10 Investments to Ride Market Rally to New All-Time Highs Early Next Year, Says 6 Market Strategists

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Market strategists suggest that the remarkable stock market rally of the last three months might not be over yet. While some investors believe that this market rally isn’t trustworthy, others are confident that the path of least resistance for US stocks is higher. Economic data along with lower inflation has been a tailwind as it allowed the Federal Reserve to pause its interest rate hikes that were hurting banks. The S&P 500 is up 15% since March 13. This could mean that there is still more room for stocks to go up, provided that the investors are willing to take the risk. The doubt about stocks currently is a tell-tale sign that there isn’t too much greed in markets as investor positioning is still conservative. Investors currently have plenty of money on the sidelines to invest. The market’s momentum lures investors back from the sidelines, prompting a broader market breadth and could be sustainable provided it is less reliant on just a handful of outstanding stocks.

Jason Draho, a colleague of Bernstein’s and the head of asset allocation Americas at UBS Global Wealth Management, agreed and said that once economic data held up, investors capitulated by re-adding exposure to stocks and not just market leaders. Through the first five months of the year, just seven stocks accounted for all of the S&P 500’s year-to-date gains. However, the weak market breadth has gotten much broader in June, which has helped boost investors’ confidence in the market.

Although there will be lingering risks like a hawkish US central bank and a weaker economy, investors should now be wary of a slight pullback in the near term. That said, strategists are confident that a big market crash isn’t on the horizon. In fact, some bulls believe the opposite to be true.

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Our work shows that strong starts to calendar years of this magnitude rarely lead to declines in the final seven months with above-average returns the much more likely scenario, wrote Brian Belski, the chief investment strategist at BMO Capital Markets, in a June 15 note.

Bernstein and Draho of UBS Wealth Management each highlighted fixed income, mainly higher quality debt, as attractive. Bernstein said that bond yields are near 15-year highs, which offer those who lock in those rates a sound way to diversify their portfolios. He likes high-quality corporate bonds for retirement accounts and US Treasuries as an alternative to holding cash. Within equities, Sheldon believes that small- and mid-cap companies are more attractive since they’ve underperformed their larger counterparts.

Keller said that investors can brace for a correction by buying stocks in the consumer staples and utilities sectors. They’ll only work if markets struggle, but the strategist believes it’s a solid bet to make.

Frequently Asked Questions (FAQs) Related to the Above News

Is the remarkable stock market rally of the last three months over?

Market strategists suggest that the rally may not be over yet and there might be more room for stocks to go up, provided that investors are willing to take the risk.

Why do some investors doubt the market rally currently?

Some investors are still doubtful about the market rally, which means there isn't too much greed in markets as investor positioning remains conservative.

Are there opportunities for investors to invest their money in the market now?

Yes, investors currently have plenty of money on the sidelines to invest, and the market's momentum may lure them back from the sidelines prompting a broader market breadth.

What type of bonds are attractive for investors now?

Bernstein highlights fixed income, primarily higher quality debt, as attractive. He likes high-quality corporate bonds for retirement accounts and US Treasuries as an alternative to holding cash.

What type of equities are more attractive for investors now?

Sheldon believes that small- and mid-cap companies are more attractive since they've underperformed their larger counterparts.

What strategy does Keller suggest for investors to brace for a correction?

Keller suggests that investors can brace for a correction by buying stocks in the consumer staples and utilities sectors.

Please note that the FAQs provided on this page are based on the news article published. While we strive to provide accurate and up-to-date information, it is always recommended to consult relevant authorities or professionals before making any decisions or taking action based on the FAQs or the news article.

Advait Gupta
Advait Gupta
Advait is our expert writer and manager for the Artificial Intelligence category. His passion for AI research and its advancements drives him to deliver in-depth articles that explore the frontiers of this rapidly evolving field. Advait's articles delve into the latest breakthroughs, trends, and ethical considerations, keeping readers at the forefront of AI knowledge.

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