If mutual-fund investors come around to stocks again, that would create some interesting possibilities for the U.S. market as it moves deeper into its best months.
Market veteran Sam Eisenstadt, who earned a stellar reputation as Value Line’s research director, sees another double-digit average gain for stocks, while a top market-timing newsletter expects buying momentum to reach a crescendo into the new year.
The problem for many investors is that they’ve been fighting the last war, traumatized by the global markets’ meltdown two years ago. Catching the stock market’s upward trajectory would mean that shareholders sell bond funds, but that’s easier said than done. In the tug-of-war between momentum and inertia, it’s a safe bet that inertia typically wins.
Accordingly, the end of the year is a good time to review your portfolio and see if it’s allocated properly to both your market outlook and your risk tolerance. Don’t take on any more potential for trouble than you can handle, but you might find that after being tucked safely in bonds for so long, you’re stronger than you think.
