Financial expert warns: sell risky investments after price gains, according to Michael Hartnett from BofA

Financial expert warns: sell risky investments after price gains, according to Michael Hartnett from BofA

According to a report by www.wallstreet-online.de, Michael Hartnett of Bank of America (BofA) warns investors about dumping risky assets after recent gains. He points to technical and macroeconomic headwinds.

After the S&P 500 bottomed on October 27, an "epic risk-on rally" ensued, as Hartnett put it. This rally was characterized by several hallmarks such as tightening spreads in high-yield bonds, jumps in small caps, shares of US regional banks, distressed tech companies and China-exposed assets. However, Hartnett warns investors to “tune out” this.

Additionally, Bank of America's bull and bear indicator has given a contrarian buy signal over the past five weeks. In the past, stocks have risen by an average of one to three percent since this buy signal began. This would mean a target of around 4,650 points for the S&P 500. However, Hartnett recommends holding back above this level as the US benchmark index closed at 4,514.02 points on Friday.

As an economist, I would like to emphasize that Hartnett's warning about risky assets could indicate a possible correction or decline in current price gains. The increased spreads on high-yield bonds and the positive performance of small caps and regional bank stocks could also indicate market volatility and uncertainty. Investors should carefully weigh these signals and adapt their investment strategy accordingly.

This development could have an impact on the stock market, particularly high-risk investments and index funds linked to the S&P 500. A possible correction or decline could result in a reduction in investor assets. This could also have an impact on the consumer, as general market sentiment can impact consumer spending and consumer confidence.

It is important that investors heed the warnings from experts like Hartnett and reconsider their investment strategy accordingly to be prepared for possible market fluctuations.