First, I don’t think the market has much further to fall, as long as the rates stabilize here (they appear to have begun to). Earnings so far are fine — not disastrous as Mr. Wilson of Morgan Stanley has predicted, and even his target for year end is 3900, so I think we should be comfortably above that at year end, i.e. at or above where we are right now.
That of course will not be true if there will be a credit event, but I think the chance is very small, and the government would step in as they did in March.
However I do think the magnificent 7 will likely underperform, as their valuations are stretched. Among them I’m most concerned about Apple, as it’s the most susceptible to consumers and also to geopolitical risks.
For the next two months I will be closely watching rates and looking for opportunities in fixed income, utilities, energy, and reits. But if any high quality names will be on sale I will try to grab some shares!
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