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Hagioson Jul 09, 2009 10:30am
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Stay in stocks this summer, CIBC says
Stay in stocks this summer, CIBC saysStay in stocks this summer, CIBC says
Steve Ladurantaye,Globe and Mail Update
Investors should resist the urge to bail on stocks through the summer,CIBC World Markets said Thursday, and look for buying opportunities ifthe market slips much further in the next two months.
“Riding out the bumps ... is a more realistic option, given the risksin trying to time the market too precisely when the economy is near aturning point,” said chief economist Avery Shenfeld.
The S&P/TSX has drifted 8.5per cent lower in the last month after a fierce spring rally, as doubtshave set in about the pace of any recovery. Mr. Shenfeld said “even ahint of growth” could spark a quick rally that “would be easy to miss.”
“More importantly, longer term valuation metrics still show ampleheadroom for equities, even if the first year of expansion proves to beas tepid as we suspect,” he said.
“Excess cash holdings in the household sector, and central banksdetermined to add liquidity, augur for another leg to the equity rallyto begin before year end.”
Mr. Shenfeld maintained his year-end target for the index at 10,300,and remained underweight in consumer discretionary stocks andindustrials while adding weight to telecom stocks.
“The only highly cyclical sector in which we have an overweight is basemetals, where Asia's economic rebound, already well under way, shouldbe a plus,” he said.