The Rise of "HALO" (Heavy Assets, Low Obsolescence) Stocks: Entering the Earnings-Driven Phase
The HALO (Heavy Assets, Low Obsolescence) investment theme—originally coined by Ritholtz Wealth Management CEO Josh Brown and aggressively backed by institutional giants like Goldman Sachs—has proven to be one of the most successful and resilient market strategies of 2026. As of early July 2026, the HALO pair trade, which goes long Capital Intensive companies (GSSTCAPI) and short Capital Light companies (GSSTCAPL), is up an impressive 20% year-to-date.
Initially, the HALO trade was driven by a massive valuation convergence, as investors fled overvalued, asset-light software and technology names in favor of deeply discounted, physical-asset-heavy businesses1. However, in a major tactical update released on July 7, 2026, Goldman Sachs analyst Guillaume Jaisson declared that the HALO trade is entering its next phase of growth: the earnings-driven phase.
With valuations between capital-intensive and capital-light companies having largely converged, future outperformance will be determined by fundamental earnings growth. Goldman Sachs remains highly bullish on this transition, emphasizing that longer-term global asset allocations remain heavily underweight Value and physical assets. As physical infrastructure, energy security, and manufacturing capacity regain strategic importance amidst ongoing global trade friction and geopolitical instability (such as the U.S.-Iran conflict), these asset-heavy companies are poised to deliver superior earnings growth.
Key Quotes
"The HALO pair trade, expressed as long Capital Intensive (GSSTCAPI) vs short Capital Light (GSSTCAPL) companies, is up around 20% year to date... Going forward, we expect returns to be increasingly driven by earnings." — Guillaume Jaisson, Goldman Sachs Analyst Source: Yahoo Finance
"Tactical positioning risks exist after a strong rally and the increasing correlation of HALO with the Momentum factor. However, longer-term allocations remain heavily skewed away from Value, suggesting investors remain under-positioned for a world in which physical assets, infrastructure and industrial capacity regain strategic importance." — Goldman Sachs Investment Research Note Source: Yahoo Finance
Preferred Sectors and Holdings
Goldman Sachs has highlighted several key sectors and specific holdings that represent the physical layer of this trade:
- Infrastructure & Utilities: Enel, E.ON
- Basic Materials & Energy Security: Shell, BP
- Aerospace & Defense: Airbus, Rheinmetall
- Industrial Sovereignty & Manufacturing: Volvo, BMW
- The Physical Layer of Technology: ASML Holding, ASM International (the hardware and lithography tools required to build the physical chips powering the AI boom)
Implications for Investors
The HALO trade offers a powerful framework for self-directed investors looking to balance their portfolios against the high volatility of tech-heavy indices. By focusing on companies that own physical, hard-to-replicate infrastructure with low obsolescence risk, investors gain exposure to tangible, real-world cash flows that are naturally hedged against inflation and supply chain shocks. As the trade shifts into its earnings phase, investors should prioritize companies with high capital efficiency, strong free cash flow, and clear pricing power.
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An instance of High-multiple tech valuations cannot survive when rising interest rates favor heavy, tangible assets — It tracks the success of the HALO investment strategy, which explicitly favors capital-intensive physical assets over capital-light software and technology. ↩︎