Veteran Wall Street money manager
Bob Doll, chief equity strategist at Nuveen Asset Management, predicts 2015 is likely to be the year investors transition from disbelief to belief — or from skepticism to optimism — about the continuing bull stock market.
Doll believes it may become tougher for investors to make profits in the new year unless they are selective, but that the stage is nevertheless set for more gains.
"The phase of the rising tide lifting all boats appears to be ending and investing is becoming more challenging. As such, the importance of security selection will likely increase," he wrote in an investment commentary for Nuveen.
Some of the positives he sees spilling over from 2014 are a rising GDP, subdued inflation and wage growth.
"It also appears to us that we're moving from an environment where equities and bonds did well to a period in which stocks are likely to advance while areas of the bond market struggle, and from a period of very low to more normal volatility."
Doll ticked off a set of reasons to be optimistic for 2015, including his forecast for more economic growth with low inflation, a pickup in consumer spending, solid earnings growth and more stimulus from non-U.S. central banks.
"The United States is likely to experience a surprisingly resilient economy in the coming year. The consumer sector should strengthen due to better jobs growth, some improvement in real wage gains and a noticeable pickup in confidence," he wrote.
"Investment spending is likely to rise, while the government sector should move from a modest economic drag to a net contributor to growth."
One possible economic drag he sees is the suspicion that tepid recoveries in much of the rest of the world will retard U.S. export growth.
"Although equities are no longer a bargain, they offer better value than other financial assets and should outperform cash, bonds, inflation and commodities."
Doll said that among U.S. stocks, he prefers mid-cycle cyclicals, companies that generate positive free cash flow, and stocks with higher levels of domestic earnings.
"Even though equities are likely to advance further, the pace of gains that occurred during the massive run-up since the 2009 market low is likely to falter. We are expecting to see average annual returns somewhere in the mid-to-high single digit range," he predicted.
The latest
Ticker Sense Blogger Sentiment Poll, a survey by Birinyi Associates of some of the web's most prominent investment bloggers, shows bullish sentiment is still high.
The weekly poll shows bullish sentiment at 39.13 percent, neutral sentiment at 30.43 percent and bearish sentiment also at 30.43 percent.
The latest
American Association of Individual Investors Sentiment Survey is even more bullish.
It shows bullish sentiment at 51.7 percent, neutral sentiment at 29.0 percent and bearish sentiment at only 19.3 percent.
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