2013/08/09

JPMORGAN'S TOM LEE: I Had Lunch With 80 Wealth Advisers, And What They Told Me Has Me More Bullish

JP Morgan's Tom Lee
In his latest note to clients, JPMorgan chief U.S. equity strategist Tom Lee – who has the highest year-end S&P 500 price target on Wall Street – passes along a few interesting anecdotes.
Lee writes:
We continue to find sentiment readings (positive, per AAII) to be incongruent with the feedback we get from hedge funds, asset managers and individual investors. With August/September being seasonally weak periods, hedge funds seem to be looking for short ideas and long-only managers simply do not feel comfortable putting incremental cash to work at new market highs. A final but interesting anecdote, at a large group lunch earlier this week with 80 or so wealth advisors, we heard how most individual investors are spectators in the equity markets, having a greater share of their assets in bonds, particularly munis – apparently, stocks are for “other people” (who want to take the risk).
In our view, sentiment tends to have contrarian implications – that is, if investors are generally (anecdotally) cautious, this suggests that a lot of the negatives are already reflected in current prices. Consequently, as much as investors are concerned about a potential pullback (which we acknowledge is possible), the current caution suggests better implied risk/reward.
As for strategy, Lee says, "We continue to like Cyclicals here, primarily because of the anticipated acceleration in [second half] growth for U.S. and Euro area, as evidenced by the upturn in economic momentum indicators." 


Read more: http://www.businessinsider.com/tom-lee-retail-investors-are-spectating-2013-8#ixzz2bTulR6kw

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