FX168 Financial News (North America) — As the market climbed to a series of new highs in 2024, many Wall Street analysts began warning of the emergence of a stock market bubble. Investors who are concerned about this should consider investing in small assets to protect themselves from the risk of eventual collapse.

This is the view of David Rosenberg (David Rosenberg), a top economist and founder of Rosenberg Research, who has been warning for months that the stock market may face the risk of a collapse. Rosenberg predicted that the stock market might pull back 39%. This expectation is particularly extreme on Wall Street. Against the backdrop of a strong economy and lower interest rates, most investors are interested in the economysoft landingBe optimistic.

Rosenberg said in a report to customers last Friday (10/18): “Watching the market these days is like watching a clown blow a balloon (or Chuck Prince dancing in a ballroom), knowing that this is inevitable. When this super bubble bursts, it's going to be a spectacular sight.”

He pointed out that investors need to be careful and avoid following a “crowd mentality,” especially fanaticism against big tech stocks. Instead, he advised investors to focus on stocks with strong business models, continued growth, and good pricing, and add some “insurance” to their portfolios.

Here are his best investment ideas to deal with a possible bursting market bubble: #2024年下半年市场展望 #

Healthcare and essential consumer goods

Investors should focus on the goods that people will always need in the future. Rosenberg specifically recommended focusing on choices in the areas of healthcare and consumer essentials.

He wrote, “Focus on what people need, not what they want. Things related to e-commerce, cloud services, and turning a home into a new office are still in their infancy.”

utilities

The outlook for utility stocks is also quite promising. Other analysts predict that utility stocks will gain significant room for growth due to increased demand for electricity and data centers brought about by the AI boom.

Rosenberg said, “Utility stocks are almost a 'no-brain' choice because they have earnings attributes and are re-rated as 'defensive growth' due to strong demand for electricity in the US and increased profit visibility.”

Aerospace and defense

Given the heightened global geopolitical tension, aerospace and defense stocks are also worth watching.

“The aerospace/defense industry has been an area we are optimistic about for several years, and it is also the best way to hedge against an increasingly turbulent world. Military budgets have generally increased in various countries, and we are not sensitive to who comes to power on November 5.”

Big tech companies

Rosenberg pointed out that although some technology sectors are showing bubble characteristics, given the popularity of working from home, cloud services, and remote work, investors can still seize the opportunities of some large technology stocks. However, he advised investors to wait for a better price before entering the market.

“I would rather buy these stocks at a better price than I have now because the recent rise has eroded anticipated future returns. Let's be cautious, but if there is a sharp pullback, we will actively buy.”

Safehaven assets

Investors should consider investing in “one-dose insurance” in their portfolios. This means gold — the “most realistic store of value” — and government bonds, Rosenberg said.

“The beauty of gold is that it's not a debt that the central bank can easily cancel, nor is it a currency that the government can print at will.” He said when talking about this precious metal. “I'm also optimistic about the treasury bond market because it has almost the highest yield of any major industrial country and excellent liquidity.”

Rosenberg added,Real estate investment trusts（REIT) It's also a great way to hedge risk, especially REITs associated with industrial and healthcare industries.

He emphasized, “We must be more thematic, thoughtful, and more picky than usual when making decisions, because the stock market and financial assets in general have become a momentum casino.”

Despite this, most Wall Street analysts still expect the stock market to perform strongly at the end of the year and 2025. Goldman Sachs, UBS, BMO, and Deutsche Bank have all raised their year-end target prices for the S&P 500 in recent weeks. The new forecast range is 5,750 points to 6,400 points.