Salient to Investors:
Fund Gurus write:
- Market corrections have been short lived due to periods of high volatility and not underlying fundamental issues.
- Stocks are very attractive. Values are in line with historical 10-yr average but companies have strengthened their balance sheets and are positioned for further revenue growth. Many companies are at the same or lower values than 5 years ago, but have lower levels of debt and more focused on growth.
- Stocks have few competitors. Cash and bond yields are next to nothing. High yield debt offers 5% versus 10% historically.
- Continued inflows into equity markets will provide further support against pullbacks. A net $80 billion has flowed into equity mutual funds in Q1, 2013, the largest inflow since Q1 2000. Even actively managed funds have seen their first net inflows since the credit crisis.
- Pension funds globally have been relatively slow to invest in equities, having increased bond exposure and alternative assets since 2008.
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