There’s a Goldman Sachs note making the rounds on Wall Street Wednesday,saying stocks are offering buyers the opportunity of a lifetime.
But Chief market strategist, David Joy of Ameriprise Financial thinks Goldman is too late.
“It struck me that maybe they should have made that call a few months ago,” said Joy. “We’re up about 30 percent from the October lows.”
The question is whether the rally can be sustained. TheDow Jones Industrial Average is up 7.80 percent year to date. The S&P 500rose 8.64 percent from 52 weeks ago.
“I like equities, but I think it’s time to trim some of the profits we’ve been able to achieve over the last five months,” said Joy, advising investors not to exit equities completely, but to “just pull it back a little bit, back to sector neutrality.”
In Joy’s view, the rally in equities is based on a consumer-driven pickup in the U.S. economy, and the relative stability in the European banking system.
“Both things are well priced into market, so we’re going to have to see really good economic data in the U.S. to keep this rally going,” he said.
While waiting for the next round of economic data, some investors’ hands may be tied, given that bonds aren’t looking that attractive either.
Joy too is wary of bonds, but thinks the leveraged loan market is a good alternative.
“They offer relatively stable net asset values, credit quality is improving, along with an improving economy — and you can get a 5 percent dividend yield,” he said.
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Disclosure information for Joy and Ameriprise was not immediately available.