With the S&P 500 (NYSEarca:SPY) off to a roaring start this year and nervously sitting at a 4-year high, at least one Wall Street pro says it is time to revisit the defensive theme that dominated the market last year. And he’s someone you should listen to.
Adam Parker, U.S. Equity Strategist at Morgan Stanley made the most accurate market call for 2011. He now says it’s time to think about the 2nd half and 2013 because his crystal ball shows “risk aversion” will make a comeback. “We think the risk-reward is skewed to the negative as the year unfolds,” Parker says in the attached clip. He cites a year-end target of 1167 for the S&P 500 –a 15% drop from current levels.
Parker’s strategy for moving into a defensive position is built on the backs of two sectors; Utilities (NYSEarca:XLU) and Healthcare (NYSEarca:XLV), and their proven ability to deliver “more achievable estimates, higher cash balances, higher dividends.”
See the full “Breakout” interview below: