Tags: BlackRock | Doll | Stocks | Bonds

BlackRock's Doll: Buy Stocks, Shy Away From Bonds

Thursday, 22 Apr 2010 11:01 AM

Investors should allocate their assets toward equities and fixed income, says Robert Doll, vice chairman and chief equity strategist at BlackRock.

Betting on risk will yield stronger returns for investors, he says.

“Our broad strategy has been overweight risk assets — equities, credit-related fixed income and underweight safe assets — meaning cash and Treasury bonds,” he said.

Doll said he predicts the economy will stay on the same course and improve even more.

“One good month [of economic data] doesn’t make it a string, but I think we’ll get a string – all the lead indicators point to that," he told CNBC. "Earnings clearly are doing better, sentiment is improving and there are still a lot of cash on the sidelines."

Investors can also overweight the United States, Doll said.

“You clearly want some higher quality to the extend that new normal might be the case — we want to have companies with strong balance sheets and good free cash flow can gain market share," he said.

"But on the other hand if we’re in global cyclical recovery, which we are, you’ve got to own some cyclicals too. So you want a mix in the portfolio,” he said.

With recent gains in equities, analysts believe the earnings season will be positive, Bloomberg reported.

“We do expect to see earnings gains for most companies in the cyclical sectors,” Fred Dickson, chief market strategist at D.A. Davidson, which manages around $25 billion, wrote in an emailed note.

“The story will be the margin by which companies top estimates and the extent of upward revisions in their second-quarter revenue and earnings guidance.”

The economy is turning around and will yield strong returns.

“The same issues that were haunting us” over the past few years “are still out there, but the economy’s overcoming some of those concerns and the important thing is earnings are really coming in real strong for the market,” said Edward Yardeni, president of Yardeni Research, in an interview on Bloomberg Radio.

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