Wilmington Trust’s Meghan Shue has published a contrarian playbook designed to help investors profit during volatility.
Even with increased forecasts and sluggish risk cravings on Wall Street, she cites equity overweight as a first recommendation for anyone with a 9-12 month period.
The company’s investment strategy officer told CNBC’s “Trading Nation” on Friday. “Therefore, we believe that equities are ahead of bonds.”
Next, Shoe emphasizes the purchase of emerging market stocks. It currently includes China, one of the least popular spots on the street. China has been hit by new regulations targeting industries such as Big Tech, cryptocurrencies and casinos. In addition, it addresses the impact of the debt crisis of Chinese real estate developer Evergrande.
“It’s certainly risky in China,” Shu said. “Sure, real estate weakness puts some downward pressure on the economy, but I think regulatory risk is at least some priced at this point. Chinese equities have fallen 30% since February. “
Third, Shoe, who oversees $ 141 billion in assets, believes investors should overweight cyclics and ease their enthusiasm for tech stocks. Her top picks are finance, industry, energy and materials.
“We are also overweighting internationally developed equities that are highly cyclical and tend to benefit from a global economic recovery,” said CNBC contributor Shu. ..
Her basic case is that the global reopening, which was interrupted by the surge in Covid-19 Delta variants, will resume in the fourth quarter, beginning this Friday.
Shue’s fourth role is to significantly overweight commodities for strong demand, inventory restructuring, and the continued impact of inflation.
“The view of that temporary inflation is almost consensus,” Shu said. “I think inflationary pressures will ease in 2022, but I think there is an upside risk, so I’m using this as a hedge,” he said.
Contrarian trading to withstand market volatility: Meghan Shue
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