If 2019’s monster rally folds, Ed Keon has adopted an approach to keep losses in check even though he’s bullish.
Keon, who runs QMA’s strategy for more than $50 billion in multi-asset portfolios, expects stocks will reach all-time highs this year.
But there’s a caveat: He’s building his investment strategy to withstand a painful setback due mostly to geopolitical risks.
“We have kind of a barbell strategy. We’re overweight stocks overall, especially in the U.S. and emerging markets,” he said Tuesday on CNBC’s “Futures Now.” “We also have a big position in bonds, especially Treasury bonds.”
Keon’s positioning in Treasurys addresses global slowdown risks and their potential to infect the United States. It’s a risk he isn’t taking lightly due to discouraging hard economic data overseas. He also views the U.S.-China trade war as a serious threat to the market.
At the same time, he’s not as pessimistic as Wall Street on first quarter earnings. Keon, who started his career at an earnings forecasting firm, believes the reports will come in better than expected.
“The consensus now is to negative numbers. We’ll probably do a little bit better than that just because we almost always do,” he said. “But I still guess that we get pretty close to zero earnings growth.”
The S&P 500 is on pace to have its best start to the year since 1998 and best quarter in a decade. On Tuesday, the index broke a two day losing streak. It’s now up more than 12 percent so far this year.
“We’re back to about where we were 14 months ago on the S&P 500. I think we can go in either direction here,” said Keon, who believes the market is in a consolidation phase due to the year’s historic run.