After a turbulent month for technology stocks, it's worth remembering that a well-rounded portfolio isn't just about AI and chipmakers. Russell's Finimize Portfolio includes a mix of steadier, non-tech names and tactical trades designed to smooth out the bumps. Today, he checks in on how those picks are faring.
The July scorecard
Gold and the tech rotation trade had a decent month in July. Gold, in particular, has been a beneficiary of uncertainty—investors often flock to the metal when markets get shaky or when they expect interest rates to fall. The tech rotation trade, which involves shifting money from high-flying tech stocks into other sectors, also held up well as the tech selloff gathered pace.
The rest of the portfolio, though, has struggled. Daikin, the Japanese air-conditioning giant, and Harrow, a US pharmaceutical company, have both faced headwinds. The Hormuz Recovery basket—a collection of assets that would benefit from a de-escalation in the Middle East—has also been under pressure.
The main culprit? A nearly 20% jump in Brent crude oil prices. When oil spikes, it can hurt companies with energy-intensive operations, raise input costs, and generally weigh on consumer spending. For a basket like Hormuz Recovery, which is tied to geopolitical stability, rising tensions are the opposite of what it needs.
Why the non-tech names matter
It's easy to get caught up in the excitement of high-growth tech. These stocks can deliver outsized returns, but they also tend to swing wildly. That's where the steadier holdings come in. By including companies like Daikin—a global leader in HVAC systems with a long track record—or Harrow, which focuses on niche pharmaceutical products, the portfolio aims to reduce overall volatility.
Gold plays a similar role. It's often seen as a safe haven, and its price tends to move independently of stocks. When tech is falling, gold can provide a cushion. The tech rotation trade, meanwhile, is a tactical bet that money will flow out of tech and into other sectors—a theme that has played out in recent weeks as investors reassess AI valuations.
This diversification is a key principle for everyday investors. Putting all your eggs in one basket—especially a basket full of high-beta tech stocks—can lead to sleepless nights. A mix of asset classes and sectors can help you stay the course when markets get choppy.
What's next: the Middle East wildcard
The next month could look very different depending on what happens in the Middle East. The region has been a source of geopolitical tension for decades, and any escalation can send oil prices soaring and roil global markets. For the Hormuz Recovery basket, a de-escalation would be a positive catalyst. For gold, continued uncertainty could keep prices elevated.
Investors should also keep an eye on central bank policy. Gold has been supported by expectations that the Federal Reserve might cut interest rates later this year. Lower rates make gold more attractive because it doesn't pay interest, so the opportunity cost of holding it falls. If those expectations shift, gold could give back some gains.
For Daikin and Harrow, the outlook depends more on company-specific factors and broader economic conditions. Daikin, for instance, is sensitive to global construction and consumer spending. Harrow's fortunes are tied to its product pipeline and regulatory approvals.
What it means for investors
The takeaway here isn't that one pick is better than another. It's that a diversified portfolio can help you weather different market environments. When tech is struggling, gold and rotation trades can provide a buffer. When oil spikes, energy-sensitive names might suffer, but other holdings could benefit.
That's not to say you should rush out and buy gold or any of these specific investments. Instead, think about your own portfolio. Are you overly concentrated in one sector? Do you have assets that tend to move in different directions? A little balance can go a long way.
As always, keep an eye on the headlines. The Middle East situation is fluid, and oil prices are a key variable. If tensions ease, the Hormuz Recovery basket could rebound. If they escalate, gold might shine even brighter. Either way, being prepared is half the battle.
For more on how gold is performing, check out our recent piece on gold's best month since February. And if you're wondering about the broader market, our analysis of the S&P 500's recent dip offers context.
