It's hard to believe, but by the end of the first quarter, the bull market in the U.S. will be four years old. It's already more than 1,300 days old since bouncing off the lows in March of 2009, and yet, it's still below average (1600+ days) compared to the length of bull markets since 1940, according to Bespoke Investment Group. And according to Bob Doll, chief equity strategist at Nuveen Asset Management, the good times will continue to roll this year too, but at a sluggish, choppy pace. Here are some of his predictions for the year ahead.
U.S. Stocks Will Record a New All-Time High in 2013
"We've gotta get to 1,553 which was the closing high for the S&P 500 in 2007. That's less than a 10% gain," he predicts in the attached video. "My guess is we'll meander our way through, that we'll grind higher." Inversely, he says all the worry could turn out to be a good thing. "People think you need good news for markets to go up," he says, "when often all you need is just less bad news, or clarification."
Emerging Markets Will Outperform Developed Markets
Another prediction is that money ''will creep back into" smaller, less developed markets, and cause them to beat the U.S. again this year. While he's concerned about the threat of a slowdown in China, Doll is emboldened by the turn in the rate cycle now that central banks have, for the most part, gone through their tightening phase. As a result, he's looking for ''acceptable growth" in Emerging markets, just not great.
Let the Dividends Roll
Income investors will be pleased to know Doll's next 2013 prediction is for the double-digit dividend growth trend to continue for a third year. While some are forecasting the demise of these income producing stocks, Doll says the tax implications were less than feared and payout ratios are still below average.
Politicians Will Listen and Act
Widespread disgust and outrage by individual and institutions over the protracted and partially resolved fiscal cliff will be enough to move C0ngress' hand this year Doll predicts, saying he expects a $2-3 trillion ten-year budget deal to be completed. "We think (everybody) will gang up," he says of the upcoming debt ceiling and spending battles in February. "It's not going to be smooth," he predicts, but they will get it done.
Europe Will Begin to Heal
Even though unemployment in the Eurozone is still rising and just hit a record 11.8%, Doll says the worst of it will be over and signs of improvement (or less worsening) will be noticeable in the second-half of the year. "We think there will be more bad news in Europe before there is good news," he clarifies, pointing to his "end of the year" caveat for this call.
All 10 of Doll's 2013 predictions are available here, as are the results of his 2012 picks from last year.