Will This Rally Be Different?

As the stock market shows signs of a rally much like that of 2015, should we be optimistic that it will reach new highs or prepare ourselves for another disappointment? In a recent article in Barron’s, James Paulsen of Wells Capital (a unit of Wells Fargo & Co.) thinks it could be different this time, and here’s why: This rally is seeing a much broader participation than that of 2015, when it was led by a small number of S&P 500 stocks while most underperformed. This year, the stock market isn’t facing any pressure from bonds. Last year, the rally […]

Stodgy Dividend Payers On Top So Far in 2016

The Wall Street Journal reports on investors’ recent moves toward high-dividend stocks. Stocks in the S&P High Yield Dividend Aristocrats Index (which have increased their dividends every year for at least 20 years) are up 1.9% this year, while the S&P is down 4.3%. The return on the Dow Jones U.S. Dividend 100 Index (which consists of consistently high paying stocks) is down 0.8%. One reason for the interest in dividend payers is the perception that further Fed rate hikes are increasingly unlikely. Years of low rates make bonds less attractive. As James Paulsen, CIO at Wells Capital Management, puts […]

Paulsen Urges Shifting More Towards International Stocks

US investors should start considering a heavier weighting to international stocks, according to James Paulsen of Wells Capital Management. Paulson, who is chief investment strategist at Wells, says that a commodity-price rebound will benefit international stocks more than the domestic names.  “The U.S. economy is more consumer-centric compared to foreign economies,” Paulson wrote in a note to clients. According to the Bloomberg piece Paulson says, “the pendulum is due to swing against domestic shares, he wrote, as an economic growth spurt similar to those near the end of 1970s, 1980s and 1990s expansions lifts commodity prices.”

Paulson: Understanding Indisputable Consensus and Unrecognized Themes

In an article in Canada’s Financial Post, columnist David Pett offers up some valuable investment insights from James Paulson, chief investment strategist at Wells Capital Management, who has been mostly correct in his stock market and economic calls since early in the bull market. Paulson explains that often, investors weight the consensus opinion in the market too heavily and lose sight about the factors that end up influencing what happens in the future. Paulson recently wrote, “combined, indisputable consensus trends and unrecognized themes can represent potential shocks to the investor mindset”. In Paulson’s view, there are five indisputable consensus themes […]

Paulsen: Look Deeper at Valuations

Nearly six years into the bull market, the S&P 500 is trading at somewhat elevated but far from euphoric valuations. But in a recent note, Wells Capital’s James Paulsen says that doesn’t tell the whole story of the overall market’s valuation.

Paulsen: Cocktail of Factors May Spark Inflation Fears In 2014

Could 2014 finally be the year that long-simmering inflation fears boil over? Wells Capital’s Jim Paulsen thinks it just might be. “In the last five or six years we’ve been worried about nothing but deflation and weak growth,” Paulsen tells Yahoo Finance’s Breakout, “so it’s very difficult to imagine that we might get to a point where we’re worried about an overheated economy again, but I think we’ve got a shot at that (this year).” Paulsen says a number of factors — a new dovish Federal Reserve chairman, tightening labor market, rising factory capacity utilization rate, rising commodity prices — […]

Paulsen: QE Has Had Little Impact

One strategist who likely is pleased with the Federal Reserve for finally beginning to taper its asset purchasing plan: Wells Capital’s James Paulsen. Paulsen said last week at the Wells Fargo 2014 Investment Outlook conference that quantitative easing “has not had much impact,” except for there now being $3.5 trillion in bank reserves that has not reached the economy, the Las Vegas Review Journal reports. The Fed, he said, “should have stopped (quantitative easing) a while ago.” In buying up $85 billion in bonds every month, the Fed has essentially been “screaming, ‘we are scared and you should be too,’” […]

Paulsen on the Debt Crisis, and Earnings Upside

Wells Capital’s Jim Paulsen says he has been viewing the debt debacle in Washington as a buying opportunity, not a long-term problem. Paulsen tells CNBC that he’s high on non-U.S. stocks right now; in the U.S., he likes cyclical areas like industrials, materials, and financials. Paulsen also talks about why he thinks third-quarter earnings and revenue results may be better than most expect.

Paulsen: Market “Digesting” Big Issues

Wells Capital Chief Investment Strategist James Paulsen says that, with the market digesting several major issues, he expects stocks to remain in a trading range for the remainder of the year. Paulsen tells Bloomberg that the market is digesting three major things: a big upward move in multiples; a repricing of long-term interest rates; and the Federal Reserve’s tapering of its asset-buying programs. He thinks the bull market won’t be stopped, but that the market may pause for a few months.  

Paulsen: Tapering Will Lead To More Confidence, Not Less

Wells Capital’s James Paulsen thinks that the “great Fed myth” about the stock market rally being a “sugar high” will soon be debunked. Paulsen tells Bloomberg he thinks the market’s moves this year have mainly resulted from increased confidence, not the Federal Reserve’s policies, evidenced by rising price/earnings multiples. CEOs remain hesitant, however, which has limited capital spending. Paulsen thinks part of their hesitance is a concern that the Fed, which has continued its quantitative easing programs well after many have believed the economy can stand on its own, may know something they don’t. If the Fed starts shows confidence and […]

Paulsen: Fed A Hindrance To Long-Term Gains

Wells Capital’s James Paulsen says that, with valuations low compared to historical standards, stocks could provide investors with double-digit annual returns over the next decade — if the Federal Reserve gets out of the way. “In the post-war era, when the inflation rate has been as low as it is today, the U.S. stock market PE multiple has been higher than it is currently almost 70 percent of the time,” Paulsen writes in a recent research note. “Although earnings will need to rise, investors should not fret too much about the speed of earnings growth because the primary driver behind […]