Record market highs, strong economic data, and positive fundamentals typically make for a smooth bull-ride. But don't let tranquil markets lull you, some money managers are warning.
In the earnings season currently underway, over two-thirds of companies have exceeded consensus earnings estimates. S&P 500 earnings are now forecast at 5 percent growth for the fourth quarter versus last year, up from the 4.6 percent estimate as of last week, says Bill Stone, chief investment strategist at PNC Asset Management Group.
Guarding against policy and political volatility is essential, says Sameer Samana, Wells Fargo's global quantitative strategist. Samana is currently neutral on stocks with an "overweight" rating on bonds.
Among stocks, Samana likes cyclicals — shares of companies whose stock prices are typically steered by the health of the overall economy. His portfolio skews toward the industrial, discretionary, financial and healthcare sectors — all sectors seen as gaining from the implementation of President Trump's business policies.