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US markets rebounded on Wednesday as AI-related stocks rallied and the Supreme Court's potential skepticism of the Trump Administration’s standing on tariffs emerged. In my Vanguard Moderate strategy, I recommend selling the Vanguard Mega Cap Value ETF (MGV) in favor of the Vanguard Mega Cap Growth ETF (MGK), says Brian Kelly, editor of MoneyLetter.

While the AI trade has been more volatile and appears to be tiring, the US economy has continued to be resilient. Although government economic data is on hold, Wednesday’s ADP jobs and ISM Services data were both positive. Federal Reserve Chair Powell did cast doubt on a December interest rate cut recently, but odds are still seemingly in favor of a rate reduction.

Vanguard Mega Cap Growth ETF (MGK) Chart
 

Our global stock markets were all marginally lower for the reporting period. From Oct. 30 through Nov. 5, the S&P 500 Index (SPX) was off 1.4%; the Euro Stoxx 50 declined 0.6%; the Nikkei 225 dropped 2.1%; and the Shanghai Composite was 1.2% lower.

While stock valuations have been somewhat stretched, with a resilient economy and Fed policy still in our favor, we believe the near-term risks to equities are manageable. It may be wise to maintain your current asset allocations, but to also trim outsized value positions.

The MGK fund seeks to track the performance of the CRSP US Mega Cap Growth Index. The index is a float-adjusted, market-capitalization-weighted index designed to measure the equity market performance of mega-capitalization growth stocks in the US.

My recommended action would be to consider buying the MGK fund.

About the Author

Brian Kelly has enjoyed a long career in newsletter publishing and has maintained involvement with MoneyLetter continuously since 1984. He has been a member of the MoneyLetter Investment Committee for over 30 years.

As vice president and product manager for IBC/Donoghue Inc., and IBC USA (Publications) Inc., Mr. Kelly was responsible for all aspects of the MoneyLetter group of products including planning, marketing, fulfillment, customer service, and public relations.

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