Katherine Nixon: 'Decent' Outlook for Stocks in 2013
Katherine Nixon is chief investment officer for the personal financial services business at Northern Trust.
Kiplinger’s: What’s your outlook for stocks?
Nixon: We think it’s going to be a pretty decent year. Our outlook is predicated on slow but steady growth in the U.S., stability in China, and a short and shallow recession in the European Union. We see earnings growth of 5% to 10% next year. Pop on top of that a 2.1% dividend yield, and you’ve got a compelling argument for decent stock returns. And you know that with $1.7 trillion in cash on the balance sheets of S&P 500 companies, they’re spring-loaded either for a recovery in global demand or for some pretty shareholder-friendly activities, including initiating share buybacks and establishing or increasing dividends.
So where should investors focus in the coming year? Sectors that have done well are a little bit more defensive. Health care companies, for instance, deliver slow and steady growth, and investors are favoring that dependability and consistency.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Will that continue in 2013? It probably will. A lot has to do with the fact that these tend to be companies that pay dividends. They pack a one-two punch of lower volatility and higher income.
What other themes are you emphasizing this year? We just increased our allocation to emerging markets, recognizing that the China growth story is intact. Right now, we’re overweighted in the U.S. and underweighted in stocks of developed foreign countries. Looking out 12 to 18 months, our middle-of-the-road portfolio has 11% of assets in emerging markets, 10% in international developed markets and 28% in U.S. stocks.
What about bonds? The best-case scenario in the high-grade fixed-income market right now is that you will earn what you get from clipping coupons. We are leaning toward high-yield bonds.
Kiplinger's Investing for Income will help you maximize your cash yield under any economic conditions. Subscribe now!
-
Nasdaq Sinks 418 Points as Tech Chills: Stock Market TodayInvestors, traders and speculators are growing cooler to the AI revolution as winter approaches.
-
23 Last-Minute Gifts That Still Arrive Before ChristmasScrambling to cross those last few names off your list? Here are 23 last-minute gifts that you can still get in time for Christmas.
-
The Rule of Compounding: Why Time Is an Investor's Best FriendDescribed as both a "miracle" and a "wonder," compound interest is simply a function of time.
-
Best Banks for High-Net-Worth Clientswealth management These banks welcome customers who keep high balances in deposit and investment accounts, showering them with fee breaks and access to financial-planning services.
-
Stock Market Holidays in 2025: NYSE, NASDAQ and Wall Street HolidaysMarkets When are the stock market holidays? Here, we look at which days the NYSE, Nasdaq and bond markets are off in 2025.
-
Stock Market Trading Hours: What Time Is the Stock Market Open Today?Markets When does the market open? While the stock market has regular hours, trading doesn't necessarily stop when the major exchanges close.
-
Bogleheads Stay the CourseBears and market volatility don’t scare these die-hard Vanguard investors.
-
The Current I-Bond Rate Is Mildly Attractive. Here's Why.Investing for Income The current I-bond rate is active until April 2026 and presents an attractive value, if not as attractive as in the recent past.
-
What Are I-Bonds? Inflation Made Them Popular. What Now?savings bonds Inflation has made Series I savings bonds, known as I-bonds, enormously popular with risk-averse investors. How do they work?
-
This New Sustainable ETF’s Pitch? Give Back Profits.investing Newday’s ETF partners with UNICEF and other groups.
-
As the Market Falls, New Retirees Need a Planretirement If you’re in the early stages of your retirement, you’re likely in a rough spot watching your portfolio shrink. We have some strategies to make the best of things.
