In the course of the current market correction, second-line stocks have almost seen the particularly low valuation level of March 2009, i.e. the time of the global financial crisis, according to the experts. At the same time, the valuation bonus for stocks with defensive qualities compared to more cyclical stocks that are dependent on the economy has climbed to almost a record level. Lakos-Bujas and colleagues see an extremely negative mood. Investors appear to have positioned their portfolios defensively in anticipation of the end of the growth cycle and the onset of a recession. Anything other than a recession will catch investors completely wrong, it said.
The experts therefore see enormous valuation risks in the case of defensive stocks and increasingly attractive opportunity-risk profiles in the case of cyclicals as well as growth and second-line stocks. Investors are likely to rebalance their portfolios quickly if the stock market pullback proves to be just another “mid-cycle scare”./ag/mis/jha/
NEW YORK (dpa-AFX)
Image Sources: TK Kurikawa / Shutterstock.com, Gil C / Shutterstock.com