Christopher Wood: hold a growth and value “barbell“ portfolio

Christopher Wood, global head of equity strategy at investment banking firm Jefferies, suggests a “barbell“ strategy of holding growth and value stocks.

The spike in coronavirus cases across America may be less concerning than it looks, says veteran analyst Christopher Wood in Greed & Fear, his weekly strategy note. The average age of new cases is falling, while deaths are declining despite rising infections. That may be because increased testing is finding a greater number of cases and more of those cases are younger and healthier people, but it could also imply that Covid-19 is evolving to become less virulent and will burn out. “If such is indeed the case, it is extremely bullish. Investors should certainly keep an open mind on such a possibility.”

However, even if we face a severe second wave of infections, we are unlikely to see a fresh round of global lockdowns. Donald Trump will not countenance shutting down the US as the presidential election draws near, while new outbreaks in Europe are likely to be dealt with by local closures. Instead, “the biggest risk to stocks, especially growth stocks, will come next quarter, when investors will be talking V-shaped recovery and there will be a sudden realisation that monetary policy is too easy”.

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