In my opinion, this year should stay a good time to pick individual stocks as correlations between stocks remain at a normal level.
Last but not least, as expected, equity market provided a nice pull-back opportunity in 2013 Q2 for sideline money to join the rally.
In the current strong bull market amid global economic recovery, it is important to take full advantage of it with any pull-back opportunities. I believe the mess in Washington DC that ended in a bipartisan deal on October 16 may have been the last major pullback opportunity in 2013 for investors to reposition money to join the rally.
There is no need for investors to speculate now when this bull market will end. Though I have no hard evidence to support this, I believe there is plenty of time to move investment capitals to cash as long as one is not managing billions of dollars.
2013 Q4 corporate earnings are still expected to grow, and all main leading economic indicators continue to rise. In my opinion, as the US goes into a rising rate environment, bonds are no longer attractive on a risk-reward basis. Therefore, I am considering to remain underweight bonds and overweight equities for remainder of the year.
As the bull market becomes mature, we expect growth stocks to start outperforming value stocks. Therefore, in 2013 Q3, we have increased our investment exposure to our large cap growth model Focus Growth and small cap growth model Earnings Growth.The investments discussed are held in client accounts as of September 30, 2013. These investments may or may not be currently held in client accounts. The reader should not assume that any investments identified were or will be profitable or that any investment recommendations or investment decisions we make in the future will be profitable. Past performance is no guarantee of future results.
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