Bruce Campbell's Top Picks: February 23, 2022
BNN Bloomberg
Top picks from Bruce Campbell, president and portfolio manager, StoneCastle Investment Management
MARKET OUTLOOK:
Markets have been correcting with multiple macro headwinds including the most well known; Inflation, interest rate increases and geopolitical tensions. All this uncertainty has investors fearful and in a mood to sell first and ask questions later.
Small- and mid-cap stocks started their correction a year ago after topping on Feb. 16, 2021. Since last fall, they have been joined by the large-cap stocks which have also undergone a correction year to date. We anticipate the small- and mid-cap stocks to be the first to emerge from the correction.
We continue to be concerned that as the quarter progresses, it will become evident that central banks are raising interest rates into a slowing economy. This will cause the economy to slow at an accelerated pace and could approach recessionary levels. Markets have already discovered this in the forward-looking numbers and is part of the reason for the correction.
In this environment of slowing economic numbers, there are still opportunities to generate returns in markets where nimble investors can follow the money flow to find attractive asset classes, sectors, and individual companies. Currently, the strongest sectors include energy, materials, select financials and consumer staples. With investors fearful, sentiment has been pushed to levels where historically, markets have found a bottom. The challenge is sentiment can not always be used as an effective timing tool and must be used with other top-down indicators to help with the “all clear”.
TOP PICKS:
