In 2012, Gilbert expects to see positive moves in Europe and in U.S. employment and the housing market. “I’m looking for modest, single-digit appreciation in the stock market after a flat-to-down 2011. Interest rates are still low and earnings are continuing to grow—giving stocks a more attractive valuation,” he says. Gilbert says Europe’s recovery is uncertain, but policymakers are making progress. He sees the recent strong U.S. growth continuing to increase employment and predicts that the housing market will touch bottom this year.

All this, he says, can assist market stabilization. A manager of Integrity’s Munder Veracity Small-Cap Value A fund (VSCVX), Gilbert says, “Stocks offer a better risk/reward vis-à-vis bonds—in particular, the small- and mid-cap stocks that are more exposed to domestic growth.” He offers black enterprise three of his top company picks.

GENESEE & WYOMING Inc. (GWR) is a shortline and regional freight railroad company that has been acquiring railroads in Australia and North America. GWI has grown its earnings by making purchases that boost its network and lower operating costs. The Greenwich, Connecticut-based business derives 33% of its $829 million in operating revenues from Australia, where GWI transports raw materials from the continent’s interior to ships headed to China. Although China’s growth has slowed, Gilbert says demand for material provides a tailwind for GWI earnings.
STOCK PRICE $57.31  •  P/E: 16.12

DANA HOLDING CORP. (DAN) is a $7.2 billion global leader in supplying axles, driveshaft, and heat-exchange and thermal bypass technologies. Gilbert says the company is benefiting from increased demand for big trucks such as Chevrolet Kodiaks, Ford F-350s, and tractor trailers. The weak economy of recent years had stifled demand, but now the mix of accelerated depreciation tax changes and greater economic activity has lifted the company’s production schedule to meet orders. Gilbert notes that Dana’s CEO has paid down debt. If consumers buy more SUVs, as they’re projected to, Dana’s earnings may increase 15%, says Gilbert.
STOCK PRICE $15.17  •  P/E: 6.61

RYLAND GROUP (RYL) is a leading $797 million market capitalization homebuilding company. The NAHB/Wells Fargo Housing Market Index has risen to its highest level since June 2007, and housing inventories are down from 10 months of sales to a more normal six. Gilbert says this shows that more consumers prefer a 4%, 30-year mortgage over rental housing. He acknowledges that housing is regional but says that, on the aggregate, home prices have reached a plateau. Ryland projects orders growing about 15% and regaining profitability. In 2011, Ryland’s net loss was $29.9 million. To halt declines, the company has left underperforming markets and is now focusing on communities in the mid-Atlantic and in Southern California, where it’s headquartered. Gilbert says these moves may allow margins to double this year.
STOCK PRICE $16.88  •  P/E: 15.08

One professional seeks to turn this popular craze into productive (and lucrative) lessons on investing, promoting financial literacy among those who love sports and brackets. Robert Wilson, vice president at Blazer Capital Management L.L.C, has created March Money Madness, an investing-focused game that allows players to put stocks head to head.

BlackEnterprise.com caught up with Wilson on how he linked a love of sports with advocating financial literacy, how his celebrity sports clientele inspired his idea and how youth can learn more about investing in creative ways.

BlackEnterprise.com: What inspired you to create the March Money Madness?

Robert Wilson: In my financial advisory practice, I work with professional athletes and entertainers. I also speak to kids a lot about financial topics, but I found that all they wanted to talk about were my celebrity clients. Instead of pushing back on that, I decided to fight fire with fire by trying to find a way to leverage their interest in sports and entertainment to teach them about important financial topics.

That’s how March Money Madness was born. I developed the game in an effort to leverage the popularity of the NCAA basketball tournament and brackets that so many people fill out before the tournament. It’s estimated that 40 million people fill out at least one bracket for March Madness, so I felt as though there was a huge interest that I could play off of.

How exactly does March Money Madness work?

Players sign up for the bracket challenge and pay a $5 entry fee. The top prize this year is 50% of the entry fees, so the more people play, the more the winner can take home. I have an ambitious goal to educate 100,000 people this year. If 100,000 people join the challenge, someone can walk away with $250,000 to pay off debt, go to school or start the business of their dreams.

After each round, the players receive an e-mail and video recap of the market action from the week including an analysis on why each particular stock won (or lost) its match-up and the factors that led to the outcome.

