How to capitalize on the stock market's latest sell-off
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Joe Ciolli
Sep 10, 2020, 02:25 IST
Matthew Caruso
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Dear Readers,
Sometimes the world needs a reminder that stocks don't just go straight up.
You'll have to forgive people for thinking they do, given how quickly major indexes spiked back into bull-market territory following the March bottom. But the past week or so has offered a serious wake-up call — and also presented opportunities for shrewd investors.
The same mega-cap tech titans that pushed the market to new records are the same ones that have led its recent skid. It's a risk that was foreseen by JPMorgan, which preemptively recommended two simple trades that can help protect portfolios.
Those looking to go on the offensive might consider following the strategy laid out by Steven Chiavarone, co-manager of the $395 million Federated Hermes Global Allocation fund. The premise of his recommendation is "making money at the expense of machines," and he also offers four specific sector picks.
While less pointedly opportunistic, Morgan Stanley's wealth management team also has suggestions for traders looking to capitalize on recent weakness. The firm recently outlined four trades tailor-made to thrive during future sell-offs.
Going beyond this smorgasbord of actionable advice, see below Business Insider's best Investing stories of the week. They include a wide array of additional recommendations, strategies, and tips for navigating uncertainty.
Caruso supercharges aspects of O'Neil's strategy by cutting losses at 3%, building monetary-policy projections into his model, leveraging time-based rules, and jettisoning positions at what look like obvious buy points to the untrained eye. He recently listed three stocks that have helped contribute to his extraordinary performance.
Meanwhile, David Baron of the Baron Focused Growth Fund broke down his Tesla bull case, citing how the company has become smarter and more efficient, cash rich, and highly profitable.
Take control of your financial future and learn how to develop an investment strategy that works for you by attending "How to Be a Smarter Investor Now" on Tuesday, September 15 at 12 p.m. ET. The event is part of Business Insider's Master Your Money Live Digital Bootcamp series, presented by Fidelity.
"You're going to continue to see a recovery in the consumer, particularly as we continue to add jobs. So we like consumer sectors. I think you're going to see a stockpiling of medical equipment and medication in response to the pandemic so areas of biotech and pharma are attractive."
— Steven Chiavarone, co-manager of the $395.3 million Federated Hermes Global Allocation fund, on what investors should be looking to buy amid the stock market's sell-off
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