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BofA Merrill Lynch Global Research – A Research Investment Committee Report – Tuesday, 12 February 2013

The roadmap

Following the recent market rally, one of the biggest questions we get from clients is, should we buy equities today, or wait for a pullback? The recent series of strong economic and corporate earnings data confirm that the underlying macro fundamentals are improving, and there’s no doubt that secular positioning argues that investors should favor equities over bonds. But from a short-term perspective, we believe that sentiment has come a bit too far, a bit too fast. Equity inflows have picked up quite dramatically over the past 11 weeks, and risk appetite has surged. This may make stocks a little vulnerable to a healthy, late-winter pullback. We recommend that investors use any weakness as a buying opportunity and stay steadfast in our conviction that equities will be 2013′s best performing asset class.

 

Read the full report here.