Why Stocks May Be Set for Fourth-Quarter Gains
Stocks just enjoyed their best September in 71 years -- meaning a little profit-taking is to be expected -- and October is a historically volatile month in any case. "The fourth quarter looks very bright me," Gwon says. "The signs are there for a recovery in the economy. But the most important thing is you have a lot of cash on the sidelines."
Corporate balance sheets are at record levels, bulging with nearly $2 trillion in cash. That bodes well for more market-boosting deal activity and share buybacks. Meanwhile, bond mutual funds are enjoying record inflows, largely at the expense of domestic stock funds. At some point, some of those fixed-income investors are going to grow weary of 1% and 2% returns and move back into equities, Gwon says.
For more on Gwon's outlook from the floor of the New York Stock Exchange (NYX), see the video below.