In the current market environment, investors should prepare their portfolios for possible inflation and volatility, according to a JP Morgan Private Bank executive.
Grace Peters, co-head of the bank’s global investment strategy, says in a new interview According to Bloomberg Television, the recent record highs for stocks make sense due to the overall increase in capital expenditures (capex).
“And that’s obviously not just about building out AI. If you look at governments sending capital, companies are also following suit. The most recent gains we saw this past earnings season showed a 12% increase in capital expenditures over AI investments, and I think the economic value will flow to the risk holders.”
Peters notes that JP Morgan Private Bank remains bullish on equities, but believes portfolios need to be better prepared “for the full range of outcomes.”
“And so we want inflation-protected income. So infrastructure, which still feels like the market is underserved. We think there’s going to be volatility, so we think hedge funds are a great asset to add. Gold, too.”
And yet, when we look at our own client portfolios, around 20% are still in cash or short-term securities with maturities of less than twelve months. And that’s why we actually think we want to be prepared for the stock bull market that we still have ahead of us. But we do think portfolio resilience still needs to be added to benefit from some of these trends.”
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