Wary optimism, not great expectations, pinpoints the outlook for stocks in 2015,top equity strategists told our sister site, ThinkAdvisor, ininterviews earlier this month.

Next year -- the third in the U.S. Presidential Election-YearCycle and historically a strong one for stocks -- is pegged as acontinuation of the long bull market, though a handful ofsignificant emerging shifts could make the ride less thansmooth.

“There are lots of big, pivotal changes in terms of thedirection of various indicators,” says Savita Subramanian, head ofU.S. equity strategy at Bank of America Merrill Lynch. “We have thefirst Fed tightening in nine years, OPEC’s behavior thateffectively signaled they’re playing a long game of not cutting oilproduction -- arguably, to stem the U.S. shale story; and astronger U.S. dollar.”

Against the background of what they anticipate to be an extendedpickup in the U.S. economic recovery, the experts are forecasting awide variance in total return, ranging from a low of minus-5percent, predicted by one strategist, up to 12 percent or slightlyhigher by another.

Large cap stocks are the place to be next year, all agree; andon the heels of the S&P 500’s record high set this year, in2015 the index could rise to 2200, they predict.

Upcoming meaningful changescall for scuttling what has become a significant trend toshort-term-focus investing; instead, the strategists urge a moreadvantageous long-term view.

Here are highlights from conversations with John Buckingham,CIO, Al Frank Asset Management; Ben Inker, co-head of GMO’s assetallocation team; Savita Subramanian; and Scott Wren, senior equitystrategist, Wells Fargo Advisors.

1. Overall equity outlook

John Buckingham: “The average stock will dobetter than the average index. As soldiers have done better thanthe generals over the long run, I expect a reversion to the mean.Total return: 10 percent to 12 percent, or even a littlehigher.”

Scott Wren: “Bullish, but not wildly bullish.Total return: 6 percent to 10 percent. Not bad.”

Savita Subramanian: “A good year, though maybenot as great as the last three; we’re at the end ofliquidity-driven market returns. But this year could be one of thebest stock-picking hunting grounds in a while if you have along-term time horizon and are able to weather a little volatility.Total return: 8 percent; a decent amount of upside from here.”

Ben Inker: “From a valuation perspective, it’shard to be excited about much, with the possible exception ofemerging markets. U.S. stocks look pretty expensive. A decent yeareconomically isn’t enough to justify much return out of them. Totalreturn: somewhere between minus-5 percent to 5 percent. [I’m not]pounding the table that next year will be a blood bath or that itwill be another 2013 either, where the market zooms higher.”

2. Interest rates

Wren: “Once the Fed gets going, the roadis going to be bumpy, though we probably won’t see much of thattill 2016.”

Subramanian: “A modest rise, with the Fedtightening in September. Rates are going from low to less low, soyield will be an important part of the investor’s decision.”

Buckingham: “The Fed and central bankersworldwide are likely to remain accommodative for longer than peoplehad thought -- rates could actually go lower depending on theeconomy.”

Inker: “Short rates have to start going up– unless the economy takes a turn for the worse.”

3. Effect of QE's end

Subramanian: “Last October we came offthe IV. A little of the volatility we’re seeing now may be drivenby that. The Fed’s tightening will be a big break from thehyper-easy monetary policy.”

Wren: “There’s a lot of money sloshing aroundin the system. But you can’t put a gun to somebody’s head: ‘We wantyou to borrow money and to spend it!’”

4. Earnings

Buckingham: “Healthy -- the caveat beingthe global economic climate.”

Inker: “Earnings will have a hard timegrowing. We have one significant [headwind], the strength of thedollar, which will particularly hit the large-cap space.”

Wren: “Growth of 6 percent or 7 percent.Good, not great.”

Subramanian: “Five percent growth, adowntick from this year. The hit to earnings might be lower-costoil than was originally anticipated – a negative to S&P 500earnings.”

5. Volatility

Wren: “Any volatility will come from badprint on Chinese GDP or bad European data or big supplydisruptions, like Saudi Arabia cuts their supply in half.”

Subramanian: “The transition from athree-decades-long regime of falling interest rates could beaccompanied by pronounced volatility.”

6. GDP

Inker: “Growth of 2 percent or 2-1/4percent should be enough to cause unemployment to fall from 5.8percent to 5 percent. Growth may not be a lot better than okay. Ifwages go up as a percent of GDP, profits will go down as apercentage.”

