According to a recent media survey, Wall Street investors believe that as concerns continue to intensify this month, it's time to rule out some risks.
The media surveyed around 400 chief investment officers, stock strategists, portfolio managers, and media writers this week. When asked what kind of market risks they are willing to take for themselves and their clients, over three-quarters of respondents said that now is a very conservative time in the stock market.
Although investors are currently more cautious about the market, they still believe that the stock market is likely to rise in the next 12 months. About half of the respondents said that the S&P 500 index will rise by more than 5% in the next 12 months. 44% said it would be basically flat, while 5% said they expected a decline next year.
After this week's pullback, the S&P 500 index fell about 4.2% from the all-time high set in early September. Many market participants believe that the market is experiencing seasonal weakness.
“Market sentiment seems to have changed in favor of bears over the past few weeks,” said Brian Price, head of investment management at Commonwealth Financial Network. “After a relatively calm summer, market participants seem to want to reduce this year's gains.”
Some famous strategists insist on being bullish. Tom Lee, co-founder of Fundstrat, believes that the sharp decline in the stock market on Monday is a buying opportunity for investors.J.P. MorganStrategist Marko Kolanovic also called this sell-off excessive.
However, one of Wall Street's biggest bears --Morgan StanleyMike Wilson believes that as some economic indicators begin to deteriorate, there will be a 20% correction in the S&P 500 index. This is a “disruptive” scenario.
The survey results show that for investors who are concerned about yield, the best strategy right now is private credit. Only 2% of respondents believe that US Treasury bonds can provide attractive returns.
Government bonds are rapidly becoming one of the most disgusting asset classes, as their safe-haven appeal waned during the economic recovery period. “Old debt king” Bill Gross (Bill Gross) recently called US treasury bonds garbage, saying that the yield on 10-year treasury bonds over the next 12 months will be around 2%, which is equivalent to a price loss of 4%-5% and a negative return of 2.5%-3%.