A new world order for the stock market is coming, explains BlackRock CIO

Making money in the stock market will likely look different over the next few years compared to the low interest rate era seen from the end of the Great Financial Crisis, says BlackRock’s CIO of U.S. fundamental equities Tony DeSpirito.

“It’s a really big deal,” says DeSpirito on Yahoo Finance Live.

DeSpirito explains that since the end of the financial crisis, the economy has experienced very low growth, very low inflation and very low rates. But those factors largely ended during the pandemic, with that regime being one with high inflation and a love for stay-at-home stocks.

Now things are changing once more as home prices have shot higher at this point in the pandemic, stock prices are still elevated, the unemployment rate is sub 4% and interest rates are headed upward.

This emerging backdrop means investors have to search for companies that have pricing power and sell unique products. All in, it will be a more complicated backdrop for investors to navigate, concedes DeSpirito.

“This is fertile ground for individual stock pickers,” says DeSpirito.

To be sure, investors are showing angst ahead of this regime shift, DeSpirito predicts.

A majority of investors, 64%, expect the S&P 500 to break below the 4,000 level this year, according to a new Bank of America survey of fund managers out Tuesday. The S&P 500 currently sits slightly above 4,400.

Despite rising market risks, pros tend to agree with DeSpirito that it makes sense to stay Overweight stocks. It just boils down to being more selective than in recent years.

“We want to lean into parts of the market where you have quality,” says Kristen Bitterly, Citi’s head global wealth investments in North America, on Yahoo Finance Live.

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn, YouTube, and reddit