Today, the list and pairings of the 64 stocks included in the challenge will be announced, and players can begin making their picks.

Players must make their picks for the first round by 9:30 a.m. (the time the stock market opens) on March 12.

The challenge works in a round-by-round format. This means players make their picks for each round, rather than picking the winners for the entire tournament up front. This allows players who didn’t have many correct picks the first round, for example, to still be engaged in the competition since their entire bracket will not be ruined by a bad first round. Because points increase for each round, anyone can win.

To further explain this: Let’s say two first-round match ups were Apple vs. Microsoft and Google vs. Yahoo, and the winners of these two match-ups will play in the second round. You picked Microsoft and Yahoo to win their first round games, however, Apple and Google were the actual winners. You would get no points for your incorrect picks for those first round games, but because the game is in a round-by-round format, you can pick between Apple and Google for the second round match-up. If you had to make all of your picks for the entire tournament up front, you would not have an opportunity to get points on this second round match-up because neither team that you picked in round 1, made it to round 2.

Note: Players do not actually “buy” stocks in their account with March Money Madness.

Continued on next page …

Robert Wilson, creator of March Money Madness

What types of stocks are included in this and how are the match-ups chosen?

The bracket is broken down into four sectors: technology, financial, consumer, and industrial. Sixteen stocks from each sector are chosen for the competition. I choose the stocks in an effort to have some that are widely familiar to people (Nike, Apple, General Electric, etc.) mixed in with a few stocks that are less familiar and will require research. (See the entire list of 64 stocks from last year’s bracket here.)

How does one choose which stock will do better than the other?

This is what makes the game challenging and fun! Just like the games in the NCAA tournament, the outcome of these short-term match-ups are somewhat unpredictable, but doing your homework will help you make an educated prediction.

For example, if a company is releasing their quarterly earnings during one of the rounds and you expect that they will beat estimates, then you probably want to pick that stock because its price will likely go up.

If there are negative news stories affecting a company, then you may not want to pick that stock, as the news will likely negatively affect the stock price.

What can people learn about investing from March Money Madness?

What’s great about the competition is that you can test out your hypotheses about what makes stock prices move in the real market, and this experience can help you become a better investor.

After playing the game, players should be able to:

—Read and understand stock market information in the newspaper (USA Today, local paper, etc)

—Know where to go to find information on the market (Black Enterprise, WSJ, Barrons, Smartmoney)

—Know how to research past stock prices (Google Finance, Yahoo Finance, Morningstar)

—Understand issues that affect stock prices (revenue, earnings announcements, interest rates, unemployment reports, etc.)

—Gain a comfort level with the movement of stocks in the market (less fear of investing)
Know where to go to open an brokerage account if they want to start investing.

Continued on next page …

What’s your response for people who might liken this to gambling?

Some people feel as though the stock market in general is like gambling. However, your odds making money on your investments are much better than your odds of winning at the casino, especially when you do your homework and research the stocks that you want to invest in.

I don’t view this challenge as gambling at all. People join the challenge because they want to learn about the market, or they have some level of knowledge of the market and want to test their ability. This is no different than someone going to buy a book at Barnes and Noble because they want to learn about investing. I’ve just turned a traditionally boring subject, into a fun, educational, social experience and have given individuals an incentive to learn by providing prizes.

You did this last year. What was the outcome for the winners?

Many people who have played the game in the past knew nothing about the stock market.  Joining the challenge pushed them to read the Wall Street Journal and other financial publications and Websites in order to do the research needed to make their picks. They began watching the market and gained some level of comfort with seeing stocks go up and go down. Ultimately many of them decided to open brokerage accounts with eTrade, Schwab and other firms to start investing in the market with real money.

How does social media play a role in promoting, marketing, and participation in MMM?

Absolutely! I am using Facebook, Twitter and e-mail marketing to help reach my goal of 100,000 players. Since I’ve created an incentive where the more people play, the more the winner can take home, there is an inherent incentive to share information on the challenge and to get friends to play along with you. I will also be partnering with a few individuals with large social media followings by making them “VIP Players” in the challenge that folks can match wits with and compare scores. For example, author and businessman Gary Vaynerchuk (@garyvee) has close to 1 million followers on Twitter and he will be a VIP player in the game that individuals can play against. His inclusion in the game and promotion of it via his social media accounts should help with the popularity of the game.

