Merrill’s Mullin: 2013 May Be the Year of the ‘Great Rotation’

First, Mullin said she’s having conversations around investments in fixed income and bonds. Mullin believes that the markets are probably at the end of a 30-year bull market in bonds, and while fixed income is an important part of any portfolio, she is evaluating her clients’ level of exposure. Mullin said she’s looking at equity-dividend strategies instead of those that are overweight in bonds.

Second, Mullin advises clients take a second look at Europe. “There are big multinational companies domiciled in Europe and doing well,” she said. “The majority of their sales are global and not based in Europe. The stocks have been beaten down, and there may be some good opportunities.”

Mullin also suggests looking at emerging markets. Consumers there are looking to open up their wallets to enjoy more goods and services. “If you look at the demographic, that is where the growth will come from: Emerging market consumers, as they move up to middle class, want all the things that Americans have. They’re an untapped market,” she said.

Investors may still be cautious about jumping back into the markets after several years of volatility. Mullin said that as investors start to dip their toes back in the investing waters, she’s suggesting that they consider a strategy known as “dollar cost averaging” into their portfolios.

Dollar Cost Averaging (DCA), or a “constant dollar plan,” is a technique in which an investor purchases a fixed dollar amount of a particular investment on a regular schedule, regardless of the share price. More shares are bought when prices are low, and fewer when prices are high. The goal of the strategy is to reduce the risk of investing a large amount in a single investment at the wrong time since eventually, the average cost per share of the security will become smaller and smaller.

“There is a long-term plan opportunity to incorporate dollar cost averaging in our strategies,” Mullin said. “We’re optimistic and see improving growth.”