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March 9, 2020, 9:09 a.m. EDT

Here’s what to buy in a ‘completely absurd’ market, according to this longtime strategist

Energy is a controversial sector right now. Rosenberg says buy, selectively.

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By Andrea Riquier


The Lamb Brothers
David Rosenberg, chief economist and strategist for Rosenberg Research

Amid the dizzying market volatility of the past few weeks, investors are left to wonder: is this a temporary state of affairs or the start of something more downbeat?

“The volatility is completely abnormal, but we do know the magnitude is more consistent with bear market than bull market behavior,” wrote David Rosenberg, chief economist and strategist of Rosenberg Research, in a Thursday research note.

To be sure, Rosenberg is well-known as a longtime bear himself.

Read: Three charts, one bear: here’s a second opinion on markets and the economy

But with stocks in the red for the year to date, profit warnings piling up left and right, and haven assets sending a strong signal that all is not right with the world, it may be worth considering the glass-half-empty view of markets right now.

Rosenberg shares some suggestions on how to invest for what he calls “a completely absurd market environment,” in which, he adds, “an alien would be questioning the mental acuity of the human race.”

See: Buy the dip? Here’s how some analysts say investors should play it

• Cash, which allows investors to keep their powder dry

• Gold  and gold mining stocks /zigman2/quotes/206399889/composite GDX +0.94% , which Rosenberg calls a “low-cost hedge at a time when central banks are running amok again,” and when “nearly 80% of the world now has negative real yields”

• Long Treasurys /zigman2/quotes/211347052/realtime BX:TMUBMUSD30Y -2.75%  

• Short-dated high-yield credit as a hedge against the havens in gold and Treasurys.

• Residential real-estate investment trusts /zigman2/quotes/200033718/composite AMH +0.92%  

Utilities

• Canadian banks

• Energy: a “contrarian” pick, Rosenberg acknowledges. He says he likes oil and gas storage, refiners, and exploration and production groups.

Read: ‘We are giving up on energy’, say Jefferies analysts, who compare beaten-down sector to ‘62 Mets

/zigman2/quotes/206399889/composite
US : U.S.: NYSE Arca
$ 34.32
+0.32 +0.94%
Volume: 33.43M
May 29, 2020 4:00p
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/zigman2/quotes/211347052/realtime
add Add to watchlist BX:TMUBMUSD30Y
BX : Tullett Prebon
1.41
-0.04 -2.75%
Volume: 0.00
May 29, 2020 5:00p
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/zigman2/quotes/200033718/composite
US : U.S.: NYSE
$ 25.24
+0.23 +0.92%
Volume: 3.04M
May 29, 2020 4:00p
P/E Ratio
84.67
Dividend Yield
0.79%
Market Cap
$7.60 billion
Rev. per Employee
$869,412
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Andrea Riquier reports on housing and banking from MarketWatch's New York newsroom. Follow her on Twitter @ARiquier.

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