"Capture Stocks and Bonds Now"... U.S. stock market expert's advice

Capital Group Head of Equity Investment
"Holding cash is missing a chance."

 

As the U.S. stock market continues to rise for the past three consecutive weeks, many investors are agonizing over the timing of the purchase. U.S. stock market experts analyzed that now is a good opportunity to invest in bonds and stocks.

 

Andy Burden, head of equity investment at Capital Group, a U.S. financial services company, told CNBC on the 21st (local time), "The amount of money deposited in deposits or money market funds (MMF) is at an all-time high. Many investors say the U.S. Central Bank (Fed) will cut interest rates, so they should hold cash now, but this is a missed opportunity."

 

"It's time to be a little courageous and start investing again," he said, stressing, "There are opportunities for both bonds and stocks."

"Cash is likely to fall in value due to inflation while just stacking it up," Burden said. "If you take out some of the cash and invest in bonds, you can secure high returns for several years and potentially enjoy capital gains." He advised that investing in investment-grade bonds is stable.

In addition, Burden should acknowledge that the stock market always has twists and turns, he said. "Now is a good time to build a stock portfolio." He explains that it is better to diversify the portfolio by taking out some of it rather than turning all cash into stocks or bonds.

 

"The proportion of investment in bonds and stocks varies depending on each stage and goal, but the traditional division of 60% of stocks and 40% of bonds is very reasonable for ordinary investors," Burden said.

Burden is optimistic about the U.S. stock market, but he also warned that "not all stocks are great."

This year, big tech stocks called "Magnificent 7" such as Alphabet, Amazon, Apple, Meta, Microsoft (MS), Nvidia, and Tesla all soared. As a result, the S&P 500 index also rose about 18% this year.

However, these seven stocks accounted for about 50-60% of the S&P 500 index's rise. Excluding large-scale stocks, the S&P 500 index will actually increase significantly.

"Investors who have not yet purchased stocks did not miss the market, they just missed the stock," Burden said, adding, "There were so many good stocks this year." He added that opportunities will be found in healthcare and digital innovation.