But Dave Sekera also says patient investors can position themselves for future success.The stock market has presented investors with an interesting dilemma in the second quarter of 2023: equities are cheap, but market conditions mean it's a difficult time to get bullish.
Sekera doesn't expect much growth for the next couple of quarters, and with a weak start to 2024 he is only projecting a 1.4.% increase in US GDP in 2024. Still, he wrote that this is an opportune moment to position for the next recovery. He explained that interest rates and inflation will come down over the next few years and growth will improve, all of which sets a solid foundation for stocks. For now, Sekera wrote, stocks are likely to stay inside their recent trading range, with positive and negative economic news dictating their course. It might not be exciting, but there will be opportunities to build future positions.
At a sector level, Sekera says small caps are trading 33% below Morningstar's estimate of their fair value, while communications stocks are still at a 30% discount in spite of a recent rally, and real estate trades at a 22% discount.
Shorts appear anxious.