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Goodbye, 'Davos Man.' 'Joe Six-pack' rules investing now

A man walks in Davos's street during the annual World Economic Forum in Davos, Switzerland.
Fabrice Coffrini | AFP | Getty Images
A man walks in Davos's street during the annual World Economic Forum in Davos, Switzerland.

"Davos Man" and his investing ideas look like they're falling out of favor, and "Joe Six-pack" is taking over.

Bank of America Merrill Lynch strategists have used those hypothetical investors to represent trends that have accelerated with the "Trump trade." They pit the "every man," everyday investor, Joe Six-pack, and his domestically focused Main Street agenda against the global investing themes of Wall Street, personified by "Davos Man."

"Conventional wisdom has flipped from Davos Man to Joe Six-pack," they wrote. BofA said investors are moving away from the globalization type of trades of "Davos Man," who is named for the annual international confab in Davos, Switzerland, where corporate and political movers and shakers go to see and be seen. The World Economic Forum's annual meeting begins next week.

Davos Man investing

  • Deflation
  • Central bank omnipotence
  • Fiscal austerity
  • Globalization
  • Bonds
  • Large-cap
  • Technology
  • Financial assets

Joe Six-pack investing

  • Inflation
  • Central bank impotence
  • Fiscal stimulus
  • Isolationism
  • Commodities
  • Small-cap
  • Banks
  • Real assets

The trend has been fueled by a number of factors, including the fact that $1.5 trillion flowed to bond funds in the past 10 years, while equity funds were ignored. Real assets, the strategists note, are at 90-year lows versus financial assets.

That was the Davos Man trade. But Joe Six-pack doesn't like bonds.

"Thus we should expect the ongoing rotation out of entrenched Wall Street to Main Street ... assets to be violent, extreme, and ultimately overshoot," the strategists wrote.

Davos Man's trades were fueled by easy central bank policy, while Joe Six-pack looks to fiscal stimulus and deregulation to drive his investment choices.