Desperate Times, Desperate Measures

2025-03-27 13:46:34 ET

Summary

• The S&P 500 Index is caught in a tug-of-war between bullish and bearish sentiment in a sea of macroeconomic uncertainty.
• Active investors should consider implementing hedging strategies to help limit downside risk and raise cash to diversify.
• EU value stocks, among others, offer attractive alternatives to overbought US large-cap names, such as the Mag-7.

During the 2007-2009 crisis, I spent my days sitting in front of a Bloomberg terminal peering – intensely staring, in fact – at the constant barrage of negative news and numbers (“FIRS <Go>” on one screen and “BTMM <Go>” on the other). Even when good news came across the wires, Mr. Market seemed to simply shrug and go about his business of pounding the long positions I was vainly trying to manage. But that is the way it is when sentiment is negative.

In contrast, when Mr. Market is happy and sentiment is positive, the opposite occurs: good news is cheered and stocks rise, while bad news and negative numbers are seemingly ignored....

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