Stocks To Buy Instead Of Tech Stocks According To An Analyst 

The Morgan Stanley analyst Mike Wilson believes investors should look somewhere other than tech in order to find safety for their investments.

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It is no secret that tech stocks have outperformed the S&P 500 this year, rising by more than 20% this year and outpacing the S&P 500's 7 percent gains. Recently, technology stocks got a boost after bond yields fell amidst volatility in the banking sector. As investors look for safety and stability in an uncertain market, they have also turned to technology.

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The chief U.S. equity strategist for Morgan Stanley, Mark Wilson, cautioned Monday that the tech sector may not be able to continue its recent outperformance as investors may believe, as Wilson noted that there are risks associated with the industry.

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Despite its defensive nature, Wilson's research suggests that Tech is actually more pro-cyclical in terms of bottoming in bear markets and becomes congruent with the broader market at the bottom mainly because of its beta of just over 1 and its high correlation with the business cycle," Wilson wrote in a note on Monday.

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In general, we recommend that you wait for a durable low in the broad market before putting more aggressively into Tech shares, since the sector is known for robust outperformance following the trough - a time when its cyclical nature works to its advantage on the upside." 

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The widely followed strategist recommends that investors look toward traditional defensive stocks in order to gain a safe return on investment.

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It is generally our view that traditional defensives (Staples, Healthcare, Utilities) offer the best risk/reward potential at current levels, particularly since Tech relative performance has returned to all-time highs and breadth remains weak and technicals have continued to fall.  

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According to Morgan Stanley, in a bear market, you want to own defensive stocks. For instance, the firm identified the utility holding company CenterPoint Energy as a defensive stock with a high-potential in this market as a “Fresh Money Buy List.” Among the safest trades were Coca-Cola and Colgate-Palmolive. Humana was also selected as a smart defensive trade because of its health insurance plan. 

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CenterPoint Energy, Coca Cola, Humana, and Colgate-Palmolive are all down more than 1% at this point in the year, while CenterPoint Energy shares are down more than 1.7%. The shares of CenterPoint Energy also fell by 4% this year. 

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He is also considered to be among the most bearish traders on Wall Street. He has lowered his target for the S&P 500 to 3,900 for 2023 in the Trade Algo annual survey of market strategists.

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