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Procuring stocks good, bonds bad investment in 2014: gurus

St. Louis Post-Dispatch/MCT--Stock investors cheered last year while bond investors groaned. Investment gurus generally expect to hear the same noises for 2014, although the laughing and moaning should be more subdued.

Expect a normal year for stocks, they say, with returns perhaps in the mid-to-high single digits. Expect a blah-to-bad year for bonds, especially the long-term variety, although the results won't be as dreary as the year gone by.

Those forecasts, of course, depend on the world going the way the smart people expect: moderate economic growth in the United States, low inflation and a modest rise in long-term interest rates — and without wars or another fiscal blowup in Washington.

This is “not an ideal environment, but one that should support further gains in stocks, and perhaps hints at a virtuous cycle of global growth that could be possible the stars align,” writes Russ Koesterich, global chief investment strategist at BlackRock.

Reality has a way of defying expectations. Few forecast a 30 percent gain for stocks this year. No one really knows what 2014 will bring.

Still, here are the best guesses from fonts of wisdom both in St. Louis and across the nation, along with some suggestions on how to play things this year.

The Economy

The consensus forecast among economists calls for gross domestic product growing 2.6 percent this year. That's moderate growth, and it's better than this last year's weak performance, expected to come in at 1.7 percent.

But some think it could surprise on the up side. Bill O'Grady, chief market strategist at Confluence Investment Management in Webster Groves, Missouri, said he thinks it could hit 3.6 percent, which would be good news for stocks.

He credits the return of grudging cooperation in Washington, where Republicans and Democrats reached a budget deal. The result eased the federal budget cuts, which he feels shaved about a percentage point from growth.

The government will hit its debt limit again, probably in March, but there seems little appetite for another investor-frightening cliffhanger in Washington.

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