The economy now appears likely to avoid a recession, so investors can take on some risk, according to BlackRock’s Russ Koesterich. Investors should not choose between growth assets and value assets. Rather, they can split the difference, he told Bloomberg TV. “I think it’s more about picking your spots, having companies with strong cash flow, rather than making these big bets on tech or not tech.” Loading Something is loading.
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The economy now appears likely to avoid a recession, so investors can take on some risk, according to Russ Koesterich, BlackRock’s Global Allocation Fund portfolio manager.
Just a few months ago, the consensus on Wall Street was for a recession this year or next year. But recent economic data have started to shift sentiment toward a soft landing.
And Koesterich is in that camp, predicting decelerating growth but no downturn.
“I think you want to go back to something that is judiciously embracing risk,” he told Bloomberg TV on Thursday.
But he emphasized that investors should not choose between growth assets and value assets. Rather, they can split the difference.
Growth stocks are ones that, while more volatile, have the potential to rise significantly, while value stocks are more conservative but generate reliable results.
Looking for growth companies that are reasonably priced is the way to go, especially in an environment of slowing growth but no contraction.
“I think it’s more about picking your spots, having companies with strong cash flow, rather than making these big bets on tech or not tech,” Koesterich said.
Still, a resilient economy could also force the Federal Reserve to get more hawkish on monetary policy as it tries to get inflation back to its 2% target.
The January jobs report that showed a booming labor market, the latest stickiness in the consumer price index, and the surprise jump in retail sales last month has lifted Wall Street predictions on how high the Fed will raise rates.