Remember when everyone was obsessed with asset-light companies? You know, the ones that basically run on vibes and venture capital? Yeah, those days are officially over.
There’s a market rotation happening right now, and it’s got a name: HALO. That’s “heavy asset, low obsolescence” for those keeping score at home. And while Wall Street’s biggest firms—Goldman, JPMorgan, Morgan Stanley—have all caught onto the trend, the guy who actually invented the framework says they’re still missing the plot.
Enter Josh Brown, CEO of Ritholtz Wealth Management and the person who literally came up with HALO back in early February. He’s basically saying: “Yeah, you’re on the right track, but you’re not quite getting it.”
Here’s the deal: For the past 15 years or so, investors have been absolutely obsessed with companies that don’t need much physical stuff. Software companies, tech platforms, the whole “asset-light” dream. It made sense—why tie up capital in factories and equipment when you can just scale code?
But then AI happened. And suddenly, everyone started panicking about whether a chatbot could replace what these companies actually do. The tech sector got absolutely hammered. The software ETF is down 17% year-to-date. Even though these companies are reporting solid earnings. Wild, right?
That’s where HALO comes in. The framework basically says: companies with real physical assets—equipment, land, facilities, logistics networks—are the ones that are going to win. You can’t replace a power plant with ChatGPT. You can’t automate away an oil rig. These businesses have what Brown calls “durable economic relevance.”
Energy, materials, and industrials are having their moment. After years of getting left behind while tech dominated, these sectors are finally outperforming the broader market.
But here’s where Brown gets a little spicy with Wall Street: this isn’t just another rotation between old and new, growth and value, or defensive and cyclical. Those are all old-school frameworks that don’t apply anymore. This is a genuine regime change.
“That paradigm has been flipped on its head,” Brown explained. We’re not championing asset-light anymore. Now we actually want companies with heavy physical assets on their balance sheet. It’s a complete inversion of what’s been prized for the last decade and a half.
The kicker? Brown says the real test is simple: Can a chatbot or an LLM replicate what this company sells? If the answer is no, you might be looking at a HALO stock. But that’s just the starting point—there’s more nuance to it than just “AI-proof.”
So what does this mean for your portfolio? Well, if you’ve been all-in on software and cloud companies, you might want to think about whether you’re comfortable with that concentration. Meanwhile, if you’ve been sleeping on industrials and energy, the market might be telling you something.
The HALO trade isn’t a fad. It’s a signal that the market’s priorities have fundamentally shifted. And unlike Wall Street’s interpretation, it’s not about picking between old and new—it’s about picking companies that actually matter in the real world.