Kiplinger’s: What’s your outlook for stocks?
Nixon: We think it’s going to be a pretty decent year. Our outlook is predicated on slow but steady growth in the U.S., stability in China, and a short and shallow recession in the European Union. We see earnings growth of 5% to 10% next year. Pop on top of that a 2.1% dividend yield, and you’ve got a compelling argument for decent stock returns. And you know that with $1.7 trillion in cash on the balance sheets of S&P 500 companies, they’re spring-loaded either for a recovery in global demand or for some pretty shareholder-friendly activities, including initiating share buybacks and establishing or increasing dividends.
So where should investors focus in the coming year? Sectors that have done well are a little bit more defensive. Health care companies, for instance, deliver slow and steady growth, and investors are favoring that dependability and consistency.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Will that continue in 2013? It probably will. A lot has to do with the fact that these tend to be companies that pay dividends. They pack a one-two punch of lower volatility and higher income.
What other themes are you emphasizing this year? We just increased our allocation to emerging markets, recognizing that the China growth story is intact. Right now, we’re overweighted in the U.S. and underweighted in stocks of developed foreign countries. Looking out 12 to 18 months, our middle-of-the-road portfolio has 11% of assets in emerging markets, 10% in international developed markets and 28% in U.S. stocks.
What about bonds? The best-case scenario in the high-grade fixed-income market right now is that you will earn what you get from clipping coupons. We are leaning toward high-yield bonds.
Kiplinger's Investing for Income will help you maximize your cash yield under any economic conditions. Subscribe now!
-
Take Charge of Retirement Spending With This Simple StrategyTo make sure you're in control of retirement spending, rather than the other way around, allocate funds to just three purposes: income, protection and legacy.
-
Here's How To Get Organized And Work For YourselfWhether you’re looking for a side gig or planning to start your own business, it has never been easier to strike out on your own. Here is our guide to navigating working for yourself.
-
Best Banks for High-Net-Worth Clients 2024wealth management These banks welcome customers who keep high balances in deposit and investment accounts, showering them with fee breaks and access to financial-planning services.
-
Stock Market Holidays in 2024 and 2025: NYSE, NASDAQ and Wall Street HolidaysMarkets When are the stock market holidays? Here, we look at which days the NYSE, Nasdaq and bond markets are off in 2024 and 2025.
-
Stock Market Trading Hours: What Time Is the Stock Market Open Today?Markets When does the market open? While the stock market does have regular hours, trading doesn't necessarily stop when the major exchanges close.
-
Bogleheads Stay the CourseBears and market volatility don’t scare these die-hard Vanguard investors.
-
The Current I-Bond Rate Until May Is Mildly Attractive. Here's Why.Investing for Income The current I-bond rate is active until November 2024 and presents an attractive value, if not as attractive as in the recent past.
-
What Are I-Bonds? Inflation Made Them Popular. What Now?savings bonds Inflation has made Series I savings bonds, known as I-bonds, enormously popular with risk-averse investors. So how do they work?
-
This New Sustainable ETF’s Pitch? Give Back Profits.investing Newday’s ETF partners with UNICEF and other groups.
-
As the Market Falls, New Retirees Need a Planretirement If you’re in the early stages of your retirement, you’re likely in a rough spot watching your portfolio shrink. We have some strategies to make the best of things.
