Veteran, well-respected economist Ed Yardeni has said for at least a year that we’re “in a rolling recession.” Given the strong, overall growth that the economy has generated in recent quarters, I find it difficult to agree that we’re in any type of recession. And some sectors of the economy are always struggling, if only due to technological changes. This has led to the rise of ETFs to buy.
For example, one could, I suppose, argue that the economy has been in “a rolling recession” for 20 years because bookstores, newspapers, and movie theaters have been struggling for that entire period. But on the other hand, Yardeni has a point because high-interest rates are indeed taking a major toll on some sectors at this point, including banks, China stocks, and, of course, homebuilders. Moreover, the travel sector is also slowing.
Conversely, however, other sectors, such as semiconductors and artificial intelligence, are outperforming the market. As a result, finding well-positioned, sector-specific ETFs to buy seems like a better strategy than purchasing large indexes that will get dragged down by the struggling components.
iShares Semiconductor ETF (SOXX)
Chip makers have a few, very powerful positive catalysts heading into 2024, making tShares Semiconductor ETF (NYSEArca:SOXX) one of the best ETFs to buy. First and foremost, in order to create artificial intelligence, a large number of chips have to be employed.
Moreover, in order to handle the huge amount of data associated with AI, data centers, which are big consumers of chips, are rapidly expanding, and more data centers are being built. According to Intel (NASDAQ:INTC), there will be significant demand for high-powered, chip-intensive PCs which will enable users to more efficiently utilize AI.
Also importantly, new autos are utilizing more and more chips, while the latter trend is likely to greatly intensify as vehicles become more autonomous.
Finally, Intel has said that PC sales have bottomed, and that’s certainly good news for chip stocks.
SPDR S&P Bank ETF (KBE)
Bank stocks have tumbled due to worries about economic growth and high bond yields.
But as I noted in a previous column, the labor market is the main driver of economic growth in the U.S., and it has slowed but remains rather strong overall. Meanwhile, worries about high-interest rates affecting the economy are overdone, as I explained in the prior article.
As far as bonds are concerned, a consensus is emerging on the Street that the Fed is done raising interest rates. Once that idea is internalized by the market, bond rates should go down, enabling investors’ confidence about bank stocks to return.
Global X Robotics & Artificial Intelligence ETF (BOTZ)
Robotics and artificial intelligence have at least two things in common. Both significantly reduce companies’ costs by lowering the amount of human labor they need. And both are currently widely proliferating.
Given these points, the Global X Robotics & Artificial Intelligence ETF (NASDAQGM:BOTZ) is one of the best ETFs to buy at this point.
Much has been written about the proliferation of AI, and many companies are clearly beginning to widely deploy the technology. But the robotics sector is also growing rapidly. Indeed, according to one study, for example, the “Global Robot Operating System Market ” is expected to expand at an impressive compound annual growth rate of 11.6% between 2022 and 2028.
Among the impressive stocks owned by BOTZ are Nvidia (NASDAQ:NVDA), whose top and bottom lines have soared tremendously amid the AI revolution, and robotics maker ABB (OTC:ABBNY) whose net profit jumped over 100% in the second quarter versus the same period a year earlier to $906 million.
On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
