U.S. vs. international stocks: While the preference here has gone back and forth in these surveys, this time it was more evenly balanced. 40% of the mavens said U.S. equities would win the performance race in the year ahead, while 35% looked for better returns beyond U.S. borders. The remainder looked for fairly even results. Among those looking for that sameness in U.S. and international performance is Mark Willoughby, senior vice president at Hilliard Lyons. "The strong dollar will be a headwind for U.S. multinationals, but the U.S. economy will still outperform other international economies," he says.
The 10-year Treasury yield: With the Federal Reserve expected to push short-term interest rates higher, we asked the experts where they see the yield on the 10-year Treasury about 12 months from now. On balance, our survey indicates that the yield should notch 2.75%, which would mark an increase of about 50 basis points, or half of 1%. "The Fed will raise rates only modestly, and the market still very much wants safe-haven assets like T-notes, so demand will keep yields quite low for some time," says Jeff Reeves, executive editor of InvestorPlace.com.
While the Federal Reserve dictates the level of its benchmark federal funds rate, investors drive the movement of the Treasury bond market. About three-fourths of our survey respondents expect the yield to range between 2% and 3%, with more than half of the Market Mavens seeing it moving up to 2.5%-2.99% over the next year.
What it all means for you
How should investors use the results of Bankrate's survey? Here's advice from Greg McBride, CFA, chief financial analyst at Bankrate.com:
- Rates will move up, the stock market will rise modestly and a bear market is still unlikely in the next year. Investors should prepare for the inevitable volatility as interest rates climb, but the likelihood of a positive stock market performance underscores the importance of hanging in there to get rewarded in the end.
- Diversify, as there is no firm opinion on whether U.S. or international markets are the better bet. Look for value, though, as the mavens say U.S. valuations look stretched.
- The higher long-term interest rates are unlikely to dent the housing market. In the context of an improving economy and rising stock market, people will buy homes, and they'll buy them regardless of whether mortgage rates are 4% or 4.5%.
Bankrate's 1st-quarter 2016 survey of stock market professionals was conducted online Dec. 3-11. Survey requests were emailed to potential respondents nationwide, and responses were submitted voluntarily via a website. Responding were: Barry Armstrong, president, Armstrong Advisory Group; Brian Belski, chief investment strategist, BMO Financial Group; Scott Bishop, director of financial planning, STA Wealth Management; Cary Carbonaro, author, "The Money Queen's Guide for Women Who Want to Build Wealth and Banish Fear"; Chuck Carlson, CEO, Horizon Investment Services; Marilyn Cohen, president, Envision Capital Management; Michael Farr, president and CEO, Farr, Miller & Washington; Kim Forrest, vice president and senior equity analyst, Fort Pitt Capital Group; Jeffrey A. Hirsch, editor, Stock Trader's Almanac; David Lafferty, chief market strategist, Natixis Global Asset Management; Charles Lieberman, managing partner and chief investment officer, Advisors Capital Management; W. Bradford McMillan, chief investment officer, Commonwealth Financial Network; Ken Moraif, senior adviser, Money Matters; Patrick J. O'Hare, chief market analyst, Briefing.com; Oliver Pursche, CEO, Bruderman Asset Management; Jeff Reeves, executive editor, InvestorPlace.com; Brian Rehling, co-head of global fixed income strategy, Wells Fargo Investment Institute; Don Taylor, Bankrate's Dr. Don, president and chief analyst, Emmett Advisers; Srinivas Thiruvadanthai, director of research, Jerome Levy Forecasting Center; Mark Willoughby, senior vice president, Hilliard Lyons .