Money manager isn't buying on dips, says conditions ‘not ripe for a bull market’

  • The bull market underway in equities is like a “fine wine” — it’s great, but it isn’t getting any better, according to American Century Investments' Richard Weiss.
  • That’s why right now he’s not buying on the dips.
  • “Decelerating economic growth, equity valuations fair at best, rising interest rates, the specter of inflation — this is not a recipe for a bull market,” he says.

The bull market underway in equities is like a “fine wine” — it’s great, but it isn’t getting any better, according to Richard Weiss, chief investment officer of multiasset strategies at American Century Investments.

That’s why right now he’s not buying on the dips.

“Decelerating economic growth, equity valuations fair at best, rising interest rates, the specter of inflation — this is not a recipe for a bull market,” he told CNBC’s “Power Lunch” on Thursday.

In fact, his firm, which has $169 billion in assets under management, is neutral to underweight in stocks, particularly for those investors near or in retirement. Within the equity portfolio, he said he’ll likely be rotating from growth stocks to consumer staples and other defensive sectors.

Market slowdown
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While Weiss isn’t alone in getting defensive as the nine-year bull market marches on, others are more positive.

On Wednesday, Citigroup’s equity strategy team advised clients to continue to buy. They wrote in a note to clients that Citi’s bear market checklist that monitors symptoms of a downturn in stocks suggests that only three of 18 “red flags” have been raised. The strategists still see a 9 percent climb in global equities over the next 12 months.

“It is still too early to call the end of this bull market,” the Citi researchers said. “So keep buying the dips. Late cycle bull markets typically narrow into growth and momentum trades. This should favor U.S. equities and information technology stocks.”

Margie Patel, senior portfolio manager at Wells Fargo Asset Management, is also confident about the equity market and called recent trade war fears a “minor issue.”

She believes people are underinvested in the market right now, looking for a big correction. But she doesn’t think that correction is coming.

“People are underestimating the very strong sustainable growth here in the U.S. economy and a lot of the countries worldwide,” she told “Power Lunch.”

She anticipates a “lull” in the stock market with a “sideways up and down choppy trading range” before it has a “strong finish” for the rest of the year into 2019 thanks to strong corporate earnings.

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