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Pragmatic Capitalism

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Goldman: Markets Overreacted to Recent Fed Talk, Buy Stocks

A bit of strategic opining from Goldman Here on the recent market moves.  In short, they think the markets overreacted to the recent Fed talk and that it’s created a buying opportunity in stocks (via Zero Hedge):

  • Clients should use the recent downdraft to build toward their strategic allocation to equities.
  • While we think that interest rates will gradually rise over the next several years and lead to low investment Grade Fixed Income returns, a repeat of 1994 is highly unlikely.
  • We recommend tactically underweighting Investment Grade Fixed Income in favor of the followingareas where the risk-return opportunities are much more attractive:
 – High Yield Bonds
 – US Bank loans
 – Emerging Market Local Debt
 – Euro Stoxx 50 (currency hedged)
 – US Bank Equities

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