Inventory forecasts from International Business Machines (IBM).

Summary

We have three strategic asset allocation models based on risk tolerance: Conservative, Growth and Aggressive. Below is a discussion of the growth segment. Stock investors have enjoyed 2024, with the S&P 500 up about 20% since the start of the year. The fixed-income benchmark ETF AGG rose by 2.0%. Our equity-bond barometer modestly favors equities over bonds due to long-term positioning. In other words, these asset classes should be near their target weights in diversified portfolios, with a slight tilt toward equities given the recent decline in interest rates. We are overweight large caps, despite a recent rise in small caps. We prefer large caps for growth and financial strength, while small caps offer value. Our recommended exposure to small and mid-caps is 10%-15% of equity allocation, below the benchmark weighting. US stocks have outperformed global stocks over the past one- and five-year periods. We expect this trend to continue given volatile global economic, political, geopolitical and currency conditions. That said, international equities offer favorable valuations in the short term, and we target 5%-10% of equity exposure to the group. Growth recovered and outperformed value in 2024 as interest rates stabilized. Longer term, we expect growth led by the IT and healthcare sectors to deliver higher returns on value