In the current market, with stocks still below their late-January highs and struggling to climb back, Goldman Sachs is advising investors to bet on cash and commodities like oil and copper, at least in the short term. The Wall Street investment bank maintains an optimistic outlook for equities over the next 12 months, but believes the momentum pushing stocks higher through 2017 is fading. While equities should improve later in the year, Goldman is keeping its overweight rating on commodities and upgraded cash for the next three months, according to CNBC.

Bullish on Cash and Commodities

Following extreme bouts of volatility during February and March, equities are basically flat for the year and down from highs reached at the end of January. The S&P 500 is up just 1.7% on the year, as of 10 a.m. ET on Wednesday, while the broad market index is down about 5.4% from its high reached on Jan. 26.

Meanwhile, commodities have been the strongest asset class so far this year and that strength is set to continue. Goldman equity strategist Christian Mueller-Glissman wrote that commodities still have “the strongest return potential near-term, based on our commodities team’s estimates, driven by their bullish view on oil and copper in particular,” according to CNBC. (See also: 3 Charts That Suggest It’s Time to Buy Commodities).

The rise in commodity prices will also create more inflationary pressure, which is likely to give the Federal Reserve even more reason to continue their interest rate hikes throughout the year. Goldman economists see three rate hikes coming from the Fed this year, a number above the Wall Street consensus. With the dollar having risen for three consecutive weeks and continued market uncertainty around trade and this fall's midterm elections, holding cash is an attractive short-term play.  

Don’t Fret Over the Stock Market

In line with Goldman’s more optimistic forecast for stocks over the longer term, CFRA’s Sam Stovall, a veteran market watcher, believes that the current market correction in equities won’t last, and they should end the year on a high note, according to a separate article by CNBC.

Most investors, however, aren’t convinced at the moment. Despite robust first-quarter earnings, the stock market is still struggling to get back to January levels. The lack of market reaction to the strong earnings results suggests that investors are worried that because earnings were so strong, they surely can’t get any better—this must be the peak and the anticipated bear market is finally here. (See also:  3 Defensive Stocks to Weather an Uncertain Market).

Stovall does not share this sentiment, pointing out that the S&P 500 has risen in price in the following nine months after a peak in 12-month GAAP EPS growth 70% of the time since World War II. He’s calling for a 2,900 target for the S&P 500 by the end of the year.