[M]oney continues to be redeemed from US-oriented equity mutual funds, while flows into bond funds are running at record levels. This affinity for bonds over stocks is understandable when looking at the past 10 years, but perverse, we believe, when looking at the likely course of the next 10…
I think 2010 will be a good year for stocks, and a challenging one for bonds. Low inflation, good economic growth, ample liquidity, rising corporate profits, attractive valuations, and continued investor scepticism should combine to move the market higher, perhaps substantially so. The current consensus appears to have the market up high single to low double digits. If the consensus is wrong, I think it will be because it is too low, not too high.
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