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Balanced Risk Reward

| March 25, 2019
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Risk-reward trade-off in stocks has become less attractive following recent gains. Stocks have had quite a run this year, with the S&P 500 Index up 12% as of March 22, 2019, and 19% since the December 24 lows [Figure 1]. The index now sits just 5% below its record high set on September 20, 2018, and 7% from our year end 2019 fair value S&P 500 target of 3,000. Given this move in stocks, coupled with a slightly weaker economic and corporate profit outlook, we believe it is prudent to readjust domestic equity allocations back to market weight.

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