CNNMoney Survey: Big 2013 Stock Gains May Already Be Over

Monday, 01 Apr 2013 12:23 PM

By John Morgan

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Most investment strategists believe U.S. stocks will remain at lofty levels in 2013, but that the stock market will end the year about where it is now, according to a CNNMoney survey of 30 investment strategists.

The consensus from the group is that the Standard & Poor’s 500 will return 11 percent and finish 2013 just above 1,580, while the Dow Jones Industrial Average will return 13 percent and end the year just below 14,900.

While those returns may be excellent on an annualized basis, they are only 1 percent higher than where the S&P 500 finished last week, and only 2 percent higher than where the Dow ended last week.

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

Alan Gayle, senior investment strategist at RidgeWorth Investments, said stocks are “a bit extended” at current levels, and that is he is waiting for a decline before buying more.

“I believe there is still further upside to the market, given reasonable valuations and continued positive economic momentum, particularly in the United States,” Gayle told CNNMoney.

Gayle predicted continued improvement in housing and consumer balance sheets, and calls for another 5 percent gain in the S&P 500 to 1,650.

The S&P 500 had a remarkable first quarter, surging 10 percent higher, while the Dow turned in a similar performance and ended 11 percent higher.

Not all of the stock investors and money managers surveyed by CNNMoney had rosy outlooks.

"Investors have become complacent," said Derek Hoyt, portfolio manager at KDV Wealth Management. "Expectations for solid earnings and economic growth in the face of current valuations and all the risks that are out there seem too optimistic."

Hoyt’s year-end target for the S&P 500 is 1,350, down 14 percent from current levels.

Retail buyers resumed their love affair with stocks during the first quarter.

U.S. and global stock funds amassed approximatley $53 billion in new money in January and February alone and another $10 billion in the first three weeks of March, according to the Investment Company Institute data cited by MarketWatch. In contrast, more than $9 billion dribbled out of stock funds in the first three months of 2012.

“It was a pretty good start,” Gregg Fisher, chief investment officer at Gerstein Fisher Funds, about the first quarter, told MarketWatch. “Even though there’s been a run-up in the dollar and U.S. equities, U.S. investors are not overexposed to equities.”

Shannon Zimmerman, associate director of fund analysis with Morningstar, said the stock market has been on a lengthy bull run by historical standards, and it is time that investors take a prudent look at their holdings.

“At the very least, investors will want to have a look at how their current portfolio is allocated relative to what they started with as a game plan, and if the divergences from that game plan are significant, sure, consider rebalancing” Zimmerman said.

“I think that's always a smart move, because you end up rebalancing into the unloved, or what has been relatively unloved, and that's usually a good idea because cheaper stocks have higher to rise.”

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

© 2014 Moneynews. All rights reserved.

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