We have been saying for the last several months that our biggest concern that could create a pullback in the market is the beginning of the Fed Taper. This is exactly what we have been seeing over the last few weeks as better economic data has increased the probability that the Fed will taper sooner rather than later which is causing nervousness in the markets. We have also seen a number of funds and institutions taking profits as we approach the end of the year to lock in some of their gains. We continue to believe the Fed will hold off on the tapering of assets until the first quarter in 2014 and would suggest using any near term pullback as a buying opportunity for those still underweight stocks.
There was a special report in Barron’s this weekend where 10 of Wall Street’s top investment strategists were interviewed for their prediction for 2014. The consensus view is that stocks could return 10% in 2014 driven by a stronger economy and higher profits. Their favorite sectors are industrials and technology.
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