Goldman Sachs: Stock market not seeing surrender-style sell-off, recommends simplifying portfolio and holding more cash.

Goldman Sachs partner and global head of hedge fund business Tony Pasquariello stated that although hedge funds have reduced exposure and asset management companies and systematic traders have been selling index futures in large quantities, the stock market has not yet seen a "truly capitulation-style" sell-off. "Frankly speaking: the market is of course smarter than I am, but I am surprised that market participants have not shown stronger concerns," Pasquariello wrote in a report. He pointed out that historical experience shows that in the stage of soaring oil prices, the stock market should have seen a larger decline, with an average decline of 12% in similar situations in the past. This has made Pasquariello concerned that investors are "underestimating the potential tail-risk downward pressure." However, he added that bulls may be betting on the sustainability of economic growth in the United States; to truly disrupt the current investment narrative, more than just soaring oil prices may be needed. Pasquariello wrote, "Even though the overall trend remains positive, I believe it is reasonable to simplify the investment portfolio and moderately increase cash levels."