Economists increasingly predict that the U.S. economy could avoid a recession. That should give U.S. stocks a boost into year-end, but Bank of America says investors should go for an equal-weighted approach to the S&P 500 to get the most benefit.
The index’s 500 companies are weighted by market capitalization, so Apple, valued at $2.8 trillion, makes up 7% of the index, for instance. The so-called “Magnificent 7″ biggest stocks, including Nvidia and Microsoft , have powered the stock market higher and are already well-owned. One in five mutual funds hold 40% or more of their allocation in these seven megacap stocks, according to Subramanian. Plus, the valuation gap between these seven stocks and the equal-weighted S&P 500 is at the widest level since the dot-com bubble era.
Broad secular shifts—like U.S.-China tensions and a reassessment of globalization—would also benefit these old economy companies as these trends pose a bigger risk to the technology stocks that have dominated in the last decade. Not only does technology have the highest foreign exposure of all sectors, its supply chains in China and Taiwan pose a risk if geopolitical tensions escalate further.
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Fonte: Investingcom - 🏆 450. / 53 Consulte Mais informação »