In May, I highlighted diversification and the possibility of a reversal between growth and value stocks, and this partially happened in July,” says Even Krohn-Pettersen of Stavanger Asset Management.
“In August, growth stocks rose again, largely due to the strong quarterly results of AI companies.”
The fund manager notes that corporate earnings growth and investor risk appetite remain relatively strong, but government debt and interest rates are now receiving increasing attention.
Risk of Dollar Strength
Krohn-Pettersen points out that countries with their own currency could, in the worst case, repay debt by “printing money”—but such measures typically weaken their currency.
“For international holders of US Treasury bonds, a 10–20–30% strengthening of the dollar means poor returns and reduced confidence, which in turn leads to lower demand and rising interest rates,” he argues.
“A stronger dollar also leads to higher import prices and increased US inflation.”
The manager emphasizes that it could take a long time before such a scenario materializes.
“In the meantime, the Iran war, trade wars, and higher tariffs are contributing to inflationary pressure in the US,” he continues.
“This reduces the Republicans’ chances in the midterm elections and increases the likelihood of Democrats retaking the House of Representatives.”
A Democratic victory in the US midterm elections in November could make it much harder for Trump to implement his policies.
Possible Policy Paralysis
If Democrats win the November midterm elections, the result could be partial policy gridlock in the White House and potential impeachment proceedings, according to Krohn-Pettersen.
“After the midterms, the range of possible outcomes increases significantly, so it may be wise to position yourself for this in advance,” he adds.
The manager therefore recommends maintaining a short duration in the bond portfolio to protect against rising interest rates without sacrificing current yield.
“You can now achieve over 5% current yield on short-term bonds with very low risk, which makes it easier to be patient while waiting for a reasonable rebalancing opportunity,” he says.
Quality and Value Stocks
Krohn-Pettersen also recommends an overweight in quality and value stocks to be less vulnerable to a potential repricing of the most expensive growth companies, and because “quality” is now more attractively priced.
“When it comes to AI exposure, it’s probably better to own the companies that build the infrastructure and tools needed, rather than betting on which models or chips will win the race,” he says.
Additionally, the manager believes more comprehensive currency hedging is warranted, especially against a potentially weakening US dollar.
“Timing is always difficult, but we can control diversification and good portfolio construction—and that has become more important than it has been in a long time,” he concludes.
https://www.finansavisen.no/finans/2026/09/04/8377774/forvalter-even-krohn-pettersen-advarer-mot-dollarsmell
