According to the latest media survey, Wall Street investors believe that as concerns continue to grow this month, it is time to rule out some risks.
The media surveyed about 400 chief investment officers, equity strategists, portfolio managers and media writers this week. When asked what kind of market risks they were willing to accept for themselves and their clients, more than 3/4 of respondents said it was time to be very conservative in the stock market.
Although investors are now taking a more cautious view of the market, they still think the stock market is likely to rise in the next 12 months. About half of the respondents said the S & P 500 would rise more than 5% in the next 12 months. 44% said they would be basically flat, while 5% said they expected a decline next year.
After this week's correction, the s & p 500 is down about 4.2% from its all-time high set in early September. Many market participants believe that the market is experiencing seasonal weakness.
"sentiment seems to have changed in favor of bears in the past few weeks," said Brian Price, head of investment management at Commonwealth Financial Network. "after a relatively calm summer, market participants seem to want to slow this year's rally."
Some famous strategists insist on bullish. Tom Lee, co-founder of Fundstrat, believes Monday's plunge in the stock market is a buying opportunity for investors. JPMorgan Chase & CoStrategist Marko Kolanovic also said the sell-off was excessive.
However, Morgan Stanley, one of the biggest bears on Wall Street,Mike Wilson believes that as some economic indicators start to deteriorate, there will be a 20% correction in the S & P 500, which is a "destructive" scenario.
The survey results show that private credit is the best strategy for investors who focus on yields. Only 2% of respondents thought Treasuries could offer attractive returns.
Government bonds are rapidly becoming one of the most disgusting asset classes as their safe-haven appeal diminishes during the economic recovery. Bill Bill Gross, the "old debt king", recently called US Treasuries junk, saying the 10-year yield over the next 12 months would be around 2 per cent, equivalent to a price loss of 4 per cent and a negative return of 2.5 per cent.