Tags: Peroni | Dow | sector | 18000

Advisors Asset Mgmt’s Peroni: Dow Is Headed to 18,000

Wednesday, 10 Apr 2013 11:29 AM

By John Morgan

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The direction of stocks is still pointed toward the sky, according to Gene Peroni, who predicts the Dow Jones Industrial Average will hit 18,000 before the current bull market ends in 2015.

In a commentary for MarketWatch, Peroni, senior vice president of equity research at Advisors Asset Management, said valuations are appropriate and market sectors are balanced for continued upward momentum.

“Based on the technical qualities of the market’s advances so far this year, the market’s risk/reward ratio remains attractive, both short and longer term,” Peroni wrote. “I see the Dow Jones Industrial Average ending 2013 between 14,750 and 15,100; by the time this cycle ends in 2015, the Dow will be at 18,000.”

Editor's Note:
Billionaires Dump Stocks. Prepare for the Unthinkable.

Peroni conceded the Dow’s first-quarter advance — more than 11 percent — was “stunning,” and there are valid reasons to expect a pullback. But he suggested investors may do well to ignore such a likelihood.

“Predicting the timing or depth of a decline could prove difficult and may even be distracting, given the broad field of technically attractive stocks at this juncture. The market is being driven by many different and diverse sectors and does not appear vulnerable to any individual micro-thematic event.”

There are several attractive areas investors should focus on, according to Peroni.

Among them, he mentioned healthcare on grounds that the sector “remains strong despite fears surrounding the Affordable Care Act.”

The manufacturing sector also appeals to Peroni, along with energy, financials, consumer staples and media and leisure-time stocks.

“And although Dow 15,100 represents my 2013 target area, this forecast could prove conservative,” Peroni wrote.

“If the Fed remains committed to a transparent monetary policy and earnings continue to grow beyond Wall Street’s consensus expectations, the Dow may keep moving up.”

Author Jeremy Siegel, a professor of finance at the University of Pennsylvania’s Wharton School, is even more bullish than Peroni.

In an interview with Yahoo, Siegel forecasted the Dow would climb to between 16,000 and 17,000 by the end of 2013, with a possibility of a trip to 18,000 by the end of 2014.

Siegel said the sunny combination of corporate profit gains and extremely low interest rates means investors should be willing to pay more for company earnings.

Editor's Note: Billionaires Dump Stocks. Prepare for the Unthinkable.

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