"With two massive names in the investment world, Bridgewater's Ray Dalio and Ark Invest's Cathie Wood, both commenting on the state of the markets, investors might be ready to rotate into value and defensives before the herd has a chance to hit the panic button. At this juncture, Dalio noted a bubble might be forming and rate hikes from the Fed might be the pin that pops it."
"And while Wood doesn't see a bursting of the bubble, it sounds like she wouldn't be surprised if there were to be a correction at some point, perhaps at the hands of a Fed pivot from rate cuts to rate hikes. Of course, such a pivot could entail great pain for the tech trade, as it did back in 2022."
"United Parcel Service ( NYSE:UPS) isn't typically a safety stock, especially since it's a rather economically sensitive name. That said, the stock has already been punished severely in recent years. Still down around 57% from all-time highs, UPS stock stands out as a bargain-basement name that's too difficult to pass up, even for select hedge funds. The 7.35% dividend yield certainly seems too good to be true, as does the mere 11.6 times forward price-to-earnings (P/E) multiple."
Ray Dalio warns a bubble may be forming and that Federal Reserve rate hikes could pop it. Cathie Wood does not expect a bursting bubble but acknowledges a possible correction, particularly if the Fed shifts from cuts to hikes. A Fed pivot to higher rates would likely hurt the technology-heavy trade, as occurred in 2022. Elevated market valuations leave little room for error, making defensive positioning prudent. United Parcel Service appears attractively valued after severe declines, trading about 57% below its highs with a 7.35% dividend yield and an 11.6x forward P/E, prompting debate between yield-trap concerns and genuine deep value.
Read at 24/7 Wall St.
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