Yahoo Finance Apple's 5G iPhone 12 hasn't changed this Wall Street pro's COVID-19 trade
Break out the barbells.
Not the physical weights that will wipe away the pandemic pounds, but rather a barbell approach to investing in the incrementally volatile stock market.
“This year as we know none of the typical things really reflect what’s going on in the market. It’s all being driven by COVID-19. We think the highest upside and downside risks belong to COVID. A vaccine is going to be the upside. Continued outbreaks will be on your downside. So we are trying to actually do a barbell portfolio,” Crossmark Global Investments chief markets strategist Victoria Fernandez explained on Yahoo Finance’s The First Trade.
A barbell approach to portfolio construction is as it sounds. It’s where an investor or their outside money manager bulks up on two extremes while also having a position of safety as to maximize (hopefully) reward and limit risk. In its simplest example, it could mean owning shares of a high beta tech company (one barbell plate), a high beta industrial company (the other barbell plate) and having a decent-sized position/s in relatively safe Treasuries, cash or dividend paying stocks (the safe weight bar in the middle).
Fernandez’s new barbell portfolio for clients consists of taking some profits in Amazon and Apple before key events this week (Prime Day and the release of the iPhone 12 5G, respectively), raising cash and putting a bit of it to work on other equities she thinks are undervalued should we get favorable COVID-19 treatment news.
“We added Visa. We like that part of the financial world. Obviously there are more and more credit card issuances happening and more and more credit card transactions happening. We like Broadcom as part of the communications phase that will go along with 5G and data infrastructure. We also like names like Walmart and McCormick. I think you can build a barbell portfolio where you have secular growth from higher tech names but you also have more of the value, kind of staple names in there to help balance it out,” Fernandez added.
The keyword here being some profits in Apple and Amazon — her remaining exposure to each will allow clients to participate in any upside from Prime Day or the new iPhone release (which looks impressive, per our tech editor Dan Howley).
Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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