Games have become inherently social, and I hope that MMM is no different. Because people can form groups to play against their friends, my aim is to create a social experience where people can learn about the market together and encourage each other to become more knowledgeable about their finances.

1 AGL Resources/Nicor (GAS) This recently merged entity created the nation’s largest natural gas-only distribution company. Before the two companies announced their merger in December 2010, AGL Resources and Nicor separately provided dividend yields of greater than 4%. Don’t expect spectacular growth, but look for continued dividends to smooth out the ride. There will be continuity at the top since AGL Resources Chairman, President, and CEO John Somerhalder II will head the combined company; Nicor CEO Russ Strobel has retired. Somerhalder has promised that the cost of delivering natural gas won’t increase for three years. Natural gas is a commodity, so its costs change in response to supply and demand. Longer term, expect natural gas to increase market share which should only help this new entrant to the S&P 500. Target price is $47.50.
PRICE AT REC.: $41.04  •  P/E: 15.78

2 Apple (APPL) Look around you—Apple products are everywhere and influencing competitors in areas of style, software, use, and service. And Apple won’t be disappearing anytime soon, despite the death of its visionary leader, Steve Jobs. Investors will expect Apple to keep chugging along, as it updates and tweaks new products for the foreseeable future. Baker says that everyone in his house owns something made by Apple, and that’s increasingly likely in your home and office, too. Apple has a pretty significant cash position, and one can expect continued growth from iPhones, iPads, and iTunes. Although more tablets have entered the market, the Cupertino, California-based company should do well even with a smaller share of a bigger pie. At a price above $400 a share, it’s a dollar-cost average buy anytime it drops. It is worth the present pain, for long-term gain. Target price is $505.
PRICE AT REC.: 421.73  •  P/E: 15.24

3 ExxonMobil (XOM) While oil will remain the most widely used fuel, overall energy demands will be reshaped by a continued shift toward less carbon-intensive energy sources—such as natural gas. With a current P/E ratio of 10.04 this stock looks undervalued. ExxonMobil’s sheer size gives it tremendous economies of scale. The company has a solid track record of dividends and a strong management team. Truly a global brand, ExxonMobil gets only 31% of its revenues from the U.S. This diversification is a buffer to economic risk from volatile markets. Target price is $92.
PRICE AT REC.: $85.50  •  P/E: 10.30

Since hindsight is 20/20, we can look back at predictions to check how reliable they have been. In his 1998 book Roaring 2000s, best-selling financial author Harry S. Dent Jr. wrote: “We should see a Dow of at least 21,500 and as high as 35,000, as the baby boomers and recent wave of immigrants move into their peak spending years around 2009.” Years ago the inimitable financial television host Jim Cramer wrote: “Housing bubble? What housing bubble? The signs are in place for a further run-up in real estate.”

Then a half-decade later—with the housing bubble rapidly deflating—Federal Reserve Chairman Ben Bernanke announced: “I don’t anticipate any serious problems . . . among the large internationally active banks that make up a very substantial part of our banking system.” Ouch! The point is not to pick on Dent, Cramer, and Bernanke, but rather to note that even smart, well-informed people doing their best can be off the mark since the future is far less predictable than we would like. To steer clear of potentially problematic advice, I have a few rules of thumb.

When looking for information about the road ahead, try to uncover the “how,” not the “what.” In other words, rather than latch on to a specific market call, figure out what data supports the thesis. For instance, how will U.S. stocks fare going forward? I don’t have one number. Rather, I think a two-pronged approach will help uncover the likely direction: What is the long-term return of the asset class, and what do recent returns suggest? Over the past 85 years, stocks have gained, on average, 10% annually. While stocks have gained 9% annually for the past quarter century, the last decade has produced poor performance: stocks have averaged only 3%. Many simply assume that the pain will continue, but reversion to the mean—which holds that after periods of extremity markets tend to go back toward trend—says the opposite. The market is more likely to see double-digit returns over the next decade or so rather than single-digit growth or especially a negative return.

