Vice chairman and global chief investment officer of equities Bob Doll says it is extremely difficult to predict what might happen in the markets next, but the battle is currently between the pessimists who believe the world is headed for additional trouble and the optimists who consider the bull market largely intact.
He says: “The bears argue that the global equity market in general, and the U.S. market in particular, topped out in early July, that the U.S. economy is in the midst of severe problems and that the dark clouds are thickening, not passing.
“The bulls, to maintain the meteorological metaphor, would argue that while the summer storms are intense, they should give way to partly cloudy if not sunny skies.”
Doll says he is much more inclined toward the latter camp however he acknowledges that a number of potential risks remain.
He says: “Investor uncertainty can, if left unchecked, snowball and eventually create serious economic repercussions. Nevertheless, the world economy remains constructive, corporate earnings growth remains solid, stocks are reasonably priced and the Fed is beginning to take some action.”