Jan 07, 2013
Morningstar.com readers expect the S&P 500 Index to post decent gains in 2013, according to a recent Discuss forum thread on Morningstar.com; The average prediction was for a 9.28% equity market gain for the year. Given low bond yields, most posters indicated they're less sanguine about the bond market, but few are expecting the bottom to drop out anytime soon. The average prediction was for a 3.7% return from the Barclays Capital Aggregate Bond Market Index for 2013.
Yet the above-mentioned averages conceal a broad array of opinions. Although most posters agree that stocks will outperform bonds this year, the bulls anticipate double-digit equity market gains, while pessimists think we're in for a flat (or worse) year. Posters also displayed a broad range of opinions about bonds' fortunes, with some predicting an abysmal bond market for 2013 and others arguing that bonds could hold their own for another year. To read the complete thread or share your own forecasts for the S&P 500 and Barclays Aggregate Bond Index, click here.
'There Is No Sign of That Bull Market Abating'
Although many posters anticipate significant volatility for the year ahead, most settled on fairly sanguine forecasts for the year. Jadster35 was among the most bullish, anticipating a 17% equity market return for 2013, spurred by the Federal Reserve's easy-money policy. "[Fed chairman Ben] Bernanke can't find an 'Off' button on the printing presses," this poster wrote.
RetiredinFL is optimistic on several fronts, forecasting a 21.3% S&P 500 return. "I think Congress will finally address our problems and the market will take off based on emotion more than fundamentals."
Uncleharley, meanwhile, is looking to the technical indicators to guide his forecast, writing, "The weekly chart for the S&P 500 shows that we have been in a bull market for the past three-and-a-half years, and the accompanying indicators show there is no sign of that bull market abating. Consequently, I project that the S&P 500 returns will be about the same in 2013 as they were in 2012, a percentage gain in the area of 12%."
Other posters are anticipating somewhat more muted, but still decent, gains. Rathgar forecasts a 7% return from the S&P 500, consisting of a 2% dividend yield and 5% growth. This poster wrote, "I think it will be a relatively boring year with a slow gradual rise and the inevitable 10% correction at some point throughout the year."
Other readers argued that your equity return in 2013 will depend on where you invest. PlantTheSeeds believes that globe-trotters will be more richly rewarded than those who remain stateside, writing, "I expect U.S. stocks to perform the worst 6%-8%(?). Europe to do better 10%-15%(?). Emerging markets to do something in between or shoot past everyone. I am leaning to the second outcome so I am going to throw the dart at 12%-30%(?)."
BMWLover concurs about the value of investing overseas, writing, "I still think that you need to have international exposure in stocks to earn the best returns. The U.S. will perform well, but the BRICs and other developing markets will also serve us well. Besides, where else do can you invest your money and earn a positive return?"
Poster TOOOINTENSE sounded a rare note of pessimism on stocks overall, arguing that valuations and macroeconomic headwinds could conspire against equities. "A look at the S&P 500 interactive graph, at max range, here on Morningstar.com should sober any optimistic forecaster. The S&P 500 is near the level of 1999 and 2008. If I were a betting soul, I would say the odds of a significant drop are much higher than a modest increase."
'No Bond Market Crash, but Weak Returns'
Pessimism about fixed-income investments was more widespread. Among the biggest naysayers was BMWLover, who wrote, "Bonds will be the loser [in 2013], although I don't know how big. Interest rates will start to trend higher despite the Fed's attempts to keep them down. The bottom line is that you can't keep pumping liquidity into the markets and not create inflation."
PlantTheSeeds concurred, writing, "I expect bonds to do badly unless there is Armageddon."
Poster DelOjoZafado offered a detailed bond-market forecast. A key concern? That current yields offer very little compensation for bonds' risks. "Bonds just cannot deliver adequate total returns from rates now being so close to zero to compete with stocks." Although investors in short- and intermediate-term may be OK, this poster predicted, "Long-term bonds will likely begin to be negatively impacted by perceived interest-rate risk and the lack of adequate compensation for that risk."
But other readers think it could be a while before the long-anticipated bond sell-off materializes. Jadster35, predicting a 3.5% return for the Barclays Aggregate, summed up that sentiment thusly: "At some point, we all know that the bond bubble is going to burst. My guess is just not quite yet."
WIZARDOFWESTON concurred. "Bonds will continue to perform fairly well, as they did in 2012, perhaps a little bit weaker; but the 'bubble' will not burst until 2014 at the earliest, or whenever the Fed rates begin to rise."
Uncleharley, the resident technician, was among the most sanguine about bonds' fortunes, writing, "[Forecasting the returns of the] Barclays Capital Aggregate Bond Index becomes a bit trickier because recent data are showing signs that some of the indicators are rolling over. A closer examination shows that this threat to roll over has been an annual December event. Consequently my thought is that the index will maintain its trend and give a return in the area of 9% or so."
MtHood isn't quite as positive, but nonetheless more upbeat than many, writing, "Bonds will stay even with historical trends over the long haul and return about 5.081%."
'Quite Unforecastable'
As is typical whenever I ask for readers' predictions, the thread featured its share of quips about the folly of such a mission.
Darwinian simply shared J.P. Morgan's quote about the market's direction: "It will fluctuate."
ArgonBeam, while tinkering around the margins of his portfolio, also tries not to let market predictions sway his positioning too much. "My crystal ball tells me to stay diversified, minimize costs, and save as much as possible," this poster wrote.
FidlStix, meanwhile, wisely noted that no matter what, investors should brace themselves for more volatility, both in the financial markets and elsewhere. In other words, business as usual. He wrote, "The world will probably continue to muddle along. Washington will probably continue to wrangle over the 'fiscal cliff.' The euro crisis will probably return to the fore. Weather will probably continue to get stranger and stranger. Markets will probably continue to soar to breathtaking heights and swoop to dizzying lows. I forecast that stocks and bonds will end 2013 right where they started--volatile and quite unforecastable."
Source：finance.yahoo.com/news