The S&P 500 index has slipped 3.5 percent since hitting a record high Dec. 29, and the CBOE Volatility Index (VIX) has soared 39 percent during that period.
So does that mean the six-year bull market is headed for a finish? Not necessarily, says Morgan Housel, columnist for the Motley Fool.
"For all the compelling arguments that stocks are poised for a fall in 2015, there is a case to be made that stocks will resume their rise,"
he writes in The Wall Street Journal.
Some reasons why:
- Dividends are climbing in sync with share prices. "That is an indication that the bull market has drawn support from the cash that U.S. companies are generating," Housel says.
- The Federal Reserve is in no rush to raise interest rates.
- "The last six times the S&P 500 produced negative annual returns, including dividends, the U.S. economy was in or near recession," Housel writes. That's not the case now.
Meanwhile,
Jeffrey Saut, chief investment strategist for Raymond James, says a sharp correction may be in store for stocks, but now isn't the time to take money off the table.
"It is too late to panic," he writes in a commentary. "The time to raise cash was a month ago, not now. Now it is time to make your shopping list, looking for the opportunity to selectively redeploy that cash into preferred equities."
Saut remains bullish on stocks long-term, despite concern that the market is overbought now.
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