"Is now a good time to come off the stock market sidelines?"
I'm getting that question a lot lately considering that the
market is clearly much more expensive than it was a year ago and
that many investors are still sitting on the sidelines in
In fact, according to
BlackRock's recent Investor Pulse survey of 4,000
, U.S. investors
continue to hold a sizable percentage of their
assets in low- or no-return cash investments
While I wouldn't say now is a bad time to enter the stock
don't believe equities are in a bubble
, I would be a little bit opportunistic when entering the market
Stocks are still reasonably valued and cheap compared to the
bonds; but there are parts of the market that look a bit more
stretched. As I mentioned this week
in a BlackRock video
, there are two equity segments where I would be comfortable
putting money to work now:
Cyclical sectors like technology.
tech sector's growth is much slower than in the past, I see
value, if not excitement, in the sector.
Tech stocks are reasonably priced
and typically carry little debt, making the sector
less vulnerable to rising interest rates
than its counterparts. And within the sector, I especially like
larger firms, part of
general preference for large and mega-cap stocks
Generally, stocks in
most overseas markets look much cheaper than U.S.
At the same time, I would be more nervous about putting new
money to work in these three segments:
U.S. small- and mid-cap stocks
, which have had a very big run already.
U.S. consumer discretionary companies
- including retailers, hotels and restaurants -- because I think
they're dependent upon
consumer that hasn't fully come back yet
, which are likely to suffer
interest rates rise further in 2014
What's your take on where to enter the market today?
Russ Koesterich, CFA, is the Chief Investment Strategist
for BlackRock and iShares Chief Global Investment Strategist.
He is a regular contributor to
and you can find more of his posts
Source: BlackRock Investment Strategy Group Research