The CIO of a $14.6 billion firm explains why hunting for bargain stocks now could hurt investors in the long run as yesterday's market leaders like tech are overtaken by new companies — and shares where to invest instead
Instead, investors should be focused on identifying tomorrow's market leaders.Most investors entered 2023 believing that, while a recession in the first couple months of the year might be rough on returns, the subsequent recovery in the latter half shouldBut Dan Suzuki, deputy chief investment officer at Richard Bernstein Advisors, which manages around $14.
He believes that the backdrop looks especially bad for the US market due to its hefty overweight to the frothy growth assets that not only floundered last year, but still have room to deflate, and are unlikely to continue leading markets going forward. According to Suzuki, valuation — which he says is"a terrible timing indicator" — has consistently been a powerful indicator of longer term returns. The fact that these assets are so cheap reflects that no investors want to own them yet — and that's exactly where the biggest return opportunities are usually found, Suzuki explained.
"There's innovation happening in the industrial sector in aerospace and defense," he explained. He also listed examples of other real assets such as energy, manufacturing, and transportation infrastructure that require significant modernization.Aside from high-quality defensive stocks, Suzuki also sees a few areas with attractive opportunities to play offense in this year. Currently, his biggest two overweights include Japan and China.
In fact, the nation is set to exit an ongoing profit recession in 2023, and its central bank has been lowering interest rates to encourage their banks to lend more, ultimately improving liquidity.
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