Mike Wilson: Stocks Entering New Bull Market, Opportunities in Small and Mid-Caps

The Start of a New Bull Market

• 💡 Morgan Stanley's Mike Wilson believes the market is in the beginning of a new bull market, approximately four months in, following a significant bear market that ended with capitulation in April.
• ⚠️ He suggests that pullbacks will likely be shallower than many anticipate, a classic sign of a new bull market that doesn't easily allow new investors in.
• 📊 Data indicates that retail investors largely remained invested or bought during the April lows, while institutional investors and passive strategies were more responsible for creating that market bottom.

Market Rotation and Broadening Out

• 🎯 Wilson anticipates a broadening out of the market, potentially explaining why the 'MAG7' stocks might be starting to underperform.
• 🚀 This broadening is contingent on the Federal Reserve beginning to cut interest rates, which is expected within the next three to six months.
• 📈 While one day doesn't make a trend, recent performance shows mid-caps and small-caps beginning to bottom out on a relative basis after four years of underperformance.

Investment Strategy and Timing

• 📌 It is not yet time to go 'all-in' on small and mid-cap stocks, but it is time to start considering the move due to their prolonged relative underperformance.
• 💰 The stock market is already pricing in some anticipated rate cuts, contributing to the recent rally.
• ⏳ A potential consolidation or correction in the third quarter, expected within the next six weeks, could be the opportune moment for rotation into broader market segments.