(Related: Bob Doll’s 10 Predictions for 2019)
Robert Doll, the senior portfolio manager and chief equity strategist at Nuveen, made 10 predictions for 2019 around the theme that markets and economic data would be choppy, but that a recession was not in the offing nor would the bull market end.
At the end of the second quarter, he reviewed those predictions and found that most of them were trending in the right direction.
And what does Doll’s crystal ball say about the second half of the year?
He sees several reasons to be cautious in the near term toward stocks, which ended the second quarter at near record levels:
- Investors have priced in prospects for lower interest rates
- The Federal Reserve has some capacity to ease rates, not so most other central banks
- A near-term U.S./China trade pact is unlikely
- Global growth is uneven, corporate earnings expectations are trending downward
- Stocks appear fully valued
Doll says Nuveen continues to have a “boringly neutral” view toward the broad equity market. It behooves investors to remain tactical, he says, possibly selling into strength and buying on weakness.
In addition, investors can focus on companies that are generating free cash flow, ones with pricing power or competitive advantages, and corporations that derive more of their revenues from domestic sources.
“This bull market doesn’t appear to be over, but investing could become more difficult,” Doll says. “We believe this is an environment where the benefits of active management and flexibility are likely to grow in importance.”
Take a look at how Doll’s predictions for 2019 are panning out at midyear — whether trends are moving in the right direction, the wrong direction or it’s too early to call.
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