Heading into November's U.S. presidential election, professional investors agree on one strategy — diversification remains key.
Stocks have been on an tear this year, with the S & P 500 and Nasdaq Composite closing at all-time highs this week even as questions swirl about when the Federal Reserve will start to lower interest rates. A rotation out of mega-cap growth stocks on Thursday briefly sent the indexes lower, but they bounced back Friday, briefly sending the Dow Jones Industrial Average to an intraday record. Now, election-related risks are also being considered.
To shed some light on how investors might best assemble their portfolios beforehand, CNBC Pro asked three Wall Street professionals to share their recommendations on how to position assets in the weeks ahead. Diversification to hedge tax rate risk FBB Capital Partners' Mike Bailey said that should former President Donald Trump win, his tax cuts might mean better overall prospects for equities. "The big event which could make a significant impact in the equity markets is the tax rate," the firm's director of research told CNBC.
"Certainly, we saw a huge move up last time when taxes were down." Bailey emphasized that while his investment strategy avoids predicting macroeconomic events and timing the market, Depending on the election's outcome, there could obviously be different results for investors, investors could find it helpful to look at the extreme outcomes of the election. In the case of an all-blue swee.