On October 21, Caixin (Editor Huang Junzhi) reported that as the U.S. stocks have been soaring this year, many Wall Street giants have been warning about the possibility of a market bubble. Some experts suggest that investors concerned about this situation should focus on "key sectors" and add some stocks with an "insurance" nature to their investment portfolios.

This is the opinion of David Rosenberg, a top economist in the United States and President of Rosenberg Research. For months, he has been warning about a possible crash in the American stock market. He even previously predicted a 39% pullback in U.S. stocks.

In his latest report, he wrote, "These days, observing the market is like watching a clown inflate a balloon, knowing that the (inevitable crash) result is unavoidable. When this super bubble bursts, it will be spectacular."

Rosenberg points out that investors need to act cautiously, avoid following the "herd mentality," referring to the frenzy around large-cap tech stocks. In his view, investors should focus on stocks with strong business models, strong growth, reasonable prices, and add some "insurance" to their investment portfolios.

However, overall, most forecasters on Wall Street still expect the U.S. stocks to remain strong. In recent weeks, Goldman Sachs, UBS, Bank of Montreal (BMO), and Deutsche Bank have all raised their year-end target prices for the S&P 500 index, with new forecasts ranging from 5750 to 6400 points.

Here are specific recommendations proposed by Rosenberg:

Medical Care and Consumer

Rosenberg states that investors should allocate their investments to things that people will always need in the future. He specifically recommends investors to focus on medical care and consumer staples stocks.

"Focus on people's needs." The report states: "Anything related to e-commerce, cloud computing service, and things that can turn your home into your new office are in the early stages of long-term growth."

Utilities companies

Rosenberg also mentioned that utility stocks seem promising. Other forecasters predict that due to the increasing demand for artificial intelligence in electricity and data centers, utility companies will face significant upside potential.

He wrote: "As we have long said, utility stocks are close to 'no-brainers' as they have income attributes, and due to the strong and long-term prospects of USA electrical demand enhancing profit visibility, utility stocks have been reclassified as 'defensive growth'".

Aerospace & defense

Rosenberg points out that given the escalating geopolitical tensions globally, aerospace & defense stocks may also be bullish.

"For years, aerospace & defense has been a sector we are bullish on in the long term, and also the best hedge against an increasingly chaotic world, as military budgets worldwide expand." He wrote.

Large technology stocks

Rosengerg also stated that although some sectors of the technology industry show signs of a bubble, investors can still seize opportunities in some large technology companies given the widespread adoption of home office, cloud computing services, and remote work. However, he mentioned that investors should wait to buy technology stocks at better prices.

"I prefer to buy these stocks at a better price than now, because the last plunge has had enough impact on future returns, so let's be cautious now. But if the stock market experiences a significant pullback, we will actively buy in," he wrote.

"Buy Insurance"

Rosengberg specifically advises investors to consider adding a "dose of insurance" to their portfolios. He refers to gold and government bonds.

He wrote: "The beauty of gold is that it is not a debt that central banks can easily absolve, nor a currency that governments can print at will. I am also bullish on the US Treasury market because its yield is among the highest in all major industrialized nations, and it has strong liquidity.

Rosengberg said,Real Estate Investment TrustIt may also be a good way to hedge risks. This is especially applicable to industries related to industrial and medical care.Real Estate Investment Trusts.

"In any case, we must become more subjective and thoughtful in decision-making, and more selective than usual, because the stock market and financial assets have generally become a momentum casino," he added.