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US at record highs: Should investors sell up or stick with equities?
by James Phillipps on Mar 06, 2013 at 14:59
He also dismisses the notion that personal income tax hikes will damage investor sentiment, pointing out that going back to 1926, counterintuitively, the S&P 500 has typically risen by 14.3% in the 12 months following a tax rise, compared to just 8% after a tax cut.
But not all of the US big guns are so positive, at least in the short-term. Raymond James chief investment strategist Jeffrey Saut says the market is overextended, with Wall Street using the Fed minutes as a reason to cool investors’ ardour after such a strong run. But the bull-run is back on track he believes, pointing to the Dow Jones Transportation index (Tran) also reaching a new peak.
'The last time the Industrials surpassed a previous all-time high, which was confirmed by the Tran, was in January 1983. That was when the senior index finally traveled above the then all-time closing high of 1051.70 recorded on January 11, 1973; and from January 1983 to January 1984, the Dow added another 20%,' he said.
Although cautious near-term, he believes any dip will present investors with a strong buying opportunity.
‘If it does lead to the 5%-7% pullback I have wrongfootedly been looking for, any correction is likely to be shallow and short,’ Saut said.
‘Eventually we are going to get a pullback; and we are buyers on that pullback.’
Meanwhile, economist Marc Faber will be watching with interest to see if the 20% correction in the S&P 500 that he predicted last October will eventually come to pass.
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