The duration of the current bull market in global stocks makes investors around the world ask, “Are we overdue for a bear market?” But bull markets don’t just die of old age. To answer “yes” to this question, you would have to conclude that valuations are far too high, or that we are likely heading into economic recession. Today, CIO Americas, Wealth Management (CIO) doesn’t believe either is a clear and present danger to the bull.
While we are now more than eight years into the current economic expansion, there are few signs to suggest the economy has run out of slack. The traditional catalysts for a recession – oil price spikes, government austerity, sharply higher rates, a credit crunch or an exogenous shock – look unlikely to emerge over the six-month investment horizon. As such, CIO believes it is too early to call the end of the cycle and become overly defensive.
CIO offers investment strategies and specific asset allocation guidance to help investors prepare for the later stages of the current bull market in its new UBS House View publication entitled: “Mapping the cycle.” As we look further forward, a downturn will inevitably come at some point, most likely from a withdrawal of monetary support. In preparing to respond, investors will need to allow for greater flexibility in investment policies and make certain they are diversified across equities, bonds and alternatives.
And, in continuing to offer investors forward looking global guidance, this edition of UBS House View focuses on cyber-security, which is back in the spotlight after a new series of high-profile cyber-crimes around the world. Cyber-security will continue to be a topic of importance as cyber-hackers become more sophisticated and the cost of attacks become more expensive. Two of our long-term investment themes – transformation technology and security and safety – have exposure to the cyber-security industry and offer potential investment opportunities.
For more on CIO’s investment outlook and portfolio recommendations, read Mapping the cycle .