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Market & Portfolio Review: 10-08-21

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The Old Economy Strikes Back

After the trauma of the Great Recession, the U.S. economy experienced years of sluggish growth as Americans paid down debt and saved money to repair their balance sheets. Consequently, investors started to pay more for a narrow group of technology and software stocks that could deliver outsized growth in a low-growth world. As the pandemic winds down, Americans are flush with cash, have low debt levels, and are urgently looking for ways to spend it as inflation reduces the incentive to hold cash.

As a result, economic growth is accelerating, leading to a broader group of “old economy” stocks that could deliver above-average growth to investors while offering attractive valuations as opposed to the nose bleed prices we see across stocks that have dominated the “new economy” such as software, clean energy, and e-commerce. Our research suggests that the leadership shift to value stocks will define the 2020’s and offer investors the best chance to outperform.

Key Takeways

  1. Strong labor markets are not a symptom of recessions
  2. Buy old economy stocks and sell the “new economy” craze
  3. Energy and banks stocks are leading the shift to value

The information here is presented by licensed professionals and not specific to any individual’s personal circumstances. Investment advisory services offered through LifePro Asset Management, LLC, a registered investment adviser. Investments involve risk and are not guaranteed. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment or investment strategy will be profitable or equal any historical performance. Discussion of any specific stocks are based on objective, non-performance criteria and such discussion neither serves as a recommendation nor as the receipt of, or a substitute for, personalized advice. Due to various factors, including changing market conditions, such discussion of positions and/or recommendations may no longer be reflective of current position(s) and/or recommendation(s). Moreover, no client or prospective client should assume that any such discussion serves as the receipt of, or a substitute for, personalized advice from Advisor, or from any other investment professional. Forward-looking statements such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” are based on management’s views and assumptions at the time such statements were originally made and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. LifePro Asset Management does not undertake any obligation to correct or update any forward-looking statements on the LPAM Site.

Robert Reaburn

Robert Reaburn

Robert Reaburn is the Executive Vice President and Head of Wealth Management at LifePro Asset Management. He works with financial advisors building diverse financial portfolios that best empower their clients with a lifetime of financial security.

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