Salient to Investors:

Graham Bishop at Exane BNP Paribas said equities will advance in 2013 as investors who missed this year’s gains try to chase the rally, driven by a reversal of investor pessimism, near-zero US interest rates, accelerating economic growth, and favorable market valuations. Bishop said this phase of the cycle supports a strong equity performance, while valuations remain low, markets can benefit from further multiple expansions as extreme risk aversion alleviates and low interest rates pull the cost of equities lower.

Strategists’ recommended levels of stock holdings was a record low 41 percent of portfolios in June and July, just as the S&P 600 started a 12 percent surge. The value of S&P 500 shares that changed hands on a monthly basis fell in August to the lowest since at least 1998.

The Stoxx Europe 600 Index is trading at 1.34 times book value versus an average 1.9 times over the past decade.

Strategists’ recommended position on bonds rose to a record 39.8 percent in June, according to Bloomberg data.

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