BMO Capital Markets strategists said in a note that while the recent stock market downturn is likely long overdue, the decline does not necessarily mean it is safe for stocks to return to their steepest pace since October 2023. He said it does not indicate anything.
If the recent slump signals the end of a pullback, they say it will be one of the slowest and shortest declines in the second year of the post-World War II bull market, excluding the pandemic period. claims.
“Therefore, we expect price volatility and volatility to return in the coming weeks and months, particularly given the divergence between rising valuation levels and the long-term outlook for interest rates, and investors are encouraged by this possibility. “We recommend positioning your portfolio accordingly,'' BMO Capital Markets strategists wrote.
In response to these conditions, BMO continues to advise clients to become more selective in their investment strategies in pursuit of outperformance.
Specifically, the strategists advocate a barbell approach to portfolio positioning, which balances risk and defence, to ensure a “favorable long-term track record relative to the broader market in all types of market environments.” I think we have obtained this.
“Our recommended barbell approach is to combine a growth (risk) strategy at a fair price with a dividend growth and yield (defense) strategy,” the BMO team added.
