If you feel the urge to take profits as stocks hit new highs, PNC Financial’s Amanda Agati has a message for you: Resist it.
According to the firm’s chief investment strategist, the market is not at peak levels.
“The worst thing that clients and investors can do with the market at current levels is pull the plug and go underweight equities,” she told CNBC’s “Trading Nation” on Friday. “There’s time left on the clock. We still think there’s room for this market to move higher.”
Her analysis came shortly after the Dow crossed 29,000 for the first time ever. It’s now up 32% since 2018’s historic Christmas Eve market drop. The S&P 500 is on fire, too — soaring almost 40% since then.
“We actually have a fairly favorable view for 2020,” she said. “I’d like to see this rally take a little bit of a pause or slow down a little bit just for the fundamentals to catch up. But we actually think 2020 is going to shape up to be a pretty solid year.”
Agati was optimistic going into last year, too. She told investors not to stop believing in the bull market despite the wild swings. Her advice paid off. Stocks reached unprecedented record high levels in 2019.
“It can be very painful to get too defensive too soon,” added Agati. “We’ve had a handful of opportunities to actually do that really since December 2018, and it would have been a mistake.”
Now, she sees another bullish dynamic unfolding.
She calls 2020 a “tale of two halves.” Agati expects the first half will be dominated by improving fundamentals and earnings growth.
By the second half of the year, she warns uncertainty surrounding November’s presidential election could inject volatility into the picture and create downward pressure.
However, her thesis calls for a resilient market boosted by sustainable re-acceleration of earnings and global growth. Agati estimates stocks could be up 10% by year-end.
“Even though it may not be a 30% from a return perspective, we still think we can get a pretty solid result,” Agati said.
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