Business is still booming, which suggests another modest interest-rate hike, sometime during the next six to nine months, says economist Allen Sinai, president of Primark Decision Economics in New York. Bonds a way Bond-fund managers have been shouting and waving their hands, trying to attract investors. She thinks that total returns could reach 15 percent to 18 percent next year. Still, it's hard to interest investors in bonds once they've sampled the thrills of growth stocks. Jeremy Siegel, a finance professor at the Wharton School in Philadelphia, sees no end to their dominance.
Growth stocks have high and rising earnings and sell for high prices, relative to their earnings.
In the 1970s and early 1980s, value stocks trounced growth. Then growth took over and never looked back. Growth investors go wrong, however, when they try to pick a handful of winners, Siegel says. You might wind up with too much Coke and too little Lucent. Buy a well-diversified mutual fund, Siegel says.