With the S&P 500 hitting a record close above 2000, it seemed like a good time to reach out to Bruce McCain, chief investment strategist at KeyBank in Cleveland.
For more than a decade, McCain’s perspective on the markets have been prescient and discerning.
So what’s up at the end of August with the S&P hitting a record close? Where’s the smart money headed?
“The patron saint of Wall Street is the lemming,” McCain said Tuesday. “Lemmings make a lot of progress in a hurry for a great distance. It’s how it ends that’s the problem.”
The lemmings, he said, have yet to really commit to the market.
And of the markets, he said, “I think there is further to go. It’s a little rich given the sluggish growth we’re seeing. We have not reached the point where people are stampeding into the market.”
They seem to be waiting for a major correction to provide opportunities, he said, and recent corrections have been anything but major.
“Everybody’s been looking for that,” he said.
Growth, he said, “has been anemic, but at the same time there’s very little sign of recession.”
And neither are there strong signs of inflation.
McCain remains bullish on equities, suggesting an investment portfolio of perhaps 65 percent equities and 35 percent bonds. Those comfortable with other vehicles might consider taking out 5 percent in “alternative assets” that could include long-short funds, well run hedge funds or managed futures, for example.
International investors should consider emerging markets, and for developed economies it would be good to pass on Japan.
“We know that this is not the best of times,” he said. “But you don’t have to have the best of times to have a decent investment environment.”
For McCain, the future remains positive.
“There may be some hiccups, but I don’t think you’ll get to the end of this for some time yet,” he said.
He likens the current climate to a “grudging grind higher. You won’t go home rich.”
But eventually, you will go home.