(Continued on next page)

Another mental tool that can be very helpful is considering the potentially negative repercussions of being wrong.  For instance, houses cost less than they have in recent history—likely close to a bottom—and borrowing burdens are lower than they have  been for decades.  So, I would argue it is a good time to buy a house if you can afford a 20% payment, and expect to stay in  the home for five years or more.  Even if prices do keep falling, there is no damage so long as you stay in the house and keep current on mortgage payments.

Finally, the long term trumps the short term, especially when financial assets are volatile. If you have read a magazine or watched television in the last couple of years, you know gold prices have shot to the moon. Specifically, over the last three years, gold has increased at a remarkable 29% per year. Many are suggesting you should hop on the bullion express. But wait: Over the past 25 years, the annual return for gold is just 6%, well below the 9% return on stocks for the same timeframe. And the price of gold can just sit there for very long periods without moving upward (which, coincidentally, is what gold itself does—it just sits there). Indeed, from March 1987 to May 2005 the return on gold was 0%.

These are just examples; they’re not meant to serve as the three key recommendations for the year. Rather they are meant to show how low-key, rational, well-informed thinking can help guide you on your path to financial independence. Ultimately the time-tested truisms of finance should serve as starting points no matter what year it is: spend less than you make; maximize your tax-advantaged investments over the long term; stay away from fads; and lean moderately against conventional wisdom rather than following the crowd. If you’re able to do these simple things, chances are you’ll create wealth more dependably than those who just listen to number-tossing experts at the beginning of the year.

Morningstar analyst Daniel Holland says there may be a long-term investment opportunity in the confusion created by such contradictory information. For one, despite the signs of an economic slowdown in Europe and the U.S., many industrials are still reporting strong order growth. A second positive sign: stock buybacks and merger activity in the sector, which have both been on the upswing. “There are definitely indications that when it comes to the best run industrials, current worries are more headlines than fundamental concerns,” says Holland.

It’s clear that the best managed companies in the group took away some important lessons from the 2008 recession. Many have pared down debt and streamlined operations. Industrials also have a trump card to the effects of the European economic troubles by having some of their business in emerging markets where infrastructure spending is helping to boost revenues. “China and Brazil are particularly compelling stories right now,” says Holland. Finally, stock market volatility has brought down some share prices of the best stocks in the group to bargain levels.

“We look for companies with a wide moat, or in other words, barriers, to keep competitors from encroaching on their markets,” says Holland. “That can include expertise, service, or technology. The bottom line is that in a cyclical industry like this, moats make it possible to maintain operating margins and, in turn, profits.” Holland talked to black enterprise about three of his industrial picks.

—James A. Anderson

1 GENERAL ELECTRIC CO. (GE) It’s a company that ranks as one of our best ideas right now. The stock trades at about 11 times our current-year earnings estimate, which is quite cheap compared with other industrial companies and the historical price-to-earnings ratio that GE has carried in the past. The company is placing more focus on equipment for power generation, which positions it well for emerging market growth. Management currently aims for the GE energy business to grow earnings by more than 10% a year. GE Capital, the company’s finance arm, has bounced back from concerns that clouded its outlook during the 2008 economic crisis. We think GE can reach a fair value of $25 a share.
PRICE AT REC.: $16.48  •  P/E: 12.58

2 PARKER HANNIFIN CORP. (PH) is a maker of engineering and manufacturing equipment—motion and control components as they are called. They include automation and flight control systems, hydraulics, filtration systems, and engines, which are used by companies from McDonald’s to Caterpillar. Parker Hannifin is managed well and has a reputation for engineering expertise. Since the 2008 financial crisis, it has focused on controlling costs and expanding operating margins above 10%. The company also trimmed its debt from roughly 30% of capital on average to a current 20%. It has put 60 years’ worth of effort into setting up a global distribution network. We think fair value for the stock is $97.
PRICE AT REC.: $83.74  •  P/E: 12.39

3 UNITED TECHNOLOGIES CORP. (UTX) United Technologies Corp. has a focus in aerospace and construction. You probably know some of its higher-profile products: Otis elevators, Carrier air conditioners, Sikorsky helicopters, or Pratt & Whitney engines. Like other peers, United Technologies has emphasized cost cutting. Management expects to extract $350 million to $400 million of annual cost reductions. We think the company can attain compound annual earnings growth of 10.9% over the next five years and reach a fair value of $94. One tailwind is its 20% exposure to emerging market growth; another is its recent acquisition of Goodrich Corp., a leading supplier of services and systems to the aerospace and defense industry.
PRICE AT REC.: $78.87  •  P/E: 14.80

