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May 28, 2013 at 08:00 PM
Raymond James Chief Investment Strategist Jeffrey Saut believes advisors and their clients need to get in tune with the markets. “I see good markets through July or August,” he said to a packed crowd at the firm’s annual independent-advisor conference in Dallas in late April.
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.”
Stocks do not look overvalued, he added. “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!”
Meanwhile, Charles Schwab Chief Investment Strategist Liz Ann Sonders has been telling advisors that the U.S. is truly undergoing a manufacturing and energy renaissance, particularly in recently depressed Midwestern states such as North Dakota, Sonders said in a keynote address before the Financial Planning Association’s New York chapter in early May.
“Someone asked me in a Q&A, ‘What’s your favorite emerging market?’ and ‘Middle America’ was what came out of my mouth,” said Sonders at FPA-New York’s annual summit. “Now when I’m asked what’s my favorite emerging market, I answer Middle America.”
Thanks to this renaissance, U.S. is “not just paper wealth” anymore, she said, predicting that U.S. household net worth would hit an all-time high in 2013.For every 100 jobs created in petroleum refining, another 1,190 additional related jobs are created, Sonders noted.
Further, she recalled a recent trip to China, where several representatives of the American Chamber of Commerce in China told her: “We think over the next 10 years, we’ll be bringing our business back to the U.S.”
