That's what Jim Paulsen, chief investment strategist for Leuthold Group, is now suggesting. He specifically says it's a good time for investors to embrace stocks with higherHe explains that focusing on beta is a good way to add risk and power up potential returns without overpaying. That's partly because investors have driven up the price of low-beta investments over the last couple of years at the expense of their more volatile counterparts.
"The price of defensive, low-beta investing relative to high beta is 50% more than it was in mid-2018," Paulsen wrote in a recent note to clients. "The relative price of high beta stocks versus cyclical stocks is near one of its lowest levels in the last 20 years." That's one reason to think about taking some more risks. Paulsen adds that there are also signs that bond market investors are starting to expect faster inflation. That's a sign traders are expecting better growth, and it's positive for the kinds of investments he's talking about.
"It makes sense to start picking away a little bit of selling some of the defensive assets and moving a little bit towards more risk-on," Paulsen said.
He is from the 'Sell' side, right? All righty, then.
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