Akane Otani

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1,333 appearances 33 recordings 1 series first heard Aug 2017 last heard Mar 2023

Akane Otani’s voice in public audio — every appearance, attributed to the second.

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WSJ Your Money Briefing · Why Stocks Have Lost Their Luster With Some Investors · 9 Mar 2023 podcast

There's a lot of worry about when the economy is going to go into recession and how bad that potentially might be.

Thanks for having me.

Well, JR, I think there's two main factors driving that shift in mindset.

One is the fact that there's a lot of worry about when the economy is going to go into recession and how bad that potentially might be for corporate America.

As we know, the stock market does heavily tend to rely on corporate earnings.

So there's this thought that if we go into a downturn, other markets might offer investors a bit more of a chance at a safe return than the stock market.

And then the second factor is the fact that interest rates have continued to rise.

We know that the Fed intends on raising interest rates at least a couple more times this year.

And that means that other assets like bonds, for instance, are offering investors a lot more yield for their money.

So take the two factors together and you have a lot of money managers saying stocks don't necessarily look like the best or the only market to be in right now.

You would think so.

But a lot of money managers actually say the stock market, especially in the U.S., still doesn't necessarily look cheap.

So, of course, yes, the S&P 500 had a terrible year last year.

We saw big declines across the board and many of the most popular stocks in the market.

But if you look at most sort of broad measures of stock,

valuations or trying to figure out how expensive the stock market is.

In general, we're seeing the S&P 500 trade above long term historical averages still.

So it still looks more expensive than on average we've seen over the past decade.

So that has a lot of investors thinking the risk reward ratio doesn't necessarily look super compelling right now.

Right, so one of the most popular alternatives to stocks always, and not just in this kind of environment, has been historically bonds because you're basically guaranteed to get 100% your return on money if you hold the bond to maturity, plus the interest payments over time that those bonds will pay out.

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