Jeff Clark and Andy Swan make a contrarian case for buying beaten-down sectors and avoiding crowded FOMO trades. Their preferred areas are financials, healthcare, and software, while energy is the short-term sector to avoid after a sharp run-up.
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This video is a contrarian market pitch centered on buying weakness where sentiment is washed out and avoiding sectors that have become crowded after big runs. Jeff Clark argues that retail investors usually chase momentum and headlines, while he prefers mean reversion: buy when risk has been “rung out” and sell or short when upside is exhausted. Andy Swan frames the same idea through Likefolio’s consumer data: he looks for products and brands that consumers are adopting even when Wall Street dislikes the stock. On financials, Jeff says banks and private credit stocks have sold off enough to create an opportunity heading into earnings season, when financials often hold up. He highlights American Express as especially attractive because sentiment is washed out and the stock is down meaningfully this year. …
Tactically, the crowding looks most dangerous in energy, while the cleaner setup is in beaten-down financials, healthcare, and software where fear has already reset valuations. The most actionable angle is to wait for pullbacks or use options to define risk instead of chasing extended strength.
Over the next few weeks and months, the bias is for oversold sectors to outperform if consumer adoption and earnings hold up, while energy likely needs to digest its recent surge before offering a better entry. Confirmation would come from stable fundamentals, insider support, and no fresh regulatory or credit shock.
The longer-run message is that disruptive technologies usually reshape, not erase, entire sectors, so investors should look for incumbents that adapt to AI rather than assume software is dead. More broadly, the durable edge is in buying businesses where consumer demand persists despite headline fear.
The energy sector has gotten ahead of itself and investors rushing in due to FOMO over the next two to six weeks will regret it.
Speaker notes energy went from worst performing sector in 2025 to best in 2026, with too many people chasing for fear of missing out, which is a difficult way to invest.
The financial sector (banks, financial stocks, private credit) is setting up well heading into earnings season and presents a short-term buying opportunity because they've sold off recently and now trade at relatively lower multiples.
Speaker cites that financial stocks have sold off recently, tend to hold up into earnings season, and now trade at lower multiples, creating a short-term opportunity.
The narrative that AI will kill software is completely wrong because AI is software that makes software more powerful and democratizes it.
Speaker argues AI is software itself, making software more powerful and useful, analogous to how Amazon democratized e-commerce, bringing more participants into the game.
What approach do you use as a trader when looking at options and using a contrarian strategy?
Andy looks for divergence opportunities where consumers love a brand and are buying its products (strong Main Street data) but Wall Street hates the stock. LikeFolio tracks consumer data to find stocks where consumer demand is high but the stock is beaten down, meaning Wall Street is wrong long term even if short-term risk is correct.
What is the first sector you are bullish on right now?
Jeff is bullish on the financial sector — banks and financial stocks are setting up well heading into earnings season after selling off recently, making them available at lower multiples. He specifically likes American Express as washed out and trading at multi-year low multiples, and is bullish on private credit stocks (KKR, Apollo, Blue Owl) which have been crushed 40-50% but insiders are buying, suggesting the sell-off may be overdone.
Are Visa and Mastercard included in the financial sector downtrend you're seeing?
Yes, but Jeff likes American Express even better than both because it's down 20% since the start of the year and trading at multiples not seen in several years. He says Visa and Mastercard are included in the same down trend.
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