Investment Clock insights

Taking some profit on our recent equity purchase


Hiroki Hashimoto, Senior Quantitative Analyst

26 September 2017

We added to our overweight position in stocks in our multi asset funds last month when increased political tensions between the US and North Korea caused a dip in global markets. Our investor sentiment indicator flagged a contrarian buy signal (see chart). Global stocks have rallied to new highs since then and sentiment has moved back towards euphoric territory. Volatility can rise in late summer and we’ve taken some profit at the margin, though we remain moderately overweight given positive equity fundamentals. 
Potential triggers for a short-term sell-off include hawkish central banks, the on-going standoff with North Korea or concerns over Chinese growth, where recent data looks a bit weaker. With equity seasonality turning positive, we would probably add back to our equity overweight on another dip.
Chart: Investor Sentiment and Global Stock Prices

We added to our overweight position in stocks in our multi asset funds last month when increased political tensions between the US and North Korea caused a dip in global markets. Our investor sentiment indicator flagged a contrarian buy signal (see chart). Global stocks have rallied to new highs since then and sentiment has moved back towards euphoric territory. Volatility can rise in late summer and we’ve taken some profit at the margin, though we remain moderately overweight given positive equity fundamentals.

Potential triggers for a short-term sell-off include hawkish central banks, the on-going standoff with North Korea or concerns over Chinese growth, where recent data looks a bit weaker. With equity seasonality turning positive, we would probably add back to our equity overweight on another dip.

Chart: Investor Sentiment and Global Stock Prices


Past performance is not a guide to future performance. The value of investments and the income from them is not guaranteed and may go down as well as up and investors may not get back the amount originally invested. The views expressed are the author’s own and do not constitute investment advice.