Overweight equities in uncertain times?

At the recent Morningstar Executive Forum, we spoke with Lesley Marks, Chief Investment Strategist at BMO Private Wealth to learn why she sees a favourable economic backdrop fit for U.S. equity growth

Ruth Saldanha 10 June, 2019 | 5:55AM

 

 

Ruth Saldanha: We're at the Morningstar Executive Forum where the theme was global investing in uncertain times. One of the panelists Lesley Marks is here with us to discuss this theme.

Lesley, thank you so much for joining us today.

Lesley Marks: Thank you for having me today.

Saldanha: On the panel you mentioned that one of the things you are overweight on is equities and within equities, U.S. equities. Why is that?

Marks: So, when we look around the world, we look at various factors that are driving the markets. We focus on the political backdrop, policy backdrop, the economy as well as sentiment or behavioral characteristics. And when you think about what's happening in the U.S., we have a very attractive economic backdrop with low inflation, low unemployment and moderate growth. And on the policy front, seeing the central bank, seeing federal reserve easing on the monetary policy side, that's a very positive environment for equities overall.

Saldanha: What are some of the risks that investors should keep a watch on right now?

Marks: Well, certainly, the global trade file is a major risk right now. We definitely have concern about where things are headed with the relationship between the U.S. and China. So, the risk has definitely increased in the last month as we watch negotiations unfold through twitter and through news headlines. But I mean, this is really a contentious negotiation. It is very important that we end up with a win-win outcome for both of the two largest economies in the world.

Saldanha: Finally, how should investors filter out the noise and deal with these risks?

Marks: Yeah. So, what we always say is investors should really think about where they are in their investment life cycle more so than where we are in the business life cycle or the business economic cycle I should say. And I think that that will help investors filter out all of the noise because when you start getting so concerned about trying to predict where the economy is going or where the stock market is going, it causes people to make investment mistakes.

 

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Ruth Saldanha  Ruth Saldanha is Senior Editor at Morningstar.ca