Poll: Financial advisors expect correction for U.S. stocks in 2014
As they work with their clients to develop 2014 investment strategies, a group of financial advisors polled by CNBC said that they were cautiously optimistic about stock value growth in the next year. The professionals who participated in the poll are members of the CNBC Digital Financial Advisor Council, a 20-member group of financial executives.
When the group was asked if they expected a significant correction for stocks in the next year, 40 percent said yes, speculating that it would be in the 10 percent range. Another fifth of those surveyed estimated a correction of 20 percent or more.
To benefit the most from this market change, the financial advisors said that equities would take up the largest proportion of their client's portfolios. The asset classes of bonds and alternative investments were listed next in importance.
While the council members had differing ideas about the exact asset balance of a portfolio, they all stressed that a client's ability to handle risk should determine how an advisor invests their money.
"A client's portfolio allocation should be driven by the amount of risk they can take financially and psychologically," said Carolyn McClanahan, council member and founder of Life Planning Partners, to CNBC. "The market is relatively expensive compared to the past. Will it become more expensive [which means markets go up more], or will it correct to historical means?"
McClanahan also emphasized that frequent monitoring is the key to successful trading. She said that institutional and individual investors should regularly rebalance their portfolios, maintaining a healthy mixture of conservative and risk-prone assets.
With SmartStops' investment risk alert software, you'll be able to actively manage your portfolio. Explore our website to learn more.