At Korving & Company we are engaged in the business of planning and investment management. That means that we focus on the client and on the long term. We are often asked about our shorter term outlook. In reply we will often cite people who are in the business of making predictions. With that as prelude, here is Morningstar’s prediction.
Many firms provide market forecasts, but Morningstar has a few special things going for it — such as being unbiased (ostensibly) and having an analyst named Heather Brilliant. Ms. Brilliant’s forecast for 2013 includes these elements:
• The market is fairly valued, so don’t expect multiple expansion.
• Expect market volatility due to continuing debt problems in Europe, growth in China, and fits and starts of the U.S. economy.
• Due to market volatility, stock picking will make a comeback — for example, even though the S&P is up 15%, certain housing-related stocks fared much better.
• The fiscal cliff will be a non-event, even if nothing is done before year’s end, since most changes will have an effect over the course of the year. And even if we are drawn into a recession, it will not result in a protracted market decline.
• The U.S. economy could surprise everyone.
• Real estate and consumer defensive sectors are the most overvalued.