The new era of investing is here and stocks will no longer be the key player, a top global strategist says (2024)

Happy Saturday, readers. I'm Phil Rosen.

I'm eager to share today's conversation with a top strategist about changes to the current investing landscape — but first I have a question.

Who should I speak to next?

Any suggestions? Tweet me @philrosenn or email me at prosen@businessinsider.com with your best recs on who you'd like to see in conversation.

Now let's get to today's Q and A.

If this was forwarded to you, sign up here. Download Insider's app here.

Seema Shah is the chief global strategist at Principal Asset Management. This conversation has been lightly edited for length and clarity.

Phil Rosen: Can you explain your use of the phrase "new era" for investing?

Seema Shah: The key part of it is that we're not in an era of unlimited central bank liquidity.

That is an environment which is very good for investors, even if economic growth isn't strong. That was the post-Great Financial Crisis period.

Now we're in a very different landscape to the one we saw before, and making those kinds of returns is going to be that much harder. Investors can't just rest back on actions they got used to over the last 10 years.

How do you think investors should approach stocks in the current landscape?

SS: One of the key things would be decreasing equity risk. Just as stocks were a key beneficiary of the last era, they will be one of the key losers for the period going forward as long as central banks keep policy very tight.

If you don't like stocks for the new era, what kind of investments would you recommend?

SS: Real assets, like commodities and natural resources.

There's always going to be volatility for a commodity, but if you're looking over the longer term, the picture of commodities is strong simply because they're finite resources, and it's a similar story with natural resources.

I also like listed infrastructure. Historically, in a period of low economic growth and higher-than-expected inflation, it outperforms global fixed income and global equities, almost without exception.

Read the full story from our conversation.

What do you think of Shah's insights on the end of the easy-money era? Tweet me @philrosenn, or email me prosen@businessinsider.com.

And here are the top stories from markets this week:

1. Goldman Sachs named the stocks that hedge funds are piling into right now. Strategists said firms are adjusting to a micro-driven economy, and certain names set them up to outperform the broader market. Here are 12 names institutions are eyeing.

2. The probability of a disastrous US debt default has more than tripled since the start of the year, MSCI wrote in a note. Trading activity in US government credit card swaps has surged as investors buy insurance on a potentially catastrophic event. Get the full details.

3. A new Zillow survey showed that home prices will fall in 2023 but then enter a growth period like the one from the 1980s. The survey forecasts that prices will dip 1.6% this year, then rise at an average yearly rate of 3.5% through 2027. Under that scenario, home prices will be up 23% in 2027 compared to 2021 levels.

4. Nearly two million barrels of Russian diesel are stranded at sea because no one wants to buy them. A warm winter and new sanctions have eased demand for the energy commodity, and now the largest at-sea buildup since October 2020 is floating in the water.

5. Warren Buffett made a splash this week with his annual letter to shareholders. He touted his iconic Coca-Cola and American Express bets, and also trashed managers who manipulated earnings. Read our full recap from the billionaire legend.

6. The Fed's own economists warned that further rate hikes could risk an even worse housing correction. "The bubble hypothesis merits attention," the authors said. See what they had to say about the potential for a "domino effect."

7. Holding cash isn't a guaranteed safe bet. The top strategist at RiverFront Investment group said even though bond yields are surging, there's reason to be cautious: "Cash feels safe during a crisis, but there is a cost."

8. Homeowners are rushing to turn their record amounts of equity into fast cash. American owners are sitting on $29.6 trillion of home equity, according to the Federal Reserve. This is why people are asking banks for credit lines at a pace not seen in years.

9. Buy into this batch of value stocks to help your portfolio thrive during "economic purgatory." That's according to the manager of a $17 billion fund. These are the seven names he expects to withstand looming economic hurdles.

10. These 13 beaten-down stocks offer a "margin of safety" from a potential credit shock. That's according to top-1% fund manager, James Abate. See the full list of names he's most bullish on.

Curated by Phil Rosen in New York. Feedback or tips? Tweet @philrosenn or email prosen@businessinsider.com

Edited by Max Adams (@maxradams) in New York and Nathan Rennolds (@ncrennolds) in London.