HOW SHOULD INVESTORS POSITION THEMSELVES AT THIS END OF THE CYCLE?

The truth is that there is always a bull market somewhere. For starters, from Fidelity we believe that investors should put their money in values with specific situations: one thing that can be sure in the final part of the cycle is that the dispersion will increase and that many opportunities will arise to increase or decrease the relative profitability.

However, we must be careful with this new race formed by “certain values of growth”. The algorithms that suggest that FAANG values will hold in a fall movement forget some basic mathematical aspects: with capitalizations close to a trillion dollars, I foresee that these companies will be much more exposed to the real economy than during the last crisis when their penetration It was lower and had much more growth path.

Below are some of the markets that I think have the most potential to stand out over the next few years:

  • US: large divergences in monetary policy should make companies oriented to the domestic market continue to shine.
  • India: trade wars do not affect it and its long-term demographic evolution is favorable.
  • Emerging markets: value is beginning to emerge clearly.
  • Japan: Solid cycle of corporate governance (return of capital to shareholders), with some of the strongest corporate balance sheets in the world.
  • Energy / oil: the lack of investment in recent years should translate into strong markets during the next.
  • United Kingdom: would have to travel upwards in a “no Brexit” scenario.
  • Undervalued stocks: if the Fed made a break in its cycle of rate hikes, these actions would be the main beneficiaries, with the financial sector in the lead.