- The stock market is rotating away from the tech sector into what Goldman calls "old economy" stocks.
- HALO, a term coined by Josh Brown, is short for heavy asset, low obsolescence.
- Brown says the HALO trade is a more accurate framework for finding winners in today's market.
There's a shift taking place in markets this year, away from the tech winners of recent memory and into HALO stocks.
That stands for "heavy asset, low obsolescence." It's the market's hot new trade, but the term's inventor says Wall Street is misunderstanding it.
The HALO framework says companies with substantial physical capital and durable economic relevance will outperform asset-light businesses like software makers, and has been flagged as the antitode to investors' AI panic.
Josh Brown, CEO of Ritholtz Wealth Management and the coiner of HALO, says the recent market rotation is more than an anti-AI play; it marks a simple yet significant shift in the characteristics investors want in the companies they are buying into.
Brown told Business Insider that the HALO framework, which he created in early February, describes a market rotation that was already underway. The recent AI scare has only further catalyzed the trade.
The tech sector is in the red since the start of 2026, with the software industry among the hardest hit. The State Street Technology Select Sector ETF is down 5% year-to-date while the iShares Expanded Tech-Software Sector ETF is down 17%.
This dramatic downturn came despite software companies' latest earnings reports generally showing strong results.
"The internal logic of the stock market today has nothing to do with the real-time results the company's reporting, and has everything to do with whether or not companies are immune to AI or susceptible," Brown explained.
He said that asking, "Can a chatbot or an LLM replicate what this company sells or not?" is a good indicator of whether a stock fits into the HALO framework, but it isn't the only factor.
Energy, materials, and industrials sectors, which tend to fall into the HALO bucket, have outperformed the broader market, a sharp contrast from recent years of tech dominance driving the bulk of the market's gains.
Brown's HALO framework caught the attention of some of the market's biggest firms, including Goldman Sachs, JPMorgan, and Morgan Stanley, but Brown told Business Insider that while Wall Street's framing is on the right track, it doesn't quite nail his thesis.
To Brown, the HALO trade isn't just an inflection point in the usual investment cycle, but a distinct regime change in the market that falls outside the usual paradigms.
"It's not old versus new, it's not growth versus value, it's not defensive versus cyclical, it's not small versus large. Those are all an old paradigm that's not applicable to what's going on," Brown said.
He explained that since the global financial crisis in 2008, investors have favored asset-light companies that don't rely on investment in physical infrastructure, such as software makers.
"That paradigm has been flipped on its head, and in the HALO era, you no longer are championing asset-light business models," the investing pro told Business Insider.
"Now, we actually want companies to possess heavy assets, physical assets on their balance sheet, be it equipment, land, facilities with logistics. This is now what's prized," he outlined.
The post The HALO trade is powering a market rotation. The investor who coined the term says Wall Street is getting it wrong. appeared first on Business Insider
