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Real estate will slow as major stocks advance
If one of your New Year's resolutions is to make smarter investment decisions in 2006, resolve to put your money in the stock market, advises economic forecaster Harry S. Dent, founder and president of the H.S. Dent Foundation, Allen, Tex. "The smart money will turn more bullish--leading to a strong rally as new money comes back into stocks and out of housing, bonds, and REITS [real estate investment trusts]," he declares.
Dent indicates that, because the bond, REIT, energy, and homebuilding sectors are beginning to slow, investors will become increasingly bullish toward the stock market in the upcoming months. |
So much, in fact, that, if economic reports are strong, "it is likely the markets could resume their rally." The rally will be led by institutions, he explains. "New institutional investors will come back into the markets well ahead of the more bearish everyday investor."
With his projected targets between 14-15,000 for the Dow Jones Industrial Average as well as 3,500 for the Nasdaq, "we could even be underestimating the market's potential for 2006," Dent contends.
Other forecast highlights include:
* The Fed will stop raising rates by January 2006 to avoid an inverted yield curve.
* Oil prices will continue to trend down throughout 2006.
* The housing bubble, which already is showing signs of slowing, will manifest as flattening and then lower housing prices.
* The Dow's ascent will take place by August 2006.
* The market can continue to rally because stocks currently are undervalued by 40% compared to bonds.
"All indications show that stocks are heading up from here," Dent concludes. "So, investors that waited for proof of the recovery from the lows in October 2002 have already missed a doubling of the Nasdaq and a 50% gain in the Dow.... If investors procrastinate, they again will miss major gains in the coming year."
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