Institutional investors have been buying stocks by the bushel over the course of 2013. The S&P 500 is on track to end the year with an increase of more than 30 percent and the Nasdaq up nearly 40 percent. But not all investors have bought into the logic of easy money provided by the Federal Reserve trickling into corporate profits and from there boosting share prices.
Scott Colyer, CEO and Chief Investment Officer at Advisors Asset Management, says:
I don’t blame them. In fact, I believe that is one of the major reasons that you don’t have the individual investor back in this game. And many of them just said, “never again.”
Heather Brilliant, head of equity and credit research at Morningstar said that while the bond market might seem like a safe alternative for cautious investors, now is probably not the right time:
We really see a very difficult environment. We think rates are going to go up more, which means that people holding bonds are going to be stuck holding a potentially very dangerous portfolio.
Stephen Biggar, global director of equity research at S&P Capital IQ, says that while the stock market’s gains look to continue, concerns over “corrections,” — a reversal of some of those gains — do have some merit:
The market rarely goes in a single direction for a long as it has. We think we’ll continue the momentum early in the year and then have a bit of a pull-back and finish five percent higher.
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.