How to capitalise on the stock market's latest sell-off

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Dear Readers,

Sometimes the world needs a reminder that stocks don’t just go straight up.

You’ll have to forgive people for thinking they do, given how quickly major indexes spiked back into bull-market territory following the March bottom. But the past week or so has offered a serious wake-up call — and also presented opportunities for shrewd investors.

The same mega-cap tech titans that pushed the market to new records are the same ones that have led its recent skid. It’s a risk that was foreseen by JPMorgan, which preemptively recommended two simple trades that can help protect portfolios.


If you aren’t yet a subscriber to Insider Investing, you can sign up here.

Those looking to go on the offensive might consider following the strategy laid out by Steven Chiavarone, co-manager of the $US395 million Federated Hermes Global Allocation fund. The premise of his recommendation is “making money at the expense of machines,” and he also offers four specific sector picks.

While less pointedly opportunistic, Morgan Stanley’s wealth management team also has suggestions for traders looking to capitalise on recent weakness. The firm recently outlined four trades tailor-made to thrive during future sell-offs.

And then there’s Bank of America, which is closely watching a series of under-the-radar indicators that suggest the stock market is “running on fumes.” The firm recently warned a September meltdown may just be getting started.

Going beyond this smorgasbord of actionable advice, see below Business Insider’s best Investing stories of the week. They include a wide array of additional recommendations, strategies, and tips for navigating uncertainty.

Thanks for reading!

— Joe

Tips from investor who made a 382% return in first half of 2020

Matthew CarusoMatthew Caruso

Matthew Caruso captured a 382% return in the first half of 2020, and trading methodology stems from William O’Neil’s renowned CANSLIM approach.

Caruso supercharges aspects of O’Neil’s strategy by cutting losses at 3%, building monetary-policy projections into his model, leveraging time-based rules, and jettisoning positions at what look like obvious buy points to the untrained eye. He recently listed three stocks that have helped contribute to his extraordinary performance.

Read the full story here:

US Investing Championship hopeful Matthew Caruso landed a 382% return in the first half of 2020. He shares the unique twist he’s putting on a classic trading strategy — and 3 stocks he’s holding right now.

A pair of Tesla bull cases


FILE PHOTO: Tesla Inc CEO Elon Musk speaks at an opening ceremony for Tesla China-made Model Y program in Shanghai, China January 7, 2020. REUTERS/Aly Song/File PhotoReuters


Tasha Keeney, an analyst at the $US28.4 billion asset manager ARK Investment Management, explained to Business Insider how Tesla’s new equity issuance is structured in a way that favours retail investors and could help ramp up production.

Meanwhile, David Baron of the Baron Focused Growth Fund broke down his Tesla bull case, citing how the company has become smarter and more efficient, cash rich, and highly profitable.

Read the full stories here:

One of Tesla’s biggest bulls on Wall Street breaks down how the company’s $US5 billion stock sale could benefit retail investors — and explains why the electric-car giant would still be cheap at $US1,400 per share in 2024

David Baron’s fund has returned 93% to investors in the last 12 months thanks to a Tesla bet 5 years ago. He told us why he thinks the electric-car behemoth has much further to run, despite its huge rally.

Stock pick central

Seeking experts who are willing to name names? Look no further:


Take control of your financial future and learn how to develop an investment strategy that works for you by attending “How to Be a Smarter Investor Now” on Tuesday, September 15 at 12 p.m. ET. The event is part of Business Insider’s Master Your Money Live Digital Bootcamp series, presented by Fidelity.

Register here.

Business Insider

Quote of the week

“You’re going to continue to see a recovery in the consumer, particularly as we continue to add jobs. So we like consumer sectors. I think you’re going to see a stockpiling of medical equipment and medication in response to the pandemic so areas of biotech and pharma are attractive.”

— Steven Chiavarone, co-manager of the $US395.3 million Federated Hermes Global Allocation fund, on what investors should be looking to buy amid the stock market’s sell-off

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