Kingsview CIO Scott Martin discusses data as it relates to inflation, trimming positions in certain sectors, and putting cash back to work in areas such as technology and utilities.
Program: Making Money with Charles Payne
Station: Fox Business News
CHARLES PAYNE: I want to bring in now the money guys. Hey, David Dietze with us. Scott Martin’s with us. All right. Equity’s going much higher. Bond yields are plunging. The fear index is plunging. Scott, so how does this report change your way of thinking? Maybe your positioning with respect to your stock positions
SCOTT MARTIN: It doesn’t really change anything for us, Charles. We’ve actually been using some of the strength in some of the recent economic data to pare back just some of the winners, man, that we’ve talked a lot about on the show here, financials, energy and materials. And it’s not that we’re bailing on those positions, but just trimming them back, taking some profits off the table, because I think a lot of this data, as you talked about with Constance there, is starting to get baked in the cake as far as how summer is going to go. And therefore, I think the market’s going to likely be disappointed by better and better data as it relates to inflation as well.
CHARLES PAYNE: Today, energy and financials, those are two sectors that are down. Almost all the rest are up. Are you putting that money to work somewhere else?
MARTIN: No we’re keeping it in cash for now, Charles, and then looking to maybe put it back to work and some things that fall more over the course of the next several weeks, which my guess is going to be in the technology space, maybe utilities as well.
CHARLES PAYNE: Hey, guys, I want you to check out this headline, you at home as well, the Fed and inflation suggest the bubble is forming now. You know, a lot of people read that, right? They got out of the market when they said it. Except the problem is that was from October 2013 when they got out of the market. Well, subsequently, they missed one hundred thirty six percent move. He been a three hundred percent move on the Nasdaq. One hundred, David Dietze. What’s the moral of this story?
DAVID DIETZE: Well, market timing does not work. And before you are all inclined to take a big move with your money, think who are you going to be selling to? What are they thinking about? Go back to your goals. Historically, this market has outpaced cash and fixed income over the last hundred years. There’s always going to be some sectors that are overpriced, but conversely, there’s always going to be some sectors they’re underpriced. Back then, technology was very cheap. We were on the cusp of big tech revolution. Should never want to do one thing with all your money for every bad headline. There’s also a good headline.
PAYNE: Yeah, the moral of the story is ignoring the headlines. OK, we’re looking pretty good here, Scott. And know you’re sitting on some cash my man, what will it take for you to now look at growth? Which I believe is the new value.
MARTIN: Yeah, it could be, and it got to a level where there is some value in growth, Charles. I mean, we just are looking for pullbacks. We’re looking for entry points. We’ve had those in Zoom. We’ve had them in DocuSign, we’ve had them in Teladoc, Zwillo as well. So just looking for four points of interest or points of entry that are just basically oversold conditions. The other thing, too, I mentioned the cash earlier, Charles. You know, I love Gold man. We’ve been picking up gold on the lows in March and April of this spring. A lot of people called us crazy as Bitcoin and Ethereum are falling out of favor because of regulation and taxation. It looks like gold is back in favor and looking to be that alternative asset class that it’s always been.
PAYNE: Yeah, gold right around nineteen hundred and a strong stealth rally. David what are some of the things you’re doing? What are you focused on right now?
DIETZE: Well, so we love growth too but I would kind of turn it around. I don’t want to look at the labels on stocks. I want to look at the companies. They’re going to show the greatest earnings per share growth. And there I come back to the cyclicals and the value plays. The energy stocks are leading the brigade in terms of year over year growth. Financials are going to come up next. And that’s where the growth is, at least to the end of the year. The secular growers did a great job, but now they’re year over year comparisons aren’t going to look quite as good. of course, unfortunately, I do think we’re going to see higher interest rates. Who does, who benefits from that? Who is hurt? Well, certainly the value plays where there’s more earnings today. Greater dividends today are more resilient in that kind of situation versus growth. Companies have long, longer dated things. So I would stick with the value in financials. A slight overweight. They’re continuing.
PAYNE: All right, so you see this whole inflation thing still bubbling up at some point today, notwithstanding David Scott to the best. I appreciate you guys. Have a great weekend. We’ll talk soon.