We had Jim Paulsen of Wells Capital Management on TechTicker yesterday. He’s been bullish all the way up–and he’s staying that way.
Stocks barely budged Wednesday amid a growing sense the market has already fully “priced in” an economic recovery and strong corporate profits — most notably today from Apple and Morgan Stanley.
But this kind of “cautious attitude” about the rally is one reason Jim Paulsen, chief investment strategist at Wells Capital Management, which has about $400 billion in assets, is optimistic.
A longtime bull, Paulsen believes, “it’s still early in this economic recovery and therefore early in this stock market economy.”
While the next year is highly unlikely to be as good for stocks as the past 12 months, he predicts the S&P 500 will hit 1350 by year-end and retest its all-time high above 1530 “before the next recession.”
Pressed by Henry in the accompanying video about valuation concerns, Paulsen argued valuations are “average” at worst, and that a low inflation environment justifies higher P/Es for stocks. An inflation spike would kill the bullish thesis, Paulsen admits. But the oft-bullish strategist sees no evidence that inflation is a threat for the next 12 months, or that it’s a certain outcome – as many pundits contend.
Given that outlook, Paulsen recommends investors overweight emerging markets, technology, financial and other cyclical stocks, while suggesting small-caps and consumer discretionary names are due for a pullback.
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