INSUBCONTINENT EXCLUSIVE:
Even with the benchmark SP 500 index up about 3.7 per cent this year, trailing the 19 per cent performance of last year, Wilson sees proof
that investors are taking on more risk than is obvious.
The first is simply a ranking of the performance of various corners of the market
Composite, which is dominated by tech stocks, is right at the top of the list Wilson compiled, suggesting investors are unfazed by
ballooning valuations and the prospect of an earningsgrowth slowdown.
Next are small-cap stocks, which are getting a tailwind as larger-cap
industrials face the threat of a trade war between the US and its major trading partners.
Credit, including long-term Treasurys and
investment-grade bonds, are a lot closer to the bottom of the ranking
that investors are taking on more risk than they realise, Wilson pointed to the strong performance of the stocks traders are betting against
Again, that list of the most-shorted stocks is dominated by tech.
According to data compiled by the financial-analytics firm S3 Partners,
companies with high-yield debt have also outperformed of late.
RISK-OFFThere are three things to watch for that would show investors are
Two of them may already by happening, Wilson said.
Investors are worried about a peaking in the pace of earnings growth, and the 10-year
The sector is preferred as a so-called bond proxy for its dividends, which should look more attractive if Treasury yields stay as low as
Morgan Stanley forecasts.
