Investing View is Glass 'More Than Half-Full': Kelly

Summary

David Kelly, JPMAM chief global strategist, argues the US stock market is structurally supported by buybacks, dividends, and 401(k) flows, leading to market outperformance relative to the economy. He highlights that a weakening dollar and extreme US investor underweight make international equities attractive. Kelly also warns against extreme portfolio positioning, either all-in on speculative assets like Bitcoin or hiding in cash, and emphasizes the long-term benefit of staying invested in a balanced, diversified portfolio.

• US equities have averaged 11% returns over 40 years due to structural inflows like buybacks and 401(k) contributions.
• A K-shaped economy funnels wealth into stocks, widening the gap between markets and Main Street.
• Dollar depreciation is expected to continue, providing a tailwind for international equities.
• American investors are significantly underweight international markets relative to global market cap.
• Extreme allocations to cash or speculative assets like Bitcoin are driven by biased social media sentiment.
• AI earnings are impressive but market concentration warrants caution and a more balanced approach.
• The labor market shows stagnation with no job growth and real wages falling below inflation.