Many financial commentators have turned against stocks, even though the S&P 500 index sits only 3 percent below its record high. But fear not, says Larry Fink, CEO of BlackRock, the world's biggest money manager.
"I'm quite surprised how the narrative has turned everything to the negative," he tells
CNBC. "We go through these really big bouts of negativity, and then we get some stability going. All the actions I see will lead to a higher equity market by year-end."
The S&P 500 overcame several corrections of more than 4 percent, including one of 10 percent last year, to hit its all-time peak of 2,093.55 Dec. 29.
Interest rates are going to stay lower longer here, and negative rates are going to continue in Europe, he predicts.
"Some people would say that tells you that things are going to be very negative. But it could be that we're not issuing enough bonds. And the demand from bond is so overwhelming from the private sector that it's hard for the private sector to compete with the public sector. That is our interpretation of what is going on. And so, this is going to lead to great behaviors out of bonds into equities."
Fink appears to agree with the many economists who say that the plunge of oil and gasoline prices to 5 ½-year lows will do wonders for the economy.
"Lower energy prices is probably the largest redistribution of wealth that we've seen in our lifetimes," Fink notes. Falling gasoline prices leave more money in consumers' pockets—money that many of them will spend quickly.
As for equities, Morgan Housel, a columnist for the Motley Fool, hasn't given up on them either.
"For all the compelling arguments that stocks are poised for a fall in 2015, there is a case to be made that stocks will resume their rise," he writes in
The Wall Street Journal.
Some reasons why:
- Dividends are climbing in sync with share prices. "That is an indication that the bull market has drawn support from the cash that U.S. companies are generating," Housel says.
- The Federal Reserve is in no rush to raise interest rates.
- "The last six times the S&P 500 produced negative annual returns, including dividends, the U.S. economy was in or near recession," Housel writes. That's not the case now.
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