BlackRock is still wildly bullish on the markets. In their most recent strategy note, Bob Doll, BlackRock’s Chief Equity Strategist, says the recovery is stronger than most believe, the consumer is back and production is booming:
“Economic data continues to show that the recovery is proceeding stronger than most had expected, thanks in large part to the massive fiscal and monetary stimulus enacted around the world, which has sparked a recovery in growth even beyond some of the most optimistic projections. Demand among both consumers and companies around the world has been rising, and consumer spending has been stronger than expected (although spending has been coming from savings, rather than from growth in incomes). These trends imply that production levels have not yet caught up with demand, which augers well for the ongoing boom in production.”
He says the most attractive ways to play the market is by owning U.S. and Asian equities. While the U.S. and Asia continue to recover Europe remains mired in a weak recovery:
“From a geographic perspective, the strongest growth rates continue to come from the United States and Asia. Europe’s economy has moved out of recession, but its recovery remains weak, as the region has been hampered by its inability to unify over plans to combat fiscal crises. “
He does say there are some near-term risks to the market in the wake of the Goldman Sachs news, but he says dips should be bought as the economy will continue to recovery, inflation will remain low, stocks remain cheap and earnings outperform:
“In any case, however, the recovering economy, low inflation, strong corporate earnings and reasonable valuation levels should be enough to cause any sort of correction to be short-lived. We expect that stocks should continue to outperform Treasuries and cash over the course of the year and, barring some sort of policy mistake or surprise event, believe that the current bull market is likely to continue.”
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.