Richard Madigan, chief investment officer for J.P. Morgan’s Private Bank (JPM), likes how the global economy and business environment looks right now.
The problem for investors like Madigan, however, is that no asset looks like a screaming buy.
“We feel really, really good about what we’re seeing in terms of the global economy,” Madigan said at Yahoo Finance’s All Markets Summit on Wednesday.
“The punchline: nothing’s cheap. That’s the bad news here.”
Madigan, who manages $290 billion for high net worth clients and over $1 trillion in total, said that as a long-term investor, the challenge right now is to diversify amid expensive markets and manage client expectations.
“We’re long-term investors. I think the diversification aspect for me is around not overreaching for risk,” Madigan said.
“So how you take risk in terms of a long-term investor, for us, is still much more positioned on a little bit overweight equity, a little overweight some value, some financials, some tech, some healthcare. Those all feel like consensus right now, so that worries me.”
On Wednesday, stocks were pulling back some after Tuesday’s rally pushed the major U.S. averages to new record highs. And while the stock market and economic growth have both been strong this year, earlier this week we saw analysts at Goldman Sachs caution that we are nearing “peak growth” according to some economic surveys, a potentially negative sign for markets in the next few months.
But even on the backdrop of a potential “peak growth” environment, Madigan said Wednesday that, “I’m back to where you started the conversation: the context of fundamentals are still very strong.
“So the biggest challenge I have with my clients is managing return expectations, not the fear of a break in the market.”
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Myles Udland is a writer at Yahoo Finance. Follow him on Twitter @MylesUdland
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