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Dear Readers,

What’s already been a wild year for markets got even more turbulent late last week when President Donald Trump tested positive for COVID-19. Stocks immediately took a dive upon digesting the news — and their subsequent recovery was just as sharp amid encouraging reports around Trump’s status and subsequent hospital discharge.

The whole ordeal added even more uncertainty to a market already grappling with its fair share of question marks. Some experts viewed Trump’s diagnosis as a positive for stocks, arguing that it will inspire people to take more precautions. Another school of thought suggested that any minimization of the virus’ effect by Trump behalf might worsen the situation.

So which one is it? And will the election — coming our way in just four weeks — overrule whichever it is in short order?

If you aren’t yet a subscriber to Insider Investing, you can sign up here.

On the election front, even though Trump has long claimed a Democratic win would tank markets, Wall Street has been increasingly arguing the opposite as Joe Biden distances himself in the polls. Just yesterday, the chief economist at Goldman Sachs said that a Biden-led blue wave would lead the firm to boost its economic growth forecasts.

JPMorgan has a more nuanced, albeit constructive view. The firm suggests that instead of tanking on a Biden win, equities will see a mass rotation into beaten-down value stocks. That could mean a stock-picking bonanza.

This renewed market volatility and the resulting range of forecasts has informed Business Insider’s work in recent weeks. See below Business Insider’s best Investing stories of the week, which include a wide array of additional recommendations, strategies, and tips for navigating uncertainty.

Thanks for reading!

— Joe


Bloomberg TV

The world’s biggest and best investment firms pay Rob Arnott for advice. For years, Arnott has spread the gospel of an investment strategy known as “smart beta,” which has evolved into one of the world’s hottest investment strategies and grown into a roughly $1 trillion industry.

In an exclusive interview, Arnott shared with Business Insider he’s seeing opportunities and finding value now. While he sees some big bubbles forming, he also identifies sectors where he see “extraordinary bargains.”

Read the full story here:

‘We are going to see some big shifts in the coming 3 to 6 months’: Investing pioneer Rob Arnott sounds the alarm on ‘quite a few bubbles’ in the market, including the tech boom — and tells us where he is finding bargains now


Fred Alger Management, LLC

The Alger Small-Cap Focus Fund and Mid-Cap Focus Fund, managed by Amy Zhang, have returned 27.39% and 46.08% this year, respectively. Both have outperformed their benchmarks and nearly all of their category peers.

Small- and mid-cap stocks are not only attractive on a valuation basis but also more insulated from political and geopolitical tensions, Zhang told Business Insider. She also shared four stock picks that have helped drive her outperformance across both funds.

Read the full story here:

A portfolio manager who’s outperforming nearly all of her peers this year shares 4 high-conviction stocks driving her strong performance across 2 funds


Brendan McDermid/Reuters

In September, defensive assets that investors use to hedge stock-market losses performed at their weakest since the Global Financial Crisis. JPMorgan’s John Normand recently laid out three alternatives to defensives that investors can consider to hedge their bets.

Read the full story here:

JPMORGAN: The best defenses against stock-market crashes are delivering their weakest results in a decade. Here are 3 ways to adjust your portfolio for this predicament.


Stock pick central

Seeking experts who are willing to name names? Look no further:


Chart of the week

JPMorgan

The chart above reflects the futility of owning assets that have served as historically reliable hedges: US Treasurys, gold, the Japanese yen, emerging-market bonds, and quality stocks.

In response to this, JPMorgan’s John Normand recently laid out three alternatives to defensives that investors can consider to hedge their bets.

Click here for more details


Quote of the week

“A typical basket of defensives is functioning about as well as fire insurance that covers just one bedroom in the house.”

John Normand, JPMorgan’s head of cross asset fundamental strategy, discussing just how poorly traditional stock-market hedges have been working recently