Page 22 - Investment Advisor - Jan/Feb 2021

PORTFOLIO PERSPECTIVES

By Bernice Napach and Jeff Berman

Bob Doll’s 10 Predictions for 2021

Stocks will keep rising despite having “borrowed” some of 2020’s returns,
Nuveen’s chief equity strategist says. Schwab’s Sonders gives her outlook, too.

uveen’s chief equity strategist
and senior portfolio manager
NBob Doll is relatively optimistic
in his top 10 predictions for investors
this year.
Although he admits, like many strate-
gists, that “2020 has already ‘borrowed’
some of 2021’s returns,” Doll sees room
for more gains in the year ahead.
“Stocks should get a boost from an
economic recovery combined with con-
tinued hyper-accommodative monetary
policy, fiscal support for households and
businesses and negative real returns on
government bonds,” writes Doll.
He refers to 2020 as “a year we all
wish we could forget,” and adds: “The
unprecedented coronavirus pandemic
changed everything.”
But stocks staged an unexpected
strong rally after plummeting in March,
ending the year with a gain of slightly
more than 16%.
Doll expects stocks will set another
record high in 2021, marking a 12th con-
secutive year of gains; but they’ll also lag 1. U.S. real GDP increases at its fastest 6. Value, small and non-U.S. stocks
strong earnings growth, with small-cap pace in 20 years. (especially those in emerging mar-
value and non-U.S. equities outperform- 2. Inflation approaches 2% as the kets), big and U.S. stocks.
ing large-cap, growth and U.S. stocks. 10-year U.S. Treasury yield reach- 7. Health care and financials outper-
As he noted in his mid-April revised es 1.5% (10-year yields are around form energy and utilities.
2020 outlook, Doll expects health care 0.9% currently.) 8. U.S. federal debt rises to more than
and financials to outperform energy and 3. The U.S. dollar sinks to a five-year 100% of GDP on its way to an all-
utilities. Financials failed to do that last low. (The U.S. dollar index, DXY, time high.
year, when utilities outperformed finan- fell 7% in 2020.) 9. The U.S./China cold war continues,
cials and energy equities. 4. Stocks reach a new high for the 12th but the conversation becomes qui-
Doll says the biggest risk for finan- consecutive year, but fail to keep eter and more multilateral.
cial markets in 2021 will be a greater- pace with strong earnings growth. 10. Despite polarization, President
than-expected increase in inflation and 5. Stocks outperform cash, but cash Biden, Sen. McConnell and
interest rates. He anticipates that stocks outperforms Treasury bonds for the moderate forces achieve some
will still advance, but will underperform first time since 2013. Doll expects compromise legislation. (Both
earnings growth because of increases in U,.S. government bonds will con- Democrats won in Georgia
inflation and interest rates. tinue to have negative yields, after Senate race giving the Democrats
Here are those predictions; adjusting for inflation. the majority.)

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