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To 1,500 and beyond?

On January 30 (January 31 in Asia Pacific), Russell Investments’ Global Head of Investment Strategy Andrew Pease wrote a new blog post titled, “To 1,500 and beyond?” on the market’s recent run and the factors that could cause a reversal.

January 31, 2013

To 1,500 and beyond?
By Andrew Pease, Global Head of Investment Strategy

“It’s only the end of January and the market has already broken through our year-end S&P 500® Index target of 1,500. This doesn’t make us bearish, but it does make us cautious. We still expect equities to outperform bonds over the medium term, but shorter-term, it’s worth remembering that markets move in cycles of optimism and pessimism,” writes Russell’s Global Head of Investment Strategy Andrew Pease.

He continues, “As investors have pursued their real goals, they have been riding in a risk-on/risk-off yoyo for the past couple of years where some of the biggest mistakes may have been buying on optimism and selling on pessimism. And although we don’t think there are indicators on investors’ dashboards currently flashing ’SELL’ there are warning signs reminding us that the near-term fundamentals look fully priced into current equity market levels.”

Pease outlines 5 key factors in the market’s strong run so far in 2013, as well as four significant factors that could cause a reversal.

Ultimately, Pease writes that, “Our bottom line is that we think equity markets are fully valued and a lot of the upside risks have now been priced in. Markets move in cycles and there are enough warning signs to suggest investors are becoming overly optimistic. Longer-term, we expect equities to outperform bonds, but for now we are cautious about chasing the current rally. We want to avoid the traps of buying and selling on market sentiment in an ongoing risk-on/risk-off environment.”

To see the entire blog post, visit: Andrew Pease and Russell’s team of investment strategists are also available for interviews to provide more color around these perspectives.
# # #

Investing in capital markets involves risk, principal loss is possible. There is no guarantee that the stated outcomes will be met.

This document contains forecasting or other forward-looking information; the information is inherently uncertain and may be incorrect.

These views are subject to change at any time without notice based upon market or other conditions and are current as of the date at the top of the page. It is made available on an “as is” basis. Russell Investments does not make any warranty or representation regarding the information. While all material is deemed to be reliable, accuracy and completeness cannot be guaranteed.

This is not an offer, solicitation or recommendation to purchase any security or the services of any organization.

Nothing in this presentation is intended to constitute legal, tax, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. The contents of this presentation are intended for general information purposes only and should not be acted upon without obtaining specific legal, tax, and investment advice from a licensed professional concerning your own situation and any specific investment questions you may have.

Manufacturing Purchasing Managers’ Index (PMI) is used to measure the level of diffusion based on surveyed purchasing managers in the manufacturing industry.

VIX is a trademarked ticker symbol for the Chicago Board Options Exchange Market Volatility Index, a popular measure of the implied volatility of S&P 500 Index options. It represents one measure of the market's expectation of stock market volatility over the next 30 day period.
The S&P 500® Index is an index of 500 stocks chosen for market size, liquidity and industry grouping, among other factors. The S&P 500® Index is designed to be a leading indicator of U.S. equities and is meant to reflect the risk/return characteristics of the large cap universe.

Companies included in the index are selected by the S&P Index Committee, a team of analysts and economists at Standard & Poor's. The S&P 500® is a market value weighted index - each stock's weight is proportionate to its market value.

Indexes returns represent past performance, are not a guarantee of future performance, and are not indicative of any specific investment.
Russell Investment Group, a Washington USA corporation, operates through subsidiaries worldwide, including Russell Investments, and is a subsidiary of The Northwestern Mutual Life Insurance Company.

Copyright © Russell Investments 2013. All rights reserved.

Corp- 8236 First Used: January 2013

Founded in 1936, Russell Investments is a global asset manager that serves institutional investors, financial advisers and individuals with multi-asset solutions in more than 40 countries.

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