“The area is a very strong performer over the long term,” says McKissack, whose firm manages approximately $800 million in institutional funds. “The group has underperformed this year, but when you look further out, we feel midcaps will retain their performance advantage and are one of the best places in the market.” The numbers support McKissack’s outlook. Over a 10-year-period ending Aug. 31, the Russell 1000 index of large company shares returned 3.16%. The Russell MidCap index—the types of undervalued shares McKissack selects for his portfolios—were up 7.16%.

McKissack doesn’t foresee a double-dip recession but he does expect “more stresses and pressures” from Europe and a weak U.S. job market. As such, the volatile stock market will continue to bounce up and down. “General sentiment is worse than what we see for the economy, and as a result, we think there are attractive opportunities,” he says. “It’s a good time for investors to add selectively to their positions rather than to switch money to fixed income or cash, which yield practically nothing right now.”

On top of that, dividend payers are particularly valuable in a shaky economy (see “How You Can Profit from Market Volatility,” this issue). That’s because they require a hefty commitment on the part of corporate management. Think of it this way: A company has to be pretty confident about its business in order to share a slice of its profits with shareholders. Dividend payers tend to be large, blue-chip companies with a proven track record of results. It’s that sort of dependability that helps to steady the performance of dividend-paying stocks in turbulent markets.

Then there’s the fact that interest rates on Treasury bonds have been quite low. Abercrombie says dependable companies that pay an above-average yield (the ratio of a company’s annual dividend payout to its stock price) are an attractive substitute.
A Texas native, Abercrombie works in the investment firm’s Dallas office, where he manages money for high-net worth clients. Named a top financial all-star by Black Enterprise in 2010, Abercrombie talked to BE about three of his stock picks.

1) Johnson & Johnson (JNJ) is one of just four companies that carry a AAA grade on its debt. The company offers a 3.6% yield and has been very reliable—it’s made steady payments since 1944 and has increased its dividend annually for the last 49 years. I think the company can accelerate its earnings growth over the next few years thanks to breakthroughs from its biopharmaceutical businesses. The company’s pipeline includes potential new treatments for Alzheimer’s disease, prostate cancer, hepatitis C, and a stroke prevention medicine. In our view, shares do not fully reflect the value of J&J’s pipeline potential, and as a result we believe shares are attractively valued. Meanwhile, J&J should be affected less and less by major patent expirations on earlier products.
STOCK PRICE: $64.36   •   DIVIDEND YIELD: 3.6%

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2) AT&T (T) pays a 5.8% dividend. The telecommunications giant has made payouts since 1984 and has increased dividends steadily over the last 26 years. If completed, AT&T’s merger with T-Mobile USA will make it the No. 1 wireless operator in the U.S. (At press time, the U.S. Justice Department filed an antitrust lawsuit to block the proposed acquisition.) The union should bring about operating savings that will fully offset the purchase price. Over the past five years, AT&T has grown its dividend about 5% per year on average. We expect a 2% growth rate in the next five years. We expect revenue growth in a stabilizing economy thanks to AT&T’s wireless and television businesses.
STOCK PRICE: $28.79   •   DIVIDEND YIELD: 5.8%

3) Kinder Morgan Energy Partners (KMP) which operates oil and gas pipelines and storage facilities, pays a 6.6% dividend yield. Kinder Morgan has some 28,000 miles of pipelines used to transport natural gas and refined oil. The company has paid a dividend since 1992 and has increased its payout to investors the last 14 years running. We think Kinder Morgan can generate low double-digit income earnings growth this year, reflecting acquisitions and increased demand for storage capacity. For the past decade this dividend stock has delivered annualized total returns of 19.5%. What’s more: A $10,000 investment in Kinder Morgan 20 years ago would be worth $190,000 today. In the next year, the company plans to build up its energy transportation and storage assets—one reason we think it is insulated from any decrease in oil or gas prices.
Stock Price: $70.56   •   DIVIDEND YIELD: 6.6%

Mayor Bloomberg invests $30 million of his money to aid young black and Latino men (Image: Thinkstock)

• NYC Mayor Bloomberg Invests $30 Million of His Money to Aid Minority Youth

Mayor Bloomberg has announced plans for a far-reaching program in New York City that will address persistent poverty, incarceration and unemployment among young black and Latino men. The programs, which will target this group starting in middle school, will be funded in part by $30 million from Bloomberg’s foundation and a matching grant from billionaire hedge fund manager George Soros. The remainder of the $130 million budget will be derived from city revenues.

