we remain in the constructive camp. But we caution investors that the risks we have been discussing will at some point begin dominating the investment conversation.
Robert C. Doll is senior portfolio manager and chief equity strategist at Nuveen Asset Management
1 Source: Morningstar Direct, Bloomberg and FactSet
2 Source: IBES