The stock market is heading for a sharp setback that could see the S&P 500 plunge about 22% over the coming quarters, according to the chief market strategist at FS Investments.
That means investors shouldn't wait anymore to cash out on this year's rally in equities, and should start selling their holdings now, Troy Gayeski said during a recent episode of the hosted by Bloomberg. "There's no reason to wait. It's not like you're going to leave 10% upside on the table," he said. "Usually they're driven by technical factors. And then there's a narrative that's put together to justify it: the more recent one was that inflation's going to slow enough that the Fed won't have to hike anymore, and then we're going to have a recession and somehow that's going to cause the Fed to cut rapidly.
So far this year, the S&P 500 has advanced about 8%, largely driven by investor hopes that the Federal Reserve will ease up on its tight monetary policy - which is aimed at taming inflation - as it deals with turmoil in the US banking industry.and Morgan Stanley's top stock picker Mike Wilson don't expect the rally to last long.
"This is a golden opportunity to use this bear market rally to de-risk in advance of potentially very painful losses over the next six, nine, 12 months," he added.