Gene Goldman, Chief Investment Officer at Cetera reveals what to buy if the market pulls back.
Transcript:
CAROLINE WOODS: So if there is a pullback which you’re expecting what are you buying on the dip?
GENE GOLDMAN: Oh we’re buying. I mean it’s a good point. So that sell off that we had and the V shaped bounce back. That was a high beta driven market high beta IPOs penny stocks. It was almost like just this a poor market rally. If markets do pull back though especially if the, say, the Fed has to cut rates faster, they make a policy error. Generally speaking, when the Fed comes in and cuts rates, market breadth tends to widen. Small caps, mid caps look attractive. Value looks attractive over growth from a sector perspective. Our favorite areas are technology. You know I think technology you have to look at the fact that you want to focus on fundamental opportunities, secular fundamental opportunities, artificial intelligence, cybersecurity and even infrastructure as a long term opportunity. We also love industrials. You know you look at the opportunities industrials I know they’re the top performing sector this year. But the good news is that look at NATO. NATO increased their spending on their estimated spending of GDP on defense from 2% to 5% That’s a huge, huge boon for defense spending and domestic defense spending. We’re seeing wars are changing a bit more drones, more technology. There’s going to be a revamp of some of our military defense spending. And the third area is financials. Second half of the year, a lot more IPOs, a lot more debt issuance and a lot less deregulation. All that taken together is our three big sectors.
CAROLINE WOODS: But to your point, industrials and even tech. Now the tech sector is at or near record highs. So you think those rallies have room to run?
GENE GOLDMAN: We do. We do I think if you think about the AI continuum and the AI continuum, generally speaking, people buy semiconductors first. We saw the same thing in the tech bubble in 1099 buying semiconductors as a first step. Then it’s applications, then it’s then it’s storage. So we think that semiconductors have been the bigger driver of artificial of artificial intelligence. But that’s going to start to slow down. Other parts of the continuum will be opportunistic. That’s where we’re looking at.
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