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The majority of RBJ Daily Report Snap Poll respondents this week were optimistic about the stock market over the next 12 months, with nearly two-thirds expecting it to rise even higher. And in most readers' view, stocks are the best investment for the long term.
The Dow Jones Industrial Average and S&P 500 index have been trading at or near their nominal record highs, continuing an equities surge that has sent the U.S. market's broad indexes up more than 20 percent this year.
The Dow reached 14,164.53 on Oct. 9, 2007, but as the Great Recession took hold, it plunged more than 7,600 points to 6,547.05 on March 9, 2009. Not adjusted for inflation, the Dow reached the October 2007 high mark last spring and has since added 1,600 points.
Nearly half of RBJ respondents-48 percent-say the stock market is headed for a single-digit increase over the next 12 months; 16 percent predict a double-digit increase.
Roughly one in six expects the market to be basically flat, and nearly a quarter predict a decline.
Lipper reports investors have put more than $70 billion into U.S. stock funds this year. Some market watchers say, however, that the current rally may be due for a correction.
Nearly two-thirds of RBJ readers think stocks are the best long-term investment. Real estate and gold rounded out the top three.
Roughly 375 readers participated in this week's poll, conducted Nov. 11 and 12.
Where is the stock market headed over the next 12 months?
Single-digit rise: 48%
Double-digit rise: 16%
Basically flat: 13%
Single-digit decline: 13%
Double-digit decline: 11%
In your view, what today is the best long-term investment (10 years or more)?
Real estate: 13%
Other commodities: 3%
I guess if I knew the answer to the question I'd be a rich man; however, my gut tells me we are overdue for a correction. A greater concern (is) the number of unemployed remains historically high, and I don't see the numbers coming down anytime soon. I mention this because the markets seem to be ignoring this statistic as if it doesn't matter. If this is true, the unemployed are in for a very long wait for their next jobs.
-Peter Bonenfant, Fairport
I think the market will go up a bit more, then correct in a big way when the quantitative easing program ends. Looking out 10 years, the market is still the place to be, but timing coming out and going back in will be crucial. Be diligent. The U.S. economy is essentially flat. We need a business-friendly president, Congress and governor to get ourselves back on track. We currently have none of the above.
-George Thomas, Ogden
Markets go up. Markets go down. That is what markets do. Buying an individual stock is buying into a company. Be diligent about what it is you are buying. Diversify. Over time, no matter what the markets do, you will be a winner.
The stock market will rise so long as the Fed keeps handing out free money. Wall Street loves it. Main Street continues to suffer.
-John Calia, chair, Vistage International
This market is setting up for the perfect storm. It won't be too much longer until my barber and taxi drivers are giving stock tips again (like during the dot-com run-up). Couple that with the train wreck the government has created and POW! This one will likely be deeper than the last.
-David Fiegel, Blackbird Asset Services LLC
For now, the stock market is one of the only sectors of the economy that is doing well. And the Web designers for Obamacare. Someone is going to have to pay off that $17 trillion in debt. The trillion-dollar yearly deficits will be the chickens that come home to roost. The payment on the debt will soon suck all the wind out of the market rally. If it isn't government overspending, it's the Fed printing money like it was going out of style. The government can't spend its way to prosperity.
-Clifford Jacobson M.D., Vanguard Psychiatric Services
It's great to see the stock market at its current level. However, the surge is extremely deceiving. The Federal Reserve has artificially kept interest rates low by purchasing government securities at a rate of $86 billion per month. This reduces returns on traditional savings accounts and other safe investments to such a low level that the stock market is one the few alternatives for a reasonable rate of return. Hence, the stock market is attracting a large amount of capital. This artificial stimulus will eventually produce high inflation, higher interest rates, dangerous national debt and eventually possible insolvency.
-John Rynne, president, Rynne, Murphy & Associates Inc.
I wish I had the answers, but then, doesn't everybody? Sometimes our responses are wishful thinking.
-J.A. DePaolis, Penfield
While the American economy is growing at a dismal 2.8 percent, the rest of the globe (emerging markets) is growing at 4.6 percent (China 7 percent). Consider the percent of profits from foreign sales by the following companies; Ford Motor Co., 51 percent; McDonalds Corp., 64 percent; Intel Corp., 85 percent; Amazon.com Inc., 45 percent; the Dow Chemical Co., 67 percent; Walmart Stores Inc., 20 percent; General Electric Co., 54 percent; IBM Corp., 64 percent (source: U.S. News). The future for the American investor is much brighter than the future for the American family.
-J.P. Gleason, Gleason Fund Raising Consultants
For more comments, go to rbjdaily.com. To participate in the weekly RBJ Snap Poll, sign up for the Daily Report at rbj.net/dailyreport.asp.
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