Tech Stocks' Run May End as Markets Brace for Economic Slowdown and Shift Towards Defensive Sectors
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Tech stocks like Apple, Nvidia, Tesla, Meta, Alphabet, Microsoft, and Amazon have significantly outperformed defensive sectors like utilities and real estate in 2023.
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However, economic data indicates a slowdown is coming - inflation is cooling, job growth is slowing, and consumer spending is set to decrease.
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As a result, the Fed is likely finished hiking rates, interest rates will fall, and the stock market will likely shift towards more defensive stocks.
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We believe this will lead to a reversal where tech highflyers underperform while defensive dividend payers like utilities and REITs start to outperform.
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We are positioning for this reversal by buying high quality, undervalued, high yielding names like Algonquin Power, ATCO, Brookfield Renewable, Brookfield Infrastructure, Enterprise Products Partners, and Realty Income.