Stock mutual fund managers still optimistic for 2013, despite fiscal cliff worries

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Continued: Stock mutual fund managers still optimistic for 2013, despite fiscal cliff worries

Article by: MARK JEWELL , Associated Press
Last update: December 27, 2012 - 4:45 PM

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John Buckingham, manager of two 3-star funds, Al Frank (VALUX) and Al Frank Dividend Value (VALDX), is optimistic about dividend-paying stocks, citing the abundant cash reserves that many companies have now.

He maintains that outlook despite the likelihood that tax rates on dividend income will rise sharply starting in January for investors in the top tax brackets. That's the outcome if no deal is reached in the fiscal cliff talks by Monday. A dividend tax increase could also be included in any agreement that's reached.

"Clearly, what's going to be more important to the market than higher dividend taxes is the health of corporate profits, and the economy," Buckingham says.

Investors clearly remain nervous, as withdrawals from stock funds have consistently exceeded deposits this year. Yet Buckingham sees that as an opportunity, concluding that investors' fears are a key reason why stocks are priced inexpensively. He wouldn't be surprised to see the market return 9 to 12 percent next year.

"The pendulum will always swing between fear and greed," he says. "And we've swung way too far toward fear in recent years."

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Questions? E-mail investorinsight(at)ap.org

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