Unemployment is at a 50-year low, consumer confidence is high, inflation is negligible and yield curve inversion concerns have disappeared, so what could investors possibly have to worry about?
Our rosy outlook could “evaporate” if investors are blinded to risk, Oscar Loynaz, m+ funds founder and managing director, told Yahoo Finance’s On The Move. “Don’t let that whole FOMO [fear of missing out] factor lead you to a place whereby you are allocating position within the portfolio that doesn’t reflect the potential risk as you move throughout.”
“We’re in a market that sets a record every day,” Loynaz said. “It’s a nice cocktail of things but what we talk constantly to investors about is just be careful how you move along with the market.”
According to Loynaz, there are two big ‘elephants in the room” that need to be heeded: the lack of resolution in the trade war with China and the 2020 election cycle. Loynaz warns that if investors aren’t vigilant they could make bad decisions.
Heading into a potential phase one of the U.S.-China trade deal the markets have priced in some form of resolution, but not necessarily one of new growth but more focused on the de-escalation of pressure, said Loynaz, adding that the final outcome will have a “dramatic impact’ on markets.
The other red flag for investors is the election cycle. “If you sit here six months down the road the world could be dramatically different “from a political perspective for home as well as abroad that could have dramatic implications as to where the market grows,” he added.
“What we tell investors all the time and what we hear all the time is it’s not about not being invested it’s about doing it in a smart and risk managed way,” Loynaz said. Investors should “go in it with your eyes open and manage your risk.”
Yvette Killian is a producer for Yahoo Finance’s On The Move.