Equities To Buy On A Pullback

By Bear Fight:As the 10-year Treasury plumbs a new low yield as investors are panicking over the European debt crisis and a slowdown in the U.S., I think that long-term investors with a strong stomach should build their buy list. Many large capitalization equities yield significantly more than the 10-year Treasury and have embedded dividend growth from earnings per share growth. The panic driven 10-year Treasury will not provide investors with earnings growth.

By Bear Fight:Telecom equities provide investors with strong cash flow due to their stable recurring business models. Commercial and residential subscribers sign up for annual or long-term contracts, providing strong revenue visibility.

By Bear Fight:Investors have been treated to strong equity market returns in the first quarter of 2012. According to the Stock Trader's Almanac, history has indicated that U.S. markets do better in the six-month period from November through April.

  The market rally of the past few months has propelled the Dow Jones Industrial Average to a new all-time high and has put the S&P 500 Index of within striking distance of its previous all-time high reached in October 2007.   In a note this week, Credit Suisse’s Private Bank Investment Committee said that ”plentiful liquidity, attractive valuations and low inflation” are helping fuel the current rally and “make equities among our best options in an asset allocation context.”  

By Bear Fight: << Return to Part I

By Bear Fight:Over the last 12 years equity markets have made very little progress. While policy makers are concerned about stagnating employment growth and a "lost decade" from the U.S. economy, investors have already experienced their own lost decade in U.S. equities. While the 2000s ended with the bursting of the tech bubble and an overbought stock market, the last 10 years of no price appreciation have helped valuation. The Cult of Bonds

By Bear Fight:The economy and world markets will continue to be hamstrung by significant debt loads that took decades to build. The de-leveraging process that started in 2008 is proving to be long and painful. Central bankers all over the globe are doing their part to ease debt loads by keeping interest rates low. These low rates are hurting savers and retirees by forcing them into risk assets, including stocks and high yield bonds.

The S&P 500 has been grinding steadily higher in 2013 as no real bearish catalyst has yet given investors reason enough to sell stocks. For weeks, while Wall Street strategists have mused that this may be the beginning of a "Great Rotation" out of bonds and into equities, they've also warned that a correction is near.