JPMorgan says stocks are so crowded they may crack at any time
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JPMorgan Chase's chief global equity strategist, Dubravko Lakos-Bujas, warns investors that the five-month rally in US equities may come to an end unexpectedly. Lakos-Bujas encourages diversifying holdings and considering risk management. Excessive crowding in the market's best-performing stocks raises the risk of an imminent correction. Lakos-Bujas points out that flash crashes have occurred in the past due to one fund de-levering positions, causing a chain reaction. The S&P 500 Index is on track for a 10% return in the first quarter, but Lakos-Bujas sees this as a reason for concern, as many positive factors have already been priced in. He believes there are limited sources of upside surprise and more risks in the background. Looking at recent history, the rush into popular momentum stocks is typically followed by a correction. JPMorgan holds the lowest year-end target on the S&P 500 of 4,200, implying a drop of nearly 20% from the current level.

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