UBS said the stock market rally could continue into 2025, but investors should consider preparing for the day when the rally goes too far. Global equity strategist Andrew Garthwaite said in a note to clients that his team was “cautiously optimistic” about stocks in 2025 but warned of seven “prerequisites” for a bubble Six of them already have it. Boxes that have been checked for the presence of a bubble include profits under stress and losses in market breadth. The remaining category is loose monetary policy, and markets could take a further step toward that goal on Wednesday if the Fed lowers interest rates by another quarter of a percentage point, as widely expected. Garthwaite said that if the market does turn into a bubble, investors should try to stick to stocks with more durable growth stories. “In the unlikely event that there is a bubble that we are not in yet (35% chance), we would prefer to invest in different areas this time, but you can justify valuations without a bubble,” including artificial intelligence and electrification, the note said. Said above. Among the stocks UBS identifies as hedges are those that have rallied strongly during the artificial intelligence boom, such as Taiwan Semiconductor Manufacturing Co., Meta Platforms and power company Vistra Corp. Vistra shares are up more than 200% in 2024. It’s expensive, but identifying stocks with long-term growth stories can be helpful for a portfolio to hold if the market bubble bursts and is relatively well positioned to rise. “The problem with the bubble theory is that when the bubble bursts, investors tend to lose 80% of their money (as we saw in Japan (Internet) or the Nifty 50 after late 1989). So, we Yes, UBS reports that the likelihood of a bubble is only 35%, but that’s 10% higher than before.
UBS said almost all the prerequisites for a market bubble have been met. How to hedge | Real Time Headlines
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