The buoyancy of U.S. stocks in the wake of Donald Trump's U.S. presidential election victory was nothing but a "technical rally" and we would know soon whether equity markets can hold on to their gains, says the chairman of a Swiss financial advisory firm.
Beat Wittmann, partner and chairman at Porta Advisors, has recently reined in his long-held bullish views on equities, saying "staying defensive right now is the sensible thing to do."
According to Wittmann, cash may be a safer place to park assets for the time being, given the liquidity-fueled boom enjoyed by markets in recent years, combined with a lack of clarity over the possible implementation of a raft of populist policies proposed by Trump during the campaign.
While the Swiss investor says he is not worried over longer-term equity valuations and that he still believes stocks could be the asset class of choice over an extended horizon, he warns of a looming "paradigm shift".
In Wittmann's words,"After 30 years of lower inflation and interest rates, we are going to head for reflation. That will be a bumpy road and we'll see in the next few days and weeks how this U.S. administration is going to tie up on stimulating domestic demand and running foreign relationships."