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1. "The stock market is cheaper than at previous peaks." 2. Despite the rise in payroll taxes and the sequester, the economic data has been "reassuring." 3. Consumer confidence could boost multiples. 4. The global economy is registering growth, even if it is at a slow pace. 5. A rise in interest rates doesn't necessarily have to hurt the stock market.
The Stock Market's March Madness (LPL Financial)
"As we narrow down stocks’ “sweet sixteen” potential drivers this year, the four “regions” of market-moving factors vying for investor attention are: economy, policy, fundamentals, and market dynamics.
"…The key message for investors in considering these factors is: don’t be too confident in any particular outcome. Respect the complexity of the situation. This is a time for caution and taking some profits, not for indiscriminate selling. It is a time to nibble at opportunities as they emerge; it is not a time to jump in with both feet."
Advisors are telling investors to be wary of stock funds focused on raw materials. This is because at this point in the stock market cycle they should be popping, according to Thomas Meyer, CEO at Meyer Capital Group, but "the fact they've been lagging is a red flag that it's still too early to make any oversized bets."
Chris Bertelsen of Florida-based Global Financial Private Capital told the WSJ that the materials sector is "stupid cheap" but at this point they could decline further if the S&P falls so he is telling his clients to be cautious.
Global central banks have been pushed easing money for some time now. Morgan Stanley's Gerard Minack writes that the first signs of stress from such easy monetary policy will be seen in emerging market debt, or corporate junk bonds in the developed market.
"More to the point, these are parts of the financial system where developed market central banks would likely be unwilling or unable to ‘do whatever it takes’ to prevent a serious setback. The question would then be whether setback and stress in these sectors could be contained in a world of high leverage."
Real Estate Stocks Are Still Attractive (Advisor Perspectives)
"While global real estate stocks may look pricier than other equities, valuations have only just recovered to levels that are average relative to their own history and they are still attractive when compared with bonds," writes Eric Franco at Alliance Bernstein. This is especially the case outside of the U.S. Publicly traded REITs for instance are "required to distribute most of their earnings as dividends." For investors looking for income, this area still an attractive bet.
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