Dow Could Top 19,000 in 2014
NEW YORK ( MainStreet) Equities remain an attractive investment as the Dow continues to rise and could top 19,000 easily in 2014, experts predict.
Equities outperformed bonds in 2013, as the economy showed strong signs of improvement and consumers felt more confident. The Dow Jones Industrial Average, an index comprised of 30 companies, is a benchmark for measuring the performance of investors' portfolios. The Dow will reach 19,700 by the end of 2014 since equities should continue to gain, said Matthew Tuttle, CEO of Tuttle Tactical Management, a Stamford, Conn. investment firm.
"With interest rates continuing to be low, there is no other place for investors to put money other than stocks," he said. "If you add in an economy that is on an uptrend and there are no possible surprises out of left field, then you have an environment that is very positive for stocks."
Equities could bring returns as high as 15% in 2014, allowing the Dow to reach 18,700, said Bill DeShurko, a portfolio manager on Covestor and president of 401 Advisor, an investment advisory based in Centreville, Ohio.
Investors need to be patient since many of the gains may not occur until the third or fourth quarter, he said.
"I think most of the gains will come late in the year after a year of modest earnings growth," DeShurko said. "However, optimism for accelerated gains in 2015 will power the market towards the end of the year, which would make 2015 the more likely candidate to be a bubble bursting year."
Stocks which pay dividends are one of the best options for an investor's retirement portfolio, he said.
"Dividends are the only way to be sure of a check for life," DeShurko said. "Any other strategy relies on capital gains, but most analysis ignores the effects of capital losses. The trick is to not be too greedy by stretching for too high of yields or lose focus and get caught up on growth arguments. Dividend sustainability and growth is all about cash flow."
Ken Moraif, a senior advisor at Money Matters, a Plano, Texas wealth management firm, is confident that the Dow will reach 18,000 in 2014 because the economy has rebounded.
"I don't see any signs that there is a recession coming," he said. "Most of the signs from the economy look positive and the direction is toward growth."
Investors should allocate more funds toward equities, Moraif says, even though he believes the stock market is due for a correction and the Dow will dip below 15,000 before it reaches 18,000.
"The market ran very fast last year," Moraif said. "There was a lot of excitement and exuberance, but the economic data was not as great as those expectations that were built in and that will precipitate a correction. Still, the overall trend will be upward, because the economy is improving."