‘The Triumph of Optimism’ for investors

“The Triumph of Optimism” was the message of BSC Private Wealth Management’s Outlook 2013 – Spring Update Tuesday at the Crystal Lake Country Club.

The luncheon event was sponsored by BSC PWM and the McHenry County Economic Development Corp. and featured John Chapman, managing partner, chief investment strategist, and John Sleeting, partner, fixed income strategist.

“If you look back at many decades of history, optimism pays better,” Chapman said. “Optimism is the right general perspective. We overcome our problems, we move onward, we move upward. This has been our perspective over the past several years.

“It’s not that we’re just optimists and pollyannish and naive about what’s happening in the world. It’s that we look at the data. And the data has told us again and again that things were improving, that things are healing, that our economy is cyclical, even after a big shock like we had in ‘08,” Chapman continued. “Markets will come back, the economy will eventually come back, and I suppose this first quarter, more than anything else, has been a validation of that.”

Chapman said the economy has experienced 15 consecutive quarters of growth. “Everything indicates that growth will continue in 2013 and 2014,” Chapman said. “There are no signs at this point in time that a new recession is imminent in any sort of way.

“We’re still firmly in the camp that says the economy is growing, albeit not as fast as we’d like to see,” “Chapman said. “We still believe that 3 percent is possible this year, and I think it’s going to surprise a lot of people, just like the first quarter surprised a lot of people.”

He said the recent plunge in gold prices does not represent “the beginning of the end.”

“This represents to me a recoupling of gold to commodity prices,” Chapman said. “I would expect gold to come back to $900 or maybe a little bit less. I still think it has a place in a portfolio strategy,” he said. “I just don’t think there’s a strong case for gold at this juncture.”

Among his conclusions, Chapman said, “We continue to favor equity over bonds,” and “we reiterate our expectation for the S&P to reach 1,700.”

Chapman said that within equities, “we favor a dividend bias and U.S. mega-caps,” and within fixed income, “we favor municipal bounds over Treasuries.”

“This has been one of the most volatile times, with some of the highest levels of uncertainty since the Great Depression, when it comes to the markets,” Steeling said. He urged investors to “focus on the academics, focus on the data, not get emotional or reactive.”

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