February 2011 Client Letter
The value of the U.S. stock market has doubled from its March 2009 lows and has vaulted almost 30% since this past August. Fueling the bull stampede is the Fed’s continued ultra-accommodative monetary policy, improved economic momentum, a pre–presidential election year (the average stock-market return in year three of a presidential cycle is 17.5%), and investors’ rising risk appetite (flows into stock funds are on the rise). Wall Street strategists seem optimistic: recent average price targets for 2011 project that the S&P 500 will reach 1,400, an 11% gain.