The HALO Shift: Why Heavy Assets Are Leading Again

For three years, Wall Street could not get enough of anything tied to artificial intelligence. 

Capital flowed into chips, cloud platforms, software, and every company that could whisper the letters A and I on an earnings call.

Now we are watching the next phase.

The latest headline calls it the HALO trade. Heavy assets, low obsolescence. Investors are rotating into companies they believe cannot be replaced by a line of code.

Stocks like Deere and Honeywell (both of which are in the American Prosperity portfolio) have become symbols of this shift. 

Alongside them sit energy giants such as Occidental Petroleum and a range of industrial and consumer staples businesses. 

Meanwhile, parts of the technology complex have stumbled. The S&P 500 has held up. Beneath the surface, leadership has changed.

This is not fear. This is the next phase.

After an explosive rally led by Magnificent Seven, including NVIDIA, Microsoft, and Amazon, investors are asking a more serious question. 

Which businesses will truly benefit from AI? 

Which businesses will endure regardless of AI? 

That distinction matters.

When Anthropic announced new tools to automate research and legal tasks, investors reacted fast. Nearly $300 billion in market value vanished from software, financial data, and exchange stocks within days.

That kind of reaction tells you sentiment had run hot. It also tells you that capital is now being forced to think.

Here is the deeper truth.

Heavy assets matter. Low obsolescence matters.

But let me be clear. This is not an obituary for technology. It is a reminder that real businesses win in the long run.

Look at the sector data. 

Through February 20, consumer staples posted their best start to a year on record within the S&P 500. Industrials and materials have outpaced the broader index. Utilities have attracted steady flows. 

At the same time, information technology has lagged after years of dominance.

That is rotation. Not collapse.

We have seen this movie before. In every major technological wave, capital first rushes to the obvious winners. Then it questions valuations. Then it widens its lens. Eventually, it separates durable compounders from fragile stories.

This is precisely what we focus on at American Prosperity. 

A business like Deere is not immune to cycles. Farm income fluctuates. Equipment orders can slow down. 

But the installed base, the dealer network, and the precision agriculture software layered onto physical machines create a moat that is not easily breached. Farmers still need tractors. They need parts. They need service.

Honeywell operates one of the most sophisticated industrial technology platforms in the world. Its aerospace systems, factory automation, and building controls are embedded deep inside physical infrastructure. 

AI can enhance performance and efficiency. It cannot replace the installed base that runs aircraft, plants, and commercial buildings across the globe.

This is why I have always emphasized quality over hype.

Research shows that companies with strong profitability and disciplined capital allocation outperform over time.

Quality outperforms in every market cycle.

The HALO trade is simply the market rediscovering that principle.

Now consider the broader picture. The Nasdaq reached an all-time high last October. Since then, leadership has broadened. Smaller companies, international equities, and blue-chip industrials have participated. 

That is healthy. Bull markets do not survive on narrow leadership alone.

At the same time, individual investors are still buying technology leaders. Data storage providers such as Seagate and Western Digital rank among the best performers in the S&P 500 this year. Capital is not abandoning AI. It is becoming selective.

That is exactly what should happen.

We are entering the proving phase of the AI cycle.

This is bullish because America thrives on adaptation. Our capital markets reprice quickly. Our companies adjust. Our entrepreneurs build. When hype fades, discipline rises. When discipline rises, long-term investors benefit.

The real opportunity is not hiding in a bunker of low-growth assets. It is in owning businesses with real earnings power, strong balance sheets, and assets that cannot be replicated overnight. 

Some of those businesses are industrial. Some are technological. Many combine both.

The real opportunity sits where heavy assets meet embedded intelligence. It lives inside physical infrastructure that is strengthened by software, not threatened by it. It shows up in businesses that generate real cash flow today while still investing in innovation for tomorrow. 

Real cash flow supported by innovation.

That is the sweet spot.

Wall Street may call it HALO. I call it common sense.

In every cycle, the winners are companies that generate real profits and reinvest them wisely. They survive disruption because they create value. They compound because they have options.

Hype is fading. Proof is rising. Capital is getting smarter.

That is not a warning sign.

That is the foundation of the next leg higher.

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Regards,

Charles Mizrahi
Prosperity Insider