This article is part of a regular series of thought leadership pieces from some of the more influential ETF strategists in the money management industry. Today’s article features Gary Stringer, president and chief investment officer of Memphis, Tennessee-based Stringer Asser Management.
The global economy is likely to continue advancing for years, which will create a constructive atmosphere for equity investors.
Collectively, the signals we monitor suggest that the risk of a U.S. recession is still a few years out. A growing economy increases the potential for corporate revenue and earnings growth. As a result, and despite periods of volatility, we expect equity prices to continue marching higher.
Look For Laggards
We think investors should look to emphasize investments in the areas of the equity markets that have not kept pace with some of the hotter sectors.
As the domestic equity market has appreciated this year, performance has been led by companies in the traditional growth style sectors, such as information technology. The value style has lagged, which results in interesting price dispersions that can create opportunities for investors.
Given the sheer magnitude of the growth style outperformance, we think the time for a change of stock market leadership, favoring traditional value style sectors, is upon us.