Subramanian: A broad economic recoverywith accelerated U.S. growth at 3.3 percent. Better trends inconsumption and employment, continued upside in housing, betterinvestments stemming from businesses.”

Buckingham: “A reasonable guess is 2.5 percentto 3 percent. Much will depend on the health of the world; the U.S.isn’t an island.”

Wren: “Our GDP number is 2.8 percent. If Ithought it was going to be 3.5 percent or 4 percent, I’d be a lotmore fired up about small caps.”

7. Likelihood of a correction

Buckingham: “It wouldn’t surprise me if we hada 10 percent correction at some point.”

Inker: “If the standard is two standarddeviations above historical pricing, the U.S. is looking reasonablyclose to a bubble. The rest of the world looks significantlyfarther [along].”

Subramanian: “A re-run of the October2014 pullback would be an opportunity to buy. But anything beyond a10 percent or 15 percent drop is unlikely given that there’s stilla lot of cash sitting on the sidelines; a sell-off could driveinvestors into the market.”

8. Large cap vs. small cap

Wren: “Money will continue to flow tolarge caps. As opposed to small caps, they have many products, lotsof international exposure and can easily obtain credit. Small capsare one-trick ponies in terms of products.”

Inker: “If forced to be in the U.S., we’dpick large caps. Small cap stocks are priced about as high as theyhave ever been. It’s hard to see how they’re going to grow theirvaluation. They’re maybe the closest thing to a bubble -- thoughwe’re not seeing that much excitement about them.”

Subramanian: “Large caps are a greatplace to be. Rising interest rates could be a very negativestory for small caps, which are much more credit sensitive. We’recalling for rising credit spreads next year – and spread-wideningtends to hurt small caps.”

9. Favored sectors

Buckingham: “Consumer discretionary,energy, industrials, materials, information technology.”

Wren: “Technology, industrials, consumerdiscretionary -- sectors sensitive to a continuation of therecovery. A lot of emerging markets are very dependent on demandfrom the U.S. and Europe, and that isn’t quite there.”

Inker: “One of the nice things about afair bit of the emerging world is that it’s priced for some reallybad things. Some are going to occur, but all of them probably won’thappen. So owning a diversified basket of emerging companies pricedfor really bad stuff should work out okay.”

Subramanian: “Technology and industrials.In both, we like the larger, older, less exciting stories -- thesemiconductor and big software companies, not smaller social mediastocks or higher growth companies. Our fear with international isthat there might be more pain to be felt in Europe; China looksfairly uncertain, and we’re a little less optimistic about emergingmarkets.”

10. Energy sector

Wren: “We’re looking for oil to be around$90 a barrel at year-end 2015. If so, we’ll get more interested inenergy – but not anytime in the near future.”

Subramanian: “Energy is screening as avalue trap in our quantitative model; that is, prices are fallingfaster than analysts are downgrading expectations. Given theindiscriminate selling, it could be a very good opportunity forstock selection. But as an overall sector play, it isn’t time tojump in. We’re forecasting that oil could dip as low as $50on WTI [West Texas Intermediate] in the near term, which is not agreat scenario to be in energy.”

Inker: “By the end of 2015, the oil pricewill be higher than today. It would make a lot more sense in the$75 range than in the $61 range.”

Buckingham: “The stampede out of energystocks is worse than what we saw in 1929 and in financials in 2008.I own 9 percent energy. We like Ensco.”

11. Advice: Focus on long-term investing

Subramanian: “Investors have been veryshort-term focused. That’s driven a much more reactive investmentlandscape. We’ve seen indiscriminate selling of certain themes,where they might have had a lot more [positive things] going onthan [merely] exposure and some negative risk factors. Maybe thereal contrarian way to invest is taking a long view with a holdingperiod that isn’t minutes but years!”

Inker: “The macro and political stuffdissipates, and you’re left with: What is this company actuallyworth? Fundamentals matter most. In the long run, price doesn’tmatter. It’s the cash flows you get out of the assets. As your timehorizon lengthens, what happens to those cash flows becomes ofparamount importance.”

Buckingham: “There will always be somenew bogeyman. Try not to overreact to the short term. You need tofocus on the long term and not even open up your statements!”

See also:

The underwriting forecast for 2015: NAILBA33

2015 outlook: Why financial wellness is the nextbig trend

Annuity trends: 2015 andbeyond