Markets Due for 10-15% 'Normal Correction': Strategist

Markets rose on Wednesday after a relatively tame report on consumer prices. Brett D’arcy, chief investment officer of CBIZ Wealth Management, and Deborah Danielson, founder of Danielson Financial Group, shared their market outlooks.

CNBC Market Edge
CNBC Market Edge   

“We have a good chance of hitting [S&P] 1250 to 1300 by the end of 2010,” Danielson told CNBC.

“I’ve been optimistically bullish, but since the 1930s—we’ve never had a 50 percent gain without more than a 5 percent correction; so in the near-term, for the second quarter next year, we’re due for about a 10 to 15 percent correction.”

Danielson said such a correction is “normal” and that investors should stay in the market until things average out.

D’arcy agreed that markets will be higher in 2010.

“Whenever you have such an accommodative Federal policy and fiscal policy, it always finds its way into the stock market,” he said. “We could even see stocks have one more push before 2009 year-end.”

D’arcy said interest rates will start rising in 2010 and advised investors to protect themselves when they get into the bond market.

“They should be looking at TIPS and they might want to have exposure to the U.S. dollar,” he said. “That’s a fairly contrarian play, but if we do get the Fed raising rates in 2010, then that could strengthen the dollar.”

D’arcy’s Overweights:

Technology

U.S. Dollar

TIPS

Health Care

D’arcy’s Areas to Avoid:

Gold

Energy

Cash

Long-dated fixed income products

Danielson Likes:

Municipal Bond

Preferred Stocks

"Good yielding dividend paying stocks"

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Disclosures:

No immediate information was available for Danielson or D’arcy.

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