MarketWatch's Arends: 3 Reasons Why Stocks Can Rise Further

Thursday, 14 Aug 2014 09:39 PM

By Dan Weil

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The S&P 500 has rebounded 2.6 percent from its low last Thursday, leaving it less than 2 percent away from its record high.

And MarketWatch columnist Brett Arends sees a good chance the rally will continue. Three factors "suggest" further gains, he says. 

1. "Absolutely everybody seems to be predicting a crash this autumn," Arends writes. "When everybody is saying the same thing, they are often wrong."

Editor’s Note: Dow Predicted Will Hit 60,000 — Buy These 4 Stocks Now

2. Retail investors sold stocks in a panic last month
. "History has shown, alas, that Mom and Pop are absolutely terrible market timers," Arends says. "There is no proof that they will be so again, but it's certainly possible."

3. A Bank of America Merrill Lynch survey shows that money managers have turned more bearish toward stocks — a contrary indicator.

But for the longer term, "if math and history are any guide, they suggest that stocks overall will generate sub-par long-term returns from current levels," Arends says. Of course that means there will probably be buying opportunities along the way, he notes.

Not everyone is optimistic about stocks for the fall.

"In October, the Fed is going to get away from money printing, and since we haven't had a correction in a long time, it could undermine things very quickly once people realize growth isn't in line with their expectations," Jeff Duncan, president of Duncan FinancialManagement in Sunset Hills, Mo., told Reuters.

The Federal Reserve currently plans to end its bond-buying program in October.

Editor’s Note: Dow Predicted Will Hit 60,000 — Buy These 4 Stocks Now

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