Strategist Philipp Baertschi: Stocks in ‘Goldilocks Scenario’

Wednesday, 22 Feb 2012 12:50 PM

By Michael Kling

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Now is the time to buy equities. Stocks are undervalued and in a "Goldilocks" situation, according to analysts surveyed by CNBC.

If you're wondering if the stock market rally that has sent the Dow Jones Industrial Average to 13,000 for the first time since May 2008 can continue, experts say the answer is yes, according to CNBC.

"We are in a Goldilocks scenario for equities," CNBC quoted Philipp Baertschi of Sarasin as saying. "A lot of investors are underinvested in this market and they will move money into the riskier assets."

The Goldilocks scenario means the economy is neither too hot nor too cold.

Baertschi reasons that we're only half way into the rally. Investors are too fearful about Europe because Greece's debt problems, he says, adding that they shouldn't be more cautions unless the situation significantly worsens.

Emerging markets are the most attractive.

Even if there is volatility, he would buy and bet that the rally will continue.
Garry Jenkins, head of Swordfish Research, told CNBC that he agrees that stocks have room to run.

Others aren't so sure, however.

Experts think the market rally will falter, even if a Greek rescue package is approved and the US shows improving economic indicators, according to Reuters.

The problem is that US retailers are reporting lackluster earnings.

"Earnings have generally come in more disappointing than they have been," says Robert Van Batenburg at Louis Capital. "I don't think there's a lot of fireworks coming."

Fewer companies are beating analysts' earnings estimates than in past quarters, Reuters notes.

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