Strategist: Despite new highs, stock market still good place to be
Investing • Rising earnings, growth bode well, Edward Jones’ Warne says, but others urge caution.
Published: March 15, 2013 10:09PM
Updated: March 15, 2013 10:09PM
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(AP Photo/Richard Drew) No one really knows whether history is a reliable guide, but the pattern of past bull markets also suggests that this one could continue to flourish.

Even though the stock market is trading at new highs, it isn’t a bad time to invest, according to Kate Warne, chief investment strategist for the brokerage firm of Edward Jones.

Stocks remain attractively valued, and the market still has room to move higher, she said. “We believe economic growth and rising earnings support long-term stock price increases.”

Warne was in Utah this week to speak to several hundred Edward Jones representatives from offices throughout the region. She also shared with The Salt Lake Tribune her views on investing in today’s market environment.

“People are understandably worried when the stock market hits a new high,” she said. But “in the past, when the market has reached a [record] it continued to move higher for an average of 21 months.”

That isn’t to say there won’t be some short-term interruptions in the upward trajectory.

“There still is going to be volatility, and investors can expect there will be corrections along the way,” she said, noting that historically stocks have risen over time despite such fluctuations.

Warne said investors should have a mix of stocks and bonds within their portfolios, but that the percentages of those holdings depends upon the investor’s age and goals.

Rates on short-term investments, which are driven by the Federal Reserve, can’t go much lower. But Warne said she anticipates that interest rates on longer-term investments eventually will move higher and that a laddered bond portfolio of different maturities could be used to boost returns.

Warne said she prefers the shares of companies with good growth opportunities, such as those that are entering new markets. And she likes companies that pay dividends, particularly those that have a track record of raising payouts over time.

She singled out Qualcomm, Pfizer and Chevron.

She likes Qualcomm because it owns the patents on the technology that is used in all smartphones.

She likes Pfizer because it spun off its non-core operations — its animal business — to refocus on biopharmaceuticals.

And she likes Chevron because it is “moving forward and growing.”

Warne said she anticipates the economy will continue to grow modestly this year, and despite the relatively slow growth will be capable of producing good investment results.