There are plenty of reasons for investors to think that it is not suitable now to chase us stocks but JPMorgan reports had some other news , great ones that it is starting to rise now .
What Does This Mean?
American stocks are up almost 40% from March lows, and just 10% of their all-time highs.
Despite many reasons why they shouldn't be taking in consideration :
the shrinking economy - high stock valuations - and US ,CHINA tensions - reliance on big tech stocks without forgetting to mention the surge in domestic riots lately .
Here comes the question ,
what could possibly push US stocks even higher?
According to JPMorgan, . First,
- major investment firms are sitting on record amounts of cash so there’s plenty of money on standby that can be used to buy stocks and drive prices higher.
-Second, the amount of money allocated to stocks compared to bonds is considerably below average. In other words JPMorgan reckons billions of dollars could flow out of bonds and into stocks when the time comes for investors to rebalance their portfolios.
If stocks do keep climbing, JPMorgan thinks it’ll lead to a self-perpetuating rally as higher prices encourage more buying. And since bond yields are near-zero, you’ve got some attractive-looking stock markets. with massive parts of the US in shutdown only time will tell if those investors are going to be brought back down to Earth with a bump.
Regulatory data showed the level of short positioning in US stocks that is the amount of money betting stock prices will fall – is at its highest level in five years. If US stocks continue to grind higher investors might be forced to backtrack on those bets to avoid further losses