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How to take advantage of the bull market
The S&P 500 has hit three record highs in 2013, more than any year since 1999. In fact, global equities have risen by 27 percent in the past year, 45 percent the last two years, and 77 percent during the past five years.
Saxo Bank’s Teis Knutsen thinks the rise over the past two years is driven by two things; an extremely accommodative monetary policy and increasingly solid gains to the global economic environment. Together, these two factors create a “very benign environment” for equity markets.
Long term, Teis believes this rise won’t be able to with the same momentum.
He says: “If we can’t find the new driver behind the economic story, the first quarter of 2014 may be the peak in the economic cycle for now. If that happens we are very likely to see a peak in global equity markets at about the same time and in terms of asset allocation we will see a shift from equities and back to bonds.”
Overall, Teis sticks to recommending an overweight of equities relative to bonds, and to risk in general. In terms of regions he likes the US and Europe a lot.
But he warns investors to bare in mind that this is relative to how sustainable the current rally in stock markets is.
Read more about Teis’ predictions here:
01:59 minutes
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