"Sell Bonds, Buy Stocks... Watch Inflation Warning Closely"

[Asia Economy Reporter Yujin Cho] Ned David Research predicted that this year's stock market bull run will yield double-digit returns, advising to sell bonds and buy stocks with the proceeds.

On the 21st (local time), Ned David told Business Insider (BI), "The earnings growth of global companies favors stocks over bonds, and momentum indicators are also showing bullish signals for stocks," providing this analysis.

Ned David added, "The likelihood that the U.S. Congress will pass President Joe Biden's $1.9 trillion stimulus package increases the possibility of additional liquidity supply," and "this supports the outlook for double-digit stock returns and raises expectations for economic recovery."

Amid a long-term bull market, the Standard & Poor's (S&P) 500 index has risen for 227 days without correction, continuing the stock rally. Ned David also interpreted, "Despite the bullish stock market outlook, considering the market capitalization to GDP ratio, recent valuations have expanded, which means the bull market is maturing."

However, inflation was emphasized as another indicator investors need to watch closely. Ned David forecasted, "If reflation overheats and central banks and bond market vigilantes (investors who may massively sell government bonds due to inflation concerns, causing bond prices to fall) step in, the long-term bull potential could be at risk."