Much like the middle child syndrome, midcap stocks often miss the eyes of asset allocators—to their disadvantage, said asset manager.

In perhaps past markets not as volatile as today’s, there are bulls and bears. Yet, today’s risk on, risk off environment just leaves investor’s “confused and perplexed,” according to Doug Cote, chief U.S market strategist at ING investment management.

Cote, a bull, commented that there are “only two things that drive the market; fundamentals and global risk. Right now, all the attention is on global risk, which is wrong. Fundamentals are the primary driver of the markets, and global risk is secondary—mainly when there’s been a breach in the markets.”

One example of a breach was the first-time ever downgrade of U.S. sovereign debt last August; others include the ongoing debt crises in Europe. Cote is bullish these global breaches will be maintained.

Instead, investors should turn to solid, accelerating corporate earnings. At least 70% of companies in the S&P have delivered earnings surprises, according to Cote. ING predicts corporate earnings will break record levels in 2012.

Within equities investing, midcap stocks have great hidden value, noted Cote, “tromping that of small and large cap stocks.

“They have the financial mass of a large cap company and the growth potential of a small cap company. Asset allocators who think that they have midcap covered by combining large cap and small cap are wrong,” he said.

While Cote advocated for well-performing companies in the emerging markets because many of them are experiencing a “traditional business cycle”, he believes that the U.S. is also experiencing a manufacturing boom, and a spur in consumer spending.

“President Obama is spending time in Hawaii to boost trade talks with Asia Pacific—Europe won’t be forgotten but we’ll see the global economy be driven by trade in other regions,” said Cote. “In the aggregate, U.S. retail sales are at their highest level; we’re forecasting that unemployment drops to 8% by the end of 2012.”

The firm also takes a stance that the U.S. will not go into a recession next year.

“As the bear strategists continue to believe that Armageddon, I wonder how can investors not be in the market when corporate earnings are this high,” Cote said.