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Morningstar’s 2013 Stock Market Outlook

Many firms provide market forecasts, but Morningstar has a few special things going for it — such as being unbiased (ostensibly) and having an analyst named Heather Brilliant. Ms. Brilliant’s forecast for 2013 includes these elements:

• The market is fairly valued, so don’t expect multiple expansion.
• Expect market volatility due to continuing debt problems in Europe, growth in China, and fits and starts of the U.S. economy.
• Due to market volatility, stock picking will make a comeback — for example, even though the S&P is up 15%, certain housing-related stocks fared much better.
• The fiscal cliff will be a non-event, even if nothing is done before year’s end, since most changes will have an effect over the course of the year. And even if we are drawn into a recession, it will not result in a protracted market decline.
• The U.S. economy could surprise everyone.
• Real estate and consumer defensive sectors are the most overvalued.

Over the coming week, Morningstar will provide outlooks for the different sectors and provide 30 top stock picks — although for subscribers only. What’s the price of Brilliance?

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