Scott Minerd, Global CIO of Guggenheim Partners, is bullish long-term on US equities, however, he does not believe that now is a favourable entry-point. He cites a number of indicators as well as near-term macro challenges which suggest a pause in the run-up of US equities. Historically, markets that have rallied as aggressively as US equities since November 2012 (an increase of 25%), pause or correct to digest their advances. Earnings among US companies have also flattened and could turn negative within 2-3 quarters, meaning further upside can only come from multiple expansion. Of the 19% rise in stocks year-to-date, 16% has come from multiple expansion. Finally, it appears GDP growth is entering a soft patch which is likely to put downward pressure on stock prices. According to Minerd, investors with large unrealized gains should consider booking some of those gains and reducing their equity exposure. (VIEW LINK)
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