Standard & Poor’s investment policy committee today recommended investors cut their equity holdings to 55% of their portfolio, from 60%, and increase their cash holdings to 25%, from 20%. The suggested bond portion remained unchanged at 20%.
Sam Stovall, senior market strategist for S&P Investment Services, said stocks would remain "under pressure” throughout the typically slow summer period. Although there are signs of hope, any improvement is contingent upon many factors, including: earnings estimates that come in close to expectations, fears of continued terrorism, possible war with Iraq, tensions between India and Pakistan, the conflict in the Middle East, damaged corporate credibility in the United States and skepticism among investors of Wall Street firms. Given all that, investors would be wise to keep more assets in cash, enabling them to quickly take advantage of any opportunities that arise later this year, according to S&P.
