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Dear Readers,
With major US stock indexes back within shouting distance of record highs reached before the coronavirus crash, one might think the market is headed back to business as usual.
Not so fast.
Even if those lofty levels are attained in the coming weeks and months — something viewed as eminently achievable by JPMorgan — there's a growing consensus that long-standing market conditions will be turned on their head. Suddenly, simply buying proven mega-cap tech winners and banking on their prices to soar may not be the best strategy.
Many experts across Wall Street have instead trained their attention on the areas of the market best positioned to capitalize on the sudden wave of dislocation.
Jeffrey Kleintop, the chief global investment strategist at Charles Schwab, falls into that camp. He sees a surprising stock-market rotation playing out for the first time in 12 years. And rather than tout the growth merits of tech, he's far more interested in the upside offered by by financial and industrial shares — plus international stocks.
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Morgan Stanley's US equity chief Mike Wilson also has some interesting recommendations pegged to his expectation for a swift V-shaped economic recovery. He's already advising investors to hitch their wagons to so-called cyclical stocks, which outperform during expansion periods.
But he's not talking about tech. He instead sees the opportunities in financial and small-cap shares.
Those are ultimately just two examples of what the Investing team at Business Insider has explored over the past several days. See below for our best stories of the week, including a wide array of recommendations, strategies, and tips for navigating a historically uncertain landscape.
Thanks for reading!
-- Joe
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Stock picks from two of the world's best portfolio managers
Morgan Stanley's Dennis Lynch and Kristian Heugh run the No. 1 US and international large-cap funds of the past decade. Both manage or co-manage several funds that have doubled investors' money or better in recent years.
The two highly successful growth investors told Business Insider about the stocks that they think have the most potential in the new decade. Spoiler alert: they're not sold on mega-cap tech titans like FANG in the long run.
Read the full story here:
Wall Street's best US and international stock pickers have tripled their clients' money since 2010. The duo break down 5 future-proof companies that could keep investors ahead of the pack through 2030.
20 companies that will keep paying strong dividends
Jefferies strategist Desh Peramunetilleke says investors don't appreciate how many more companies are going to cut their dividends in the near future.
In response, he and his team created a six-step process to find the companies least likely to make those cuts and narrowed them down to 20 companies spread around the world. He says they're worth a look for investors seeking reliable cash payouts going forward.
Read the full story here:
Jefferies created a 6-step process for finding companies that will keep paying strong dividends — and landed on these 20 global stocks as 'rock-solid' picks
It's not too early for traders to position for the 2020 election
Morgan Stanley's Michael Zezas says investors shouldn't get overconfident about the possibility of a divided federal government after the 2020 elections.
He says full sweeps by either party are more likely than most traders appreciate, and that investors are misreading two key effects of a "blue wave" led by former Vice President Joe Biden. Zezas offers market recommendations for intrepid investors looking to reject these notions.
Read the full story here:
Morgan Stanley says investors are misreading the implications of a 'blue-wave' election outcome — and provides 2 recommendations for traders preparing for a Biden victory
Breaking down an Army neuroscientist's real estate side hustle
Heath Jones — a US Army neuroscientist, cohost of "The Multifamily Real Estate Experiment Podcast," and co-owner of H Squared Capital — started investing in real estate after his income was reduced by 15%.
Jones employs a simple incremental value-add strategy that focuses on increasing the net operating income of a property. Today he has 23 units in total — a four-unit property, 16-unit building, and three single-family rentals.
Read the full story here:
Heath Jones is a US Army neuroscientist whose side hustle is scooping up real estate for passive income. Here's how he leverages a simple strategy for extra cash.
Chart of the week
Conventional market wisdom suggests an ideal time to buy cyclical stocks is during an economic upswing. The hard part? Knowing when such an expansion phase is playing out.
Mike Wilson, the chief US equity strategist at Morgan Stanley, says one is happening right now — and he's all-in on a sharp V-shaped economic recovery.
Wilson points to the blue line in the chart above to highlight the massive upside he sees in cylical shares. He argues that if the economy is truly recovering, that line has much further to climb.
Click here for more details — and specific recommendations.
Quote of the week
"New market leadership in the second half of the year could catch a lot of investors by surprise."
— Jeffrey Kleintop, chief global investment strategist at Charles Schwab