Read more at The Atlanta Post…

• Stocks Down Over 4% in Global Sell-Off

Stocks around the world fell sharply Thursday on intensifying investor fears about a slowdown in global economic growth and worries about Europe’s ongoing debt crisis, which is centered now on Italy and Spain.

Stock market indexes in the United States and Europe dropped more than 4 percent as Japan intervened to weaken its currency and the European Central Bank began buying bonds to try to calm markets.

At the close, the Standard & Poor’s 500-stock index was down 60.27 points, or 4.78 percent, to 1,200.07. The Dow Jones industrial average was off 512.76 points, or 4.31 percent, to 11,383.68, and the Nasdaq was down 136.68, or 5.08 percent, to 2,556.39.

Read more at the New York Times…

• Tuskegee Mark 70^th Anniversary in Washington, D.C.

America’s first black military pilots are celebrating their 70th anniversary, as nearly 100 veterans of the Tuskegee Air Corps have reunited in Washington, D.C., for their national convention this week.

Read more at NPR…

• FAA Reopens

Senate Majority Leader Harry Reid has announced an agreement to reopen the Federal Aviation Administration, clearing the way for 74,000 government and private-sector workers to return to their jobs.

Read more at USA Today…

“When I bought ConocoPhillips, I didn’t feel it was as good of a value as I would have liked it to have been,” says Murphy, who bought the stock at around $66 per share in December of 2010. He sold at about $77 a share. “I believe my other exposures to oil and gas will provide a better risk-return.” About 18% of his portfolio is in the energy sector.

Knowing when to part with an asset is essential to any successful investing strategy. In the last few months, natural disasters and political unrest have caused a surge in market volatility. These ups and downs may cause even the most confident investor to act out of emotion. Indeed, those nervous impulses were evident leading up to the March 2009 bottoming of the Dow. Investors withdrew a total of $225 billion from U.S. based mutual funds in 2008, according to TrimTabs Investment Research. Considering that the market has risen some 80% since spring of 2009, many investors may have pulled out too soon.

A sound plan of attack can help stem emotional waves and grow returns. Clear understanding of your present financial picture and future goals should determine how you manage your options, says Imari Love, equity research analyst at Morningstar.

Building the Foundation
Murphy began building his nest egg while he was in college. With a significant time horizon, and an aggressive agenda, he opted for a portfolio comprised solely of equities. He says the portfolio yields an 8% to 10% return annually. While Murphy may have a greater risk tolerance than the average investor, given his longer time horizon, he still likes to be strategic about managing his risk.

“When you find an investment option that meets your needs, research it, evaluate it relative to all your other investment options, and invest in the one that gives you the most attractive profile,” says Love. The same process holds for developing an exit strategy. “One of the reasons someone would sell is because the company-specific reasons you bought the stock either have changed or never materialized,” he explains.

No Sudden Moves
With escalating unrest in the Middle East, Japan recovering from the deadly tsunami and earthquake, high U.S. unemployment, and a housing crisis, investors are skittish. While broader market events can have a tremendous impact on a stock’s price point, Love says you need to determine whether the stock’s price is falling because it’s moving in sympathy with the rest of the market or because the company’s business has fundamentally changed in some way. Research all the factors that made you believe it was attractive in the first place—revenue structure, market positioning, innovation, management team, target returns, etc.—and take note of any changes. To guard against major surprises and disappointments, diversification is key, says Jesse Abercrombie, financial adviser at Edward Jones Investments. “Keep each stock to less than 5% of your equity portfolio. When it exceeds 5% it may be time to sell it,” he adds.

A shift in competitive landscape or a flaw in the key themes you built your investment case around can all be causes for concern and a reason to sell your stake. But sometimes, your relationship has matured and reached its maximum potential. “Ultimately, whenever you enter into a stock with a long position, you should be doing so because you believe it to be priced lower than what it’s worth,” says Love. “Once it reaches [a level of appropriate value], never be ashamed of taking a profit.”

