AMBAL Portfolio Manager Says Yes
Greg Johnson is an equity portfolio manager and principal investment officer of American Balanced Fund. He discusses his outlook for U.S. stocks and his reasons for wanting to lean against the stock market rally.
Q: What is your outlook on U.S. equity markets?
A: I am getting cautious on U.S. equities. We could be in the late stages of this economic and market cycle. We have gone an entire year without a 5% correction, which is unusual. The U.S. equity markets increasingly appear to be priced for perfection. Equity valuations, at least by historical standards, are high.
You can see our more cautious stance in our positioning. At the end of 2013, American Balanced Fund was at 74% in equities, it is now at 62% and I expect the equity allocation to come down further. I realize that we may lag if this bull market continues, but my focus is much more on protecting on the downside. As we all know, no one can precisely time the markets, but as this stock market continues to go up, my inclination will be to lean against it.