Tags: Paulsen | stocks | correction | rally

James Paulsen: Plenty of Punch Left at This Stock Party

Wednesday, 29 Feb 2012 07:43 AM

The Standard & Poor’s 500 Index has soared 8.7 percent so far this year. That has many investors wondering if a reversal is in order.

But James Paulsen, chief investment strategist at Wells Capital Management, says that while a correction is inevitable at some point, the rally still has steam.

The S&P recently stood at 1,368, and “I’ll be darned if I know” if the correction is coming at 1,400, 1,550, or some other level, he tells Yahoo.

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“We will still have some pullbacks and scary moments, but I think we’re a long ways yet from the end of this cycle,” Paulsen says. “If people can stay the course, I think they’ll be happy over time, just as they have been over the last three years."

Interest rates will inevitably rise from their near-record lows, and some pundits say that will sound the end of rising stock prices. Paulsen disagrees. If economic confidence can rebound, stocks can keep rising, he says.

"I think we could spend maybe the next decade slowly rebuilding confidence, and that would be enough to create a secular bull market a la the 1950s and ‘60s," Paulsen says.

Others agree with his outlook. “The economic fundamentals are providing the market support, while the technicals are providing resistance,” Brian Jacobsen of Wells Fargo Advantage Funds, tells Bloomberg.

“We could see 1,400 on the S&P 500 before the end of the year. Yet short-term I’m somewhat defensive.”

Editor's Note: Use This Single Loophole to Pay Zero Taxes in 2012

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