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Morgan Stanley Says Time Ripe for ‘Bottom Fishing’ Stock Losers

  • Strategists recommend large cap defensive bias in U.S. stocks
  • Small and mid-cap value stocks can be other side of barbell

U.S. stock investors can “add some more spice” to their choices as a new year begins and the pressure of keeping up with indexes eases, according to Morgan Stanley strategists. 

“As we enter 2022, the key question for investors is to decide if they want to stay with the relative winners, or is it time to start bottom fishing the losers,” strategists led by Michael Wilson wrote in a note to clients on Monday. “While we continue to favor the large cap defensive tilt that has been working, we recommend creating a barbell with stocks that have already been hammered but offer good prospects at a reasonable valuation.”