The Worst Thing You Can Do is Sell Now, Says Strategist

Don’t be a seller—a number of market experts are forecasting just moderate gains after a strong 2019, but PNC Financial’s chief investment strategist Amanda Agati said the worst thing an investor can do is sell when the urge to take gains off the table becomes too irresistible.

“The worst thing that clients and investors can do with the market at current levels is pull the plug and go underweight equities,” said Agati. “There’s time left on the clock. We still think there’s room for this market to move higher.”

Agati’s view comes at a time when a number of other strategists are expecting markets to pull back after 2019’s record run.

“We actually have a fairly favorable view for 2020,” she said. “I’d like to see this rally take a little bit of a pause or slow down a little bit just for the fundamentals to catch up. But we actually think 2020 is going to shape up to be a pretty solid year.”

“It can be very painful to get too defensive too soon,” added Agati. “We’ve had a handful of opportunities to actually do that really since December 2018, and it would have been a mistake.”

Record Year for S&P 500

It’s been a year to remember for the S&P 500 in 2019 as the index rose close to 30% to reach its highest level since 2013. The index wasn’t alone with the Dow Jones Industrial Average and Nasdaq Composite hitting their own highs in a year-end stock market rally.

“The S&P 500 was up 28.9% for 2019, its biggest one-year gain since 2013, when it rallied 29.6%,” CNBC reported on the stock market index performances. ” The Nasdaq also had its best one-year performance in six years after rallying 35.2% in 2019. The Dow rose 22.3% in 2019, its best annual performance since 2017.”

2019 wasn’t by all means a smooth ride to gains as inverted yield curves injected recession fears into investors, as well as the possibility of slowing global growth, and of course, trade wars. This caused a considerable safe haven flight to bonds, which pushed down Treasury yields while bond prices rose.

Still, market experts are forecasting just moderate gains for 2020 after a record 2019. As such, investors should take caution and exercise due diligence prior to allocating their capital.

“By any objective measure US large cap stocks start 2020 on perilous footing. Valuations are rich. Corporate debt levels are at record highs,” said Nicholas Colas, co-founder of DataTrek Research, in a note. “But… we know the Federal Reserve has learned its lesson. It will be quick to ease if necessary and slow – very slow – to raise rates.”

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