Better to Ride Out Summer Equity Blahs - CIBC

The spring equities run up has indeed stalled out into a relatively flat or slightly negative summer period, but CIBC World Markets cautions investors against running out of stocks entirely.

Avery Shenfeld, an economist with CIBC, said in his July Canadian portfolio strategy Thursday:

It would be tempting for aggressive traders to shift funds out of stocks. But for others, riding out the bumps at a benchmark equity weighting is a more realistic option given the risks in trying to time the market too precisely when the economy is near a turning point.

Stopping just short of an I-told-you-so, Mr. Shenfeld noted that CIBC had warned last month that stocks "were getting ahead of reality" by running ahead of near-term market fundamentals.

"Only the most nimble market timers should think about going underweight equities at this point in the cycle," he said.

However, for the average investor who is less fleet of foot, Mr. Shenfeld suggests staying underweight in the consumer discretionary and industrial sectors, while adding slightly to telecommunications.

CIBC is also staying overweight in the base metals sector.

"Asia's economic rebound, already well underway, should be a plus," he said.