Kevin Mahn, President And Chief Investment Officer At Hennion & Walsh Asset Management, dives into the do’s and don’ts of the current market.
Transcript:
Caroline Woods:
Joining me now, Kevin Mahn, president and chief investment officer at Hennion & Walsh Asset Management. Kevin, great to have you back at the desk.
Kevin Mahn:
Great to be back here at the New York Stock Exchange.
Caroline Woods:
Yeah, so we’re talking stocks. U.S.-China trade tensions did have investors on edge for a bit, but stocks are back in positive territory today. What’s your take? How much of this market rally depends on the two sides striking a deal?
Kevin Mahn:
Yeah, I still contend that China is the top of the fight card as it relates to global tariffs and trade. And the more back and forth that we hear, the more investors get concerned about what the long-term prospects are. Of course, we need their rare earth minerals and they need our chips, so that’s at the heart of all this. But the market seems now to be looking past that. We had that initial pullback on Friday, and boy, did we have a relief rally on Monday. That just reminds me—and should remind investors as well—about the dangers of trying to time the market.
Look, I’ve been doing this for over three decades. I don’t know how to time the market effectively. It’s an exercise in futility. So stay invested. Stay invested consistent with your risk tolerance, build in diversification where appropriate, but don’t play this guessing game of in the market, out of the market, in the market, out of the market—because you’re likely to miss out on the most significant returns that the market has to offer.
Caroline Woods:
But for those investors looking to put some money to work—maybe they missed the initial huge run higher—would you say that opportunities like last Friday were a good buying opportunity, or will there be better? You can’t time the market, but would you be comfortable putting money to work right now, with stocks very close to record highs?
Kevin Mahn:
Yeah, I do believe we’re in a buy-the-dip type of phase once again right now. We’ve had 33 record closes thus far this year for the S&P 500—57 such record closes last year. We have the market trading at elevated valuations, so most would think, “How much higher could we go?” But we got a tailwind back in September, and that tailwind came from the Federal Reserve.
There was a stat put out by Goldman Sachs that looked at the last 40 years and found that the Federal Reserve cut interest rates eight times after pausing for six months or more, as they did in September. Now, in four of those times, Caroline, the economy moved into recession—that’s not our base case here. In the other four instances, however, when the economy continued to grow—even if at a slower pace—the market moved higher by an average of 8% over six months and 15% over the next 12 months. I think we’re leaning more toward that, but you’re going to have to be a lot more selective to find those growth opportunities this time around.
Caroline Woods:
15% from here?
Kevin Mahn:
From here, over the next 12 months.
Caroline Woods:
All right. So if you have to be selective, what should you be adding to your portfolio? What should you be taking out?
Kevin Mahn:
Sure. I think you want to continue to follow the money—aerospace and defense spending, and infrastructure spending. And I know we continue to talk about the AI revolution, but I’m more focused on the infrastructure buildouts and all the money that’s being spent there—on data centers, on cooling solutions, on power solutions.
Some names that I think coincide with that: a name like IIS Holdings—most haven’t heard of the company. They provide electrical connectivity to data centers. Their stock’s up almost 97% year-to-date.
How about a company like Comfort Systems, ticker symbol FIX. They’re in the industrial sector. What the heck do they have to do with the AI revolution? But they supply cooling solutions to warehouses, distribution centers, and data centers. Their stock is up over 100%.
And then finally, Caroline, two names that are reporting earnings this week: ASML, which reported earnings earlier today, and Taiwan Semiconductor, which reports tomorrow. I think those are other great ways to play the AI revolution without just going back and forth with Nvidia, which in my view at least, still sits at the hub of the AI ecosystem.
Caroline Woods:
I was going to say—notably missing from your list is Nvidia. You can’t count out Nvidia. You still would be putting money to work in Nvidia?
Kevin Mahn:
Absolutely. Absolutely. And I think Nvidia is playing the long game with respect to AI. They used to be just in chips. Now what we found in last quarter is that 88% of their revenues came not from chips but from data center revenue.
Subscribe |
Earn. Live. Invest. |
TheStreet Pro |
#Investing #Stocks #WallStreet
source
