believes now is an opportune time for investors to hedge their portfolio against future losses.
The bank recommended investors prepare for a stock market sell-off of as much as 20% within the next few months because of a potential recession. "Some portfolio managers expect a recession to begin within the next year, a view that is consistent with most economic forecasters. In that scenario... the index could fall by 23% to 3,400," Goldman Sachs' David Kostin said in a June 20 note., combined with a potential recession within the next year, Kostin highlighted five reasons why investors should buy insurance for their portfolio now.
Kostin's view on sentiment and investor positioning was reinforced Wednesday by market veteran Ed Yardeni, who highlighted in a note that there might be"too many bulls." "The bull/bear ratio compiled by Investors Intelligence jumped to 3.00 during the July 4 week, up from 2.69 the previous week. It is the highest reading since the bull run from March 23, 2020 through January 3, 2022," he said."High bullish sentiment can be a caution flag."