The excellent Michael Wilson at Morgan Stanley with another dour note.
This year, we take our cues again from Poet Robert Frost with “The Road Not Taken.” While our year ahead targets are unexciting with a narrower range than normal, the path will not be as smooth. Investors will need to be more tactical and make choices with no regrets.
The Road Not Taken…Flexibility is always important to successful investing but it’s critical now. After a 12-month period when being stubbornly bearish paid off handsomely, we think we will now enter the final stages of the bear market where two-way risk must be respected. Hence, our switch to a more tactically
bullish view 4 weeks ago even though we do not believe this bear market is over. The “pause before the cut” late cycle is typically good for stocks and with rates finally understanding the end game, it provides additional fuel for the rally and a final rotation back to the beloved growth stocks before the final verse of Fire and Ice fully plays out.
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