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Don’t Sell in May, Says Raymond James Strategist

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Raymond James (RJF) Chief Investment Strategist Jeffrey Saut believes advisors and their clients need to catch the market’s spring fever.

“I see good markets through July or August,” he said to a packed crowd at the firm’s annual independent-advisor conference in Dallas on Tuesday, which attraced about 1,600 advisors and 1,800 other guests.

Saut also emphasized something he’s been saying in his regular blogs for the broker-dealer: “There’s a decent probability that we are in a secular bull market that has a decade or so to run.”

The investment expert told advisors (in his April 22 note), “I don’t think that ‘sell in May’ kind of strategy is going to work this year,” pointing to the fact that the market is “far from the overextended levels reached at the prior peaks of early 2000 and October of 2007.”

Saut adds that stocks do not look overvalued. “Indeed, on a trailing EPS basis the SPX is trading at 15.1 times trailing earnings and 13.7 times forward estimates. Juxtapose that to 25.1 times estimates in 2000 and 15 times at the 2007 peak.”

There are many factors driving his positive outlook, including higher housing prices, the return of manufacturing to the U.S. and the growth of the energy sector.

The expert pointed to the continued growth of the middle class in many overseas markets as another significant and positive long-term trend. Some 46% of the S&P 500 companies’ sales, and 40% of profits, come from outside the U.S., he said. “Meanwhile, recession risks from Europe are fading.”

If the markets take a quick tumble, Saut says to jump in: “Accordingly, any correction affords investors the opportunity for new buying in favorably rated stocks. Indeed, if you want to catch a wave you have got to grab a board and get into the water!”