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How well are stock investors positioned for downside? Better than it appears...

Jun 17, 2019

We Crunch the Numbers, You Make the Trade.We Crunch the Numbers, You Make the Trade.
We Crunch the Numbers, You Make the Trade.We Crunch the Numbers, You Make the Trade.

 

  • Stocks have moved higher this year despite a litany of concerns, but if one looks closer, a Bloomberg article highlights, investors seem to be well positioned for downside
  • Investors, the report notes, are well positioned for bad news, having bid up defensive or quality names as the market rose
  • This news counters the line that retail investors have been neglecting the signs from the bond market 
  • Amid this positioning, the discount of value to growth has risen to the greatest it has been since 2001
  • The Russell 2000 index is trading at the largest discount to the Russell 2000 in well over a decade
  • Bloomberg includes a quote from Brian Jacobsen of Well Fargo who commented, “People are bracing for a bear market.”
  • Investors, he added, have been favoring companies that can weather a down market

Other US Macro Posts

Builders Getting Bummed Out: Home Builders Sentiment unexpectedly drops in June, defying expectations for improvement

Not so fast, Mr Powell.....Strong data on US economy dashes hopes for rate cut from the Fed

How Ya Feelin'? Consumer Sentiment drops more than expected in June, tariffs on the mind 

  • With a valuation discount so great, Morgan Stanley warned today of a “great unwind” of these safer shares if their performance starts to lag
  • Momentum shares have also seen recent outperformance, Morgan notes, outperforming value shares by 17% in May
  • Stock investors are trying to position for 2 outcomes, the articles notes—being long stocks so as to not miss upside in the market while preferring an overall more defensive position, fearing US-China trade tensions
  • In the face of this more defensive positioning, few if any money managers are calling for an end to the bull market
  • The present US bull market is the longest ever on record, with the S&P 500 not having fallen by over 20% since March 2009, the longest in its 90 year history
     

 

 

 

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Global Top Stock IdeasTOP LONG & TOP SHORT STOCK IDEAS FOR GLOBAL MARKETSMONTHLY TOP IDEAS FROM OUR MULTI-FACTOR QUANTITATIVE MODELS