But here’s a safe bet: Once the new bull market is here, entirely different groups will lead. It’ll be out with the old — think FAANGs — and in with the new.
“There is still this belief that once we get through this angst about the economy, we will get back to the market we had in the past decade where growth and tech will do well,” says Linehan.1. Inflation will be much higher for longer, thanks, in part, to reshoring, which reduces the downward pressure on prices we’ve enjoyed from globalization.
Qualcomm has a forward price-to-earnings ratio of just under 12, well below the S&P 500’s P/E of around 16. This discount seems odd, because financials benefit from higher interest rates. They’re probably cheap because so many people expect a recession, which can damage banks if loans go bust. He also singles out the insurance company Chubb CB, +1.06%. Insurers, considered part of the financials group, benefit from rising rates because they park most of their float in bonds. Insurers earn more as their bonds roll over into higher-yielding issues. Property and casualty insurers have pricing power again, in part because of the prevalence of weather-related natural disasters.
Decarbonization is a threat, but it will take a while. “It is clear that hydrocarbons will be a part of the equation for a long time,” he says.
Very few ethical options for investment on his list.