‘The longest expansion ever in U.S. history… an inverted yield cure, and trade wars, and geopolitical risk, a fresh 20% decline still in the memory of investors just late last year… the behaviors of everyone rushing to defensive stocks to bonds, to gold — anything BUT a bull attitude. I like that.’
That’s the Leuthold Group’s Jim Paulsen explaining to CNBC this week how this “wall of worry” could be just the thing to ignite the next phase of this bull market.
“It’s some of the most bearish or cautious attitude around that record high that I can remember,” the four-decade Wall Street veteran said. “It’s sort of a bearish market high.”
Defensive sectors like utilities, consumer staples and REITs, used as hedges against mounting risks, have helped push the Dow Jones Industrial Average DJIA, -0.07% toward its best month in almost four years.
“[There’s] a lot of support for this economy and this market — and a lot of fear and caution,” Paulsen added. “That’s a powerful combination, I think, for higher levels here down the road.” And by higher levels, he means the S&P 500 SPX, +0.38% perhaps toppling the highest target on Wall Street, which is currently held by Deutsche Bank at 3,250, a double-digit gain from here.
He says investors looking to best take advantage of the next leg up should actually consider moving away from what’s working now and go back to what’s really been driving this relentless bull market.
“On strong days when the defensive stocks are running, I’d let go of some of my defensive stocks and let some of those that are fearful have them,” he said. “I would continue to maintain a position in the popular tech and communications area. You might have to hold your nose a little bit there, but I do think those sectors are going to continue to lead for as long as this bull market lasts.”
Watch the full segment:
Add Comment