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How to invest with US stocks pricey, economy slowing: Page

Feb 02, 2025 - businessinsider.com
Sébastien Page, investment chief at T. Rowe Price, is cautious about the high valuations of US stocks despite a healthy economic outlook, including strong corporate earnings and spending. While GDP growth has slowed, it still exceeded expectations in 2024, and AI spending is projected to increase. Page is scaling back on US equities due to the market's ambitious pricing and the "tyranny of high expectations" for earnings growth. He suggests a neutral-weight position in stocks as markets continue to rally, emphasizing the importance of managing risk.

Page advises investors to focus on cheaper value stocks, which have shown resilience during market selloffs, and to maintain a diversified portfolio. He sees potential in both growth and value stocks, particularly in sectors like energy, financials, materials, and healthcare, where valuations are reasonable. While not overly bullish on international stocks, Page highlights opportunities in markets like Japan, Argentina, and Brazil. His overarching advice is to stay invested and diversified, as he expects the economy and earnings to perform well.

Key takeaways:

  • Sébastien Page of T. Rowe Price is cautious about US stocks due to high valuations, despite positive economic indicators.
  • Page suggests reducing overweight in US equities and shifting towards a neutral-weight position as markets continue to rally.
  • Value stocks are seen as safer investments in the current market, with potential for upside during selloffs.
  • Investors should stay diversified, considering both growth and value stocks, and explore opportunities in international markets like Japan, Argentina, and Brazil.
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