JPMorgan Chase’s chief equity strategist Dubravko Lakos-Bujas has warned investor-clients that the US stock market could see an unexpected turnaround, urging them to prepare for a reversal of overcrowded stocks. The United States has experienced a five-month continuous rise in the stock market, leading to discussions about whether the upward trend will continue or if a correction is imminent.
According to Bloomberg, Lakos-Bujas believes that investors may find themselves on the wrong side of momentum investing as the market’s momentum begins to dissipate. He advises investors to diversify their holdings and consider risk management strategies to protect their investments.
The chief strategist has also raised concerns about an overcrowding of investors in the best-performing US stocks, increasing the risk of an immediate correction. Lakos-Bujas highlighted the potential for a chain reaction where one large fund starts reducing leverage, leading to a repositioning of investments by other funds and a potential downward spiral in the market.
Since the beginning of the year, the S&P 500 index has risen by about 10.7 percent, reaching 5,248 points. JPMorgan’s prediction that the index could end the year at 4,200 points is the bleakest forecast on Wall Street, suggesting a potential decrease of almost 20 percent from the current level. The strategist believes that many positive factors, such as strong company results and interest rate expectations, have already been priced into
