Timid investors to miss out on equity bull run, says Doll
The adviser claims that markets have priced in scenarios that are looking more unlikely every day and it is only a matter of time before valuations change to reflect this.
Pessimistic investors are overlooking signs that the global recovery is already underway and should increase their exposure to equities now if they don't want to miss out on the next bull run, according to Bob Doll, senior adviser to BlackRock.
claims that policymakers have upped their game and are providing reflationary support to the world’s markets, meaning that stocks should continue to grind unevenly higher.
"On balance, we believe that the cyclical outlook is improving and that the near-term dangers may be receding instead of intensifying," he said.
"If our outlook is correct, global financial markets may currently be discounting an overly pessimistic economic outlook, suggesting that risk assets may have more room to run."
BlackRock predicts growth of 2 per cent in the US economy and says the market is in reasonable shape.
"Given better relative economic and earnings growth levels as well as highly accommodative monetary policies, we continue to favour US stocks vs global benchmarks," he commented.
He also claimed that a third round of quantitative easing (QE3) would be positive for the country and said he was unconcerned about the threat of a "fiscal cliff" as he believes policy makers will once again reach an agreement at the last minute to prevent this.
"Although the sides remain far apart and statesmanship is sorely lacking in Washington DC, we still think there is a better-than 50 per cent chance that we’ll see an eleventh- or twelfth-hour agreement to enact a temporary extension of the Bush-era tax cuts and a delay in scheduled spending cuts with real and hopefully long-term action being taken in early 2013," he explained.
Although the US unemployment rate isn’t coming down, Doll says there are signs of a recovery.
"We have been seeing signs of improved business investment levels, increases in consumer spending and a recovery in the housing market, but the labour market remains troubled and the recent rise in energy prices will weigh on sentiment and spending levels."
On the prospects for the eurozone Doll is also cautiously optimistic.
"This Thursday, the European Central Bank (ECB) will meet and expectations are high that president Mario Draghi will clarify plans to purchase distressed bonds and help repair Europe’s financial markets."
"The outlook for Europe remains murky, but we expect that policy-makers’ pro-growth policies should help the region’s economy to recover (although peripheral European countries will likely remain in recession into next year)," he said.
This week Simon Edelsten, manager of the Artemis Global Select
fund, told FE Trustnet
that he was overweight the USA in his globally focused fund.
Investors who are bullish about the country may wish to consider AXA Framlington American Growth
, a top-quartile performer in its sector over three, five and 10 years.
Performance of funds vs sector over 3-yrs
Source: FE Analytics
The five crown-rated JPM US Equity Income
has also provided top quartile returns over three years with a yield of 2.35 per cent.