Douglas Coe Managing Partner and Chief Investment Strategist Investment Banking/
Capital Markets, Moody Reid Financial Advisors Kansas City, MO
“We’ve just entered into the second phase of one of the strongest bull markets in U.S. history. Interest rates will remain low. Stocks still remain the dominant asset class of choice for wise investors who are seeking to keep pace with inflation. Again, U.S. stocks are still undervalued.”

Jacquette Timmons President and CEOSterling Investment Management | New York
“It’s important to remember that any market rally or boom is a reflection of either our collective fear or optimism. So, yes, the current rally will continue provided the United States government doesn’t shut down or become engaged in another war, oil prices stabilize, and private industry job growth continues unabated.”

Arnett Lanse Waters Principal
A.L. Waters Capital L.L.C. | Braintree, MA
“Oil will trade above $150 per barrel. Gold will trade above $1,600 an ounce. Unrest in the Middle East will spread. Unrest will take hold in China, too. U.S. corporate earnings will decline.”

Larry Seruma Managing Principal
Nile Capital Management L.L.C. | New York
“We at Nile Capital believe that the market rally is going to continue over the next year. In the next 12 months we do not see the Federal Reserve raising rates, which means the cost of capital will remain low, and earnings will continue to surprise to the upside. Unemployment will also continue to fall, and that will increase consumption and encourage growth. In fact, we have already seen capital flows returning from abroad as investors’ allocations to U.S. markets continue to increase. In our view the biggest risk remains a less accommodative stance by the Fed; however, we believe that such a policy is unlikely in the short term.”

Joe A. Gilbert CFA, Portfolio Manager
Integrity Asset Management L.L.C. | Cleveland
“I’m still positive on the market at current valuations. Earnings will grow because of growing sales. We are in a maturing bull market, which requires investors to be more selective. But opportunities remain. Economic expansions typically last seven years and we are only in the second year of this expansion. There is continued positive business momentum and the economy is still operating substantially below potential output levels. Bull markets historically die on optimism and grow on skepticism, and there is plenty of skepticism surrounding this market now.”

Ivory Johnson Director of Financial Planning
The Scarborough Capital Management | Annapolis, MD
“In response to the financial crisis of 2008, the Federal Reserve electronically created $2 trillion of new money that wasn’t backed by anything of value, and purchased Treasury bonds from the banks. The Fed presumed that once the large banks received this money, they would lend the additional currency to consumers so they could buy more goods and services, thereby boosting economic activity. The banks instead used the money to buy stocks. Once quantitative easing and the stimulus handouts to the states end in June, the rally may be tested.”

Lee Baker CFP
Apex Financial Services Inc. | Tucker, GA
“I expect the market rally to continue over the next year for a number of reasons. First, the Federal Reserve will continue to do everything in its power to create fertile ground for the market to adhere to its upward trend. In addition, we will see dollars that had been sitting on the sideline last year continue getting into the game. Currently, the bond market is an unappealing place to put new money due to inflation fears. As a result, that leaves stocks as the most likely landing place for those dollars. The U.S.’s position in the global economy isn’t what it used to be, but all paths still lead to, or perhaps through, America. The ongoing global economic expansion will ultimately benefit our domestic markets. One cautionary note: Sustained upheaval in the oil-producing regions could eventually put the brakes on consumer spending. This would be a result of higher prices at the pump and the grocery store.”

J. Michael Salley Registered Principal
Salley Wealth Advisors Group L.L.C. | Summerville, SC
“Several important factors point to higher stock market valuations: We are fully entrenched in an economic recovery in the U.S. Gone are the sentiments and opinions about the possibility of a double-dip recession. The health of corporate America is very strong and will continue to improve. The majority of companies are reporting earnings above Wall Street’s estimates. I believe this trend of improving earnings will persist. Consumer confidence and sentiment are growing stronger. I recently read in a news article that this improvement is more evident in the African American community, based on several survey results. Lastly, there are trillions of dollars still sitting on the sidelines in a near-zero interest rate environment. These assets will soon be forced to move into equities as the picture continues to brighten.”