red warning lights signal siren

As concerns of a slowdown in global growth swirl, some experts on Wall Street are suggesting investors bulk up on defensive holdings.
Goldman Sachs just told clients to “increase portfolio defensiveness,” and Bank of America said investors’ exposure to “low quality” stocks is a key risk this year.
The calls come amid continued US-China trade negotiations, central banks around the world unwinding fiscal stimulus, and continued Brexit uncertainty.

Economists and strategists on Wall Street are increasingly asking not if, but when, a slowing global economy will accelerate into a more severe downturn.

Amid calls for slowdowns in major economies, along with lingering political uncertainty, and central banks unwinding accommodative monetary policy, some macroeconomic experts are recommending that investors bulk up on defensive assets.

Investors are gearing up to deal with volatility-inducing events like ongoing trade negotiations between the US and China, the Federal Reserve potentially scaling back its tightening, and looming Brexit uncertainty.

“Strategically, we recommend investors increase portfolio defensiveness,” a team of Goldman Sachs strategists led by David Kostin told clients in a note on Monday. “Cash allocations are at or near the bottom of their 30-year historical distribution for many investors.”

Investors might wonder what defensive means, especially in a challenging market like last year’s when few trades worked out. Investors across markets and asset classes mostly counted 2018 as a loss, and cash became more attractive as equities around the world languished.

Kostin and his team said investors should consider stocks well-positioned to outperform in an “uncertain economic environment” and came up with a list of 30 names that would still boast an above-average valuation even if earnings were to sharply decline. They included stocks across traditionally defensive sectors like industrials and consumer staples, including the likes of FedEx, Raytheon, Kroger and …read more

Source:: Business Insider

      

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