Four Of Bank Of America's Predictions For 2015: U.S Stocks Favored Over Bonds, Technology 'A Game Changer,' And More

A team of analysts at Bank of America published on Tuesday their top tips for investors to follow in 2015. “Under the Chinese zodiac, 2015 is the year of the sheep, an animal considered to be gentle and calm,” the analysts wrote in their report. “Our market forecasts fit this description in that we expect modest gains in both stocks and bonds, although undoubtedly with some bumps along the way.”

U.S. equities are preferred over bonds, according to the analysts. However, the analysts are not expecting the return differential to be as wide as has been seen over the past few years. The analysts add that equities have gone from “undervalued to fairly valued” and that expectations for rate hikes will likely keep bonds “in check” and put pressure on corporate spreads.

Technology is the analysts most favored sector given the group's higher cash pile and lower debt. The analysts state that technology companies are best positioned to benefit from a pickup in global growth. Investors have their choice of many themes within technology including cloud computing, social media and Internet of things, according to the analysts.

According to the analysts, oil prices have “weighed heavily” on energy stocks but this may have created opportunities for investors as valuations are “attractive.” The analysts are predicting a pickup in global oil demand, but does caution investors to be “prudent” and “selective.”

According to the analysts, Brazil and Russia will face “significant challengers” over the next few months and investors should focus investments towards India and increase allocation to China.