Disruptive Stocks Strategy
We have now taken advantage of the recent market decline and invested our extra cash in stocks This is because the portfolio strategy is to be fully invested in stocks and holding cash is a temporary situation. Investors should continue to be cautious, as we cannot rule out a deeper decline as Trump's trade war spreads to the economy. Market situation now: - Inflation on the rise: February core PCE inflation rose to 2.8%, which was higher than expected (+0.4% vs. +0.3%). - Interest rate policy: Fed kept key rate at 4.25-4.5% and anticipates two rate cuts, market interest rates have fallen - Markets now expect three rate cuts as economic conditions weaken - Volatility: Market volatility higher than normal, due to Trump's trade war and geopolitical tensions - Stock valuation: SP 500 index P/E ratio is around 20 and down from peak - levels, but above 5-year average - Risk level: Risks have risen on stagflation fears from the combination of high inflation and weakening economic growth. - Investors have favored defensive investments in March 2025
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