(Seoul = Yonhap Infomax) Reporters Kwon Yong-wook and Hong Ye-na = It has been argued that bonds should be invested in bonds that offer relatively stable returns at a lower risk premium than overvalued stocks.
According to Market Insider on the 14th (local time), Lisa Charlotte, chief investment officer (CIO) of Morgan Stanley Wealth Management, said, “Stocks held at the start of the year on expectations that borrowing costs will fall by the end of the year. year.”
His mantra is that the stock market rally won’t last long, so investors should turn to bonds.
Regarding the stock rally at the beginning of the year, he said, “Investors are fighting blindly against the Federal Reserve System (Fed) even though the policy authorities said they would raise and maintain interest rates if necessary. “
He went on to point out that the problem is that stock valuations are based on the assumption that interest rate cuts will be sufficient.
“Investors do not see what higher interest rates, rigid inflation and the threat of a possible recession will affect the stock market,” said Charlotte CIO. “Right now, most stocks are overvalued.”
Companies listed on the Standard & Poor’s (S&P 500) currently trade at 18.5 times price, slightly above the 10-year average of 16.9.
“There are reasons not to fight the Fed,” he said, “taking risks in a stock market bull market conflicts with the Fed’s guidelines.”
Some Fed officials have indicated that the Fed could raise rates above 5% and keep them there throughout the year.
When the Fed tightens policy, it makes it more expensive for companies to borrow cash. So, the tightening of the feed is mainly bad news for the stock market.
CIO Charlotte recommended investments in short- and medium-term US Treasuries, municipal bonds, corporate bonds, and stocks with the potential to pay above-average dividends.
United States Federal Reserve System
ywkwon@yna.co.kr
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