The stock market bubble today looks different from those of the past.Drew Angerer / Getty
Investors worried about a market correction should adjust their portfolios, David Rosenberg says.
The top economist has warned stocks are in a bubble and at risk of a major decline.
He advised investors to pay attention to key sectors and add “insurance” to their portfolios.
A number of Wall Street forecasters have been warning of a stock bubble as the market climbs to a series of fresh highs in 2024 — and investors worried about such a scenario should be putting their money in a handful of assets to protect themselves from the eventual bursting.
That’s according to David Rosenberg, a top economist and the founder of Rosenberg Research, who’s been warning of a potential craash in stocks for months. In the past, he’s warned of a 39% correction to stocks, among the more extreme predictions on Wall Street, where most investors are feeling optimistic about a soft landing amid a robust economy and easing interest rates.
“Watching the market these days is like watching a clown blowing up a balloon (or Chuck Prince dancing the ballroom), knowing the inevitable,” Rosenberg said in a note to clients on Friday. “When this mega-bubble pops, it will be spectacular.”
Investors need to exercise caution and avoid following the “herd mentality,” Rosenberg said, pointing to the fervor for mega-cap tech stocks. Instead, he said, investors should focus on stocks with strong business models, strong growth, and good prices, and add some “insurance” to their portfolios.
Below are his top investment ideas for to prepare for the potential bursting of a market bubble.
Healthcare and consumer staples
Investors should gear their investments towards what people will always need in the future. In particular, Rosenberg recommended that investors pay attention to options in the healtcare and consumer staples sectors.
“Focus on where people are going to focus on what they need, not what they want,” Rosenberg wrote. “Anything related to e- commerce, cloud services, and wiring up your home to become your new…
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