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The Approaching Reallocation Rally

Written by: Doug Kass 05/01/12 - 12:00 PM EDT

  • Corporate profit growth is beating consensus forecasts.

  • Inflation is moderating.

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  • Bill and bond (interest) rates are at historically low levels and provide an inferior alternative to savers and investors.

    • For now, stocks are doing surprisingly well without retail participation.

    It remains my contention that it will take relatively large losses in bond funds to bring back the individual investor into equities. But this is likely coming -- it almost always occurs coincident with higher stock prices -- and when it does, one of the greatest reallocations out of bonds and into equities will commence.

    That reallocation could be the catalyst that takes stocks back to new all-time highs.