A new investment trend dubbed 'HALO' (Heavy Assets, Low Obsolescence) is gaining traction on Wall Street as investors seek refuge from potential AI disruption.
This strategy favors companies with significant physical assets and a low risk of becoming obsolete, such as energy giants, retailers, fast-food chains, and industrial companies. The trend is highlighted by the underperformance of tech-related ETFs like iShares' Expanded Tech-Software Sector (IGV), which has shed 22% year-to-date, compared to strong gains in energy (XLE, up 23%), materials (XLB, up 18%), and consumer staples (XLP, up 14%) ETFs.
Experts note that companies reliant on physical goods and infrastructure, like those in the energy sector, are less susceptible to disruption by AI technologies. This shift is causing a re-evaluation of market multiples, moving away from enterprise software and towards these more tangible businesses.
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