Strategists see more gains for US stocks in 2015 as bonds look pricey

After three consecutive years of gains, the Wall Street Journal reports that Wall Street strategists forecast more gains for US stocks in 2015:

The U.S. central bank is expected to raise short-term interest rates this year for the first time in nearly a decade, but strategists still expect U.S. stocks to end the year with gains...

Wall Street strategists see the S&P 500 rising 8.2% this year, based on the average forecast of banks and money-management firms polled by research firm Birinyi Associates. Accelerating economic expansion in the U.S. and strong corporate-earnings growth will continue to power the rally, they say.

High valuations are a concern though.

To be sure, some strategists are concerned about the stock market’s relatively high valuation, saying that it leaves stocks vulnerable to a sharp pullback if earnings disappoint or if the economic outlook darkens.

Still, bonds, the traditional competitor for the investor’s money, is not looking cheap either. CNN reports on Sunday:

Stocks are pricey...

Bonds are the obvious alternative. There’s just one problem: If stocks look a little scary, bonds look worse.

“Every time you hear someone say we're at record low yields, what they're really saying is we're at record high bond prices,” says Burt White, chief investment officer of LPL Financial...

The advice for 2015 is to keep your portfolio overweight stocks and underweight bonds.