2016 stock market allocations

Friday 29 January 2016

A couple of UBS charts today help us navigate where we are in stock market allocations for the year ahead. Banks have corrected some:

But the risks are still rising. Bad debts will perhaps be more of a 2017 story as the cycle deteriorates but the share market ought to be discounting that this year, and as you can see when cycles end banks fall much further than this. I expect we’ll see rallies this year, not least when rate cuts resume, but they look more like a good short to me at those points than a buy and hold long.

Mining is very expensive:

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About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.