Stocks Will be Best Bet in 2013


Even as individuals continue to struggle through the slow economy, investing professionals around the world report that there may be a light at the end of the tunnel -- or at least that the prospects for global economic growth in the coming year could be brighter. That is according to the Global Market Sentiment Survey 2013 released by the CFA Institute this week. CFA refers to the chartered financial analyst designation held by financial and investment professionals.

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40% of CFA members around the world expect the global economy to expand in 2013, up from 34% in 2012. 39% of CFAs in the United States expect worldwide economic expansion next year, up from 36% last year.

"There seems to be a higher level of comfort with global prospects and prospects primarily for equity markets," says John Rogers, CFA, president and CEO of the CFA Institute.

"Just seeing what's going on around us, we're one year further down the road in the European debt crisis, one year of healing from where we were at this time last year.  We have the election out of the way in the U.S. The leadership transition in China and the new leadership appears to be market friendly. And we have very expansionary monetary policy on the part of central banks in all major economies," he says. Where will the best returns be?

CFAs are somewhat optimistic about equities for next year -- half of them are, at least. Globally, 50% of investment professionals surveyed say that out of available asset classes, equities are the best bet. That's up from 41% last year.

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"The returns available from fixed income are obviously pretty limited based on absolute level of rates now. And the corporate sector's earnings prospects for next year appear to be fairly healthy, and the consensus forecast for earnings in the major economies are actually pretty good," Rogers says.

"Equity markets seem underpinned by reasonable earnings and, as our survey suggests, the basic underpinning of equity markets, which is economic growth, the prospects there appear to be decent," he says.

This year turned out to be pretty good for stocks despite everything going on. Do you believe next year will be better?

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