Balanced Risk Reward
Risk-reward trade-off in stocks has become less attractive following recent gains. Stocks have had quite a run this year, with the S&P 500 Index up 12% as of March 22, 2019, and 19% since the December 24 lows [Figure 1]. The index now sits just 5% below its record high set on September 20, 2018, and 7% from our year end 2019 fair value S&P 500 target of 3,000. Given this move in stocks, coupled with a slightly weaker economic and corporate profit outlook, we believe it is prudent to readjust domestic equity allocations back to market weight.
Macro Outlook Less Certain
This change in asset allocation is... Read more