BofA Sees Cash as King in 2019 Markets

The video discusses the shift in investment strategies due to changing market conditions. In 2019, cash yields became a competitive alternative to equities, prompting investors to reconsider asset allocations. The speaker predicts market volatility with significant price movements and advises focusing on companies generating free cash while avoiding credit-sensitive stocks. The rising cost of capital, influenced by the Federal Reserve's policies, marks a transition from a period of free capital to one where capital costs are increasing, necessitating a recalibration of investment strategies.

What was the main reason for cash becoming a competitive asset class in 2019?

• Increased stock market volatility

• Higher cash yields compared to dividend yields

• Government incentives for cash investments

• Decreased interest rates

What is the suggested investment strategy in a volatile market according to the transcript?

• Invest in high-risk stocks

• Focus on companies that generate cash

• Diversify across all sectors

• Invest in international markets

What is the expected market movement over the next 12 months?

• Sharp decline

• Gradual upward trend

• Significant volatility with 5% to 10% moves

• Stable with minor fluctuations

What is causing the increase in the cost of capital?

• Federal Reserve's bond-buying program

• Decrease in global trade

• Increase in consumer spending

• Federal Reserve's tightening policies

How should investors adjust their strategies in response to the rising cost of capital?

• Focus on companies with free cash flow

• Invest in credit-sensitive stocks

• Increase holdings in bonds

• Shift to international equities