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Haverford Investments' Smith: Stocks Have More Room to Rise

By    |   Tuesday, 25 November 2014 06:10 PM

The S&P 500 index hit yet another record high Tuesday, and stocks are poised for more gains, says Hank Smith, chief investment officer at Haverford Investments.

One indication that the 5½-year bull market has more room to roam is that many investors have stayed out, he told CNBC.

"So few investors have actually participated," Smith said. "Over the past seven years, you've had some $650 billion coming out of equity mutual funds and some $1.3 trillion, $1.4 trillion going into bond funds."

Those bond investors aren't showing "optimism, confidence, exuberance, euphoria," he said. "They're making a statement that we are willing to earn next to nothing so we do not to lose money. . . . That is not indicative of any kind of greed or market top."

The stock market hit "a generational low" in March 2009, and this bull market could last 20 years, Smith said.

"Only time will tell. But there's precedent for it." Stocks rose from 1982 until 2000, he notes. "We could well be looking at that now, provided that we continue this low but steady growth that doesn't create excesses."

The S&P 500 index carried a trailing price-earnings ratio of 19.27 Friday, up from 18.85 a year ago, according to Birinyi Associates.

As for the short-term, "sentiment is probably optimistic, but cautious," Erik Wytenus, an investment specialist at JPMorgan Private Bank, told Bloomberg.

"Part of the reason is that stocks have had a powerful run. Any time you have a bull market run like this, you tend to be more selective."

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The S&P 500 index hit yet another record high Tuesday, and stocks are poised for more gains, says Hank Smith, chief investment officer at Haverford Investments.
Smith, stocks, room, rise
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2014-10-25
Tuesday, 25 November 2014 06:10 PM
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