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Brian Belski: U.S. Stocks Are Poised To Set All-Time Highs In 2013 (BMO Capital Markets)
"Our sense is that most investors are still too cautious with their portfolio positioning as many continue to doubt the sustainability of recent market strength. For our part, we believe US stocks are poised to set new all-time highs during 2013 as evidenced by our price target of 1,575 for the S&P 500.
Admittedly, the outcome (or lack thereof) of Fiscal Cliff negotiations in the coming weeks presents a significant near-term challenge for the market. However, we maintain that some sort of balanced deal will ultimately be reached."
Deutsche Bank's 13 Outlier Events That Could Blindside Markets In 2013 (Business Insider)
Deutsche Bank's currency strategy team has put together a list of 13 events that could surprise markets next year. "When thinking about the year ahead, it is tempting to extrapolate the recent past whether looking at risks or one’s base case. Moreover, there is a tendency not to deviate too far from consensus, perhaps seeing safety in being part of the herd. From a statistical perspective, this is very similar to assuming markets follow a normal or Gaussian distribution. That is, markets are well behaved and extreme outcomes are rare. The financial crisis of 2008 taught us otherwise, yet it is very difficult to shrug off the bias to assume normality in markets."
These events include the Federal Reserve buying stocks, a collapse of the British government, a collapse in the correlation between stocks and currencies, and a bursting emerging market bond bubble.
Hedge Funds Have The Most Exposure To Stocks Since 2006 (Business Insider)
Bank of America's latest global fund manager survey showed that hedge fund net exposure to equities climbed to 45 percent, its highest level since August 2006.
An Advisor Spent 20 Minutes On A Client Opportunity Template And Got $2 Million (Advisor Perspectives)
Dan Richards of ClientInsights has told advisors to pay special attention to their top clients by spending 20 - 30 minutes to prepare a four-page "client opportunity template".
The first three pages of the template are information on the client, while the the fourth page advisors answer five questions about their top client including key challenges in dealing with the client, how to drive the client's and the advisor's agenda, top three goals with the client in the next 12 months and activities to meet these goals. One advisor created the template, plotted three steps to carry out this plan and ended up getting $2 million in new assets.
After the financial crisis Keynesianism "dominated the thinking of the Obama administration" according to Jeffrey Sachs who argues that "there is no going back to the pre-crisis economy, with or without stimulus".
Sachs says there are three reasons to doubt the Keynesian view a) fiscal expansion in the form of temporary tax cuts and transfer payment were saved b) the Fed's zero interest policy risks creating more bubbles c) the real problem was structural changes to the economy, not just the recession.
The S&P 500's forward P/E rose to 12.7 yesterday and could reach 13 in a Santa rally scenario. Since early 2010, the market has had "three nasty corrections" when valuations rose to this level.
"The fourth assault on 13 could be the charm. If so, then the valuation multiple could rise quickly to 14, a level not seen since early 2010, just before Greece hit the fan. S&P 500 forward earnings edged back up to $112.77 per share during the week of December 13, just a nickel below its recent record high. A 14 multiple on that number would put the S&P 500 up to 1579, slightly above the previous record high."
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