Despite the recent run up in stocks, very strong bullish sentiment, and investor complacency – – stocks are poised to make strong gains in 2011.
Let’s consider these factors:
1) Presidential Cycle: Since 1945 stocks have gained about 20% during the 3rd year term of a first term president. Also, stocks do well with a deadlocked congress. Best of all? These numbers are even better when Democrats are in power.
2) Consumer confidence is returning as people adjust to “new normal”. Investors are eager to jump back into stocks for “fear of missing out” on huge gains. Can there be any better indicator of equities doing well than investors piling billions into bond funds, and withdrawing money form stocks the past 3 years?
3) Interest rates are low, and most big business have greatly improved efficiencies past few years which will be leveraged into big profits.
All this being said, there will likely be a short term correction in next few months. However this can be viewed as a great buying opportunity.
The stars are aligned