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Is it time to buy consumer discretionary and tech?

05 August 2022 Kyle Wales, Portfolio Manager at Flagship Asset Management
Kyle Wales, Portfolio Manager at Flagship Asset Management

Kyle Wales, Portfolio Manager at Flagship Asset Management

Bear markets always present opportunities when valuation is in your favour.

Investors have favoured defensive over consumer discretionary and tech sectors in a US stock market that has experienced its worst performance in more than 50 years, with the S&P 500 Index posting an overall decline of 20.6% in the first half of the year.

Contrary to general market consensus, however, we believe these least-loved sectors are starting to offer compelling value for investors with a long-term horizon, even though they may face near-term macro-economic challenges.

A defensive investment strategy seeks to reduce the downside risks of losing some or all of an investor’s initial capital by regularly rebalancing to maintain its intended asset allocation targets. It involves buying high-quality, short-maturity bonds and blue-chip stocks and diversifying across sectors and geographies. It would hold cash and cash equivalents in down bear markets.

Consumer discretionary products are any goods that are not necessary to enjoy basic living conditions, such as high-end apparel, leisurely activities and automobiles.

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