Yardeni: Investors Too Complacent on Stocks

Monday, 04 Nov 2013 11:42 AM

By Dan Weil

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Independent strategist Edward Yardeni is bullish on stocks, but he's worried that everyone else is as well.

The market is too complacent, he tells The New York Times.

"The bull market would be more sustainable if investors fretted about all sorts of possible bearish problems," he notes, citing the economy's sluggish growth as an example.

Editor’s Note:
5 Reasons Stocks Will Collapse . . .

GDP expanded 2.5 percent in the second quarter, but it has undoubtedly decelerated since then.

Investors' lack of nervousness "is making me a little bit nervous," Yardeni, president of Yardeni Research, says.

His ultimate worry is that investors could get carried away with their optimism and create a bubble among stocks.

"I expect the market to rise," he states. "But I'm worried that it could just go through the roof. If it does that, we could have a nasty correction afterward, maybe a bear market, and that could cause serious problems for the economy."

The Standard & Poor's 500 Index hasn't experienced a decline of more than 10 percent since it dropped 19.4 percent in the summer/fall of 2011.

Still, Yardeni expects the index will reach 2,014 next year, up 14 percent from 1,764 Monday morning.

"I just hope the market doesn't blow right past my target in the next few months," he adds.

Others are bullish too, though it's not clear how many share Yardeni's reservations.

"The path of least resistance continues to be up," James Dunigan, chief investment officer at PNC Wealth Management, tells Bloomberg. "In general, the earnings picture is good. Valuations with the market at these levels are probably in the fair range."

Editor’s Note: 5 Reasons Stocks Will Collapse . . .

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