Cash Roll-Over Is Just One Component of Outlook
Economic nationalism worldwide will favor ongoing strength in US-traded stocks, as global investors shift their attention to the most stable economies, argues a new white paper by Plotinus Asset Management. The US is the most sensible opportunity amid geopolitical uncertainty.
Artificial Intelligence: The Post-Pandemic US Equity Strategic Allocation gauges portfolio opportunities as investors see new peaks in US market indices. The white paper is published by Plotinus Asset Management, a company that oversees institutional money using an artificial intelligence-based overlay on a broad index of US stocks.
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“As investors make post-pandemic plans, the US equity opportunity must be given serious consideration, particularly with respect to reallocating from crisis-driven cash positions,” reasons CJ Finnegan, founder of Plotinus Asset Management.
Plotinus acknowledges the extreme political, media, and medical baggage attached to pandemic analysis in this setting. But focusing purely on data (see chart), the firm points out that the relationship between the economic progression of coronavirus-related deaths worldwide and the trajectory of the S&P imply a more confident outlook, particularly if you consider that investors are subject to the weight of their actions.
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The firm spotlights the role of the Federal Reserve. US stocks have taken on a “too big to fail” mantle, demanding government intervention to retain long-term value.
“The sensitivity of the Federal Reserve to how it manages its Covid-19 crisis response should provide reassurance to skeptical investors,” emphasizes Finnegan.
Plotinus challenges investors to consider the role of cash allocations in their portfolios, weighing the trade-off between safety and volatility. In an affront to convention, the white paper points out that US equities may act as a hedge against cash, not the other way around, as well as protection against the cost of lost opportunity.
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