The US noted that investors’ excessive concentration on the most successful stocks increases the risk of a sudden correction in the stock market. writes about this Bloomberg Citing a statement from JPMorgan’s senior global equity strategist Dubravko Lakos-Bujas.
In his view, investors could find themselves “on the wrong side” if the upward trend in the value of popular securities eventually weakens. Lakos-Buyas called for diversification of portfolios and careful management of risks.
“During sudden market crashes, as before, a correction can occur completely unexpectedly. First, one large fund will start to abandon some of its positions, another will follow, the third will not be ready for this, and you will face an ever-increasing collapse of the moment,” the strategist noted in the webinar.
His remarks came in the final days of a strong first quarter for the stock. The S&P500 index rose nearly 10% for a fifth straight month, boosted by strong corporate earnings, interest in artificial intelligence, a healthy U.S. economy and signals that the Fed is ready to cut interest rates this year.
But according to Lakos-Buyas, the growth factors listed leave no reason for further positivity, other than those coming from Nvidia and AI hopes.
“The potential for positive surprises is being limited and risks continue to accumulate,” he said.
The strategist also recalled that investors’ high concentration in popular leading stocks has led to constant corrections since 2008; This scenario has already happened three times.
“Each time, the massive crowding in such stocks led to a sharp reversal within a few weeks,” he emphasized, citing the January crash of Tesla (-27%) and Apple (-10%) after last year’s rally. .
Lakos-Buyas and his colleagues, including Marko Kolanovic, are among a group of analysts who believe a Wall Street crash is likely this year. While most experts have raised their forecasts for U.S. stocks amid record stock indexes, JPMorgan remains pessimistic about the sustainability of growth. The bank’s end-2024 target level for the S&P500 (4200 points) indicates a decline of almost 20% from current values, the publication states.
Before this, rating agency Fitch deprived The USA has the highest credit rating with AAA.
Previously in the US Congress warned About a possible shock to the economy due to debts
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Source: Gazeta
Ben Stock is a business analyst and writer for “Social Bites”. He offers insightful articles on the latest business news and developments, providing readers with a comprehensive understanding of the business world.