Investors may want to play favorites.
National Securities’ Art Hogan said Monday that owning equal amounts of growth and cyclical stocks will produce significant benefits as stocks explode.
“Nothing will be binary this year,” the firm’s chief market strategist told CNBC’s “Trading Nation”. “Having a balance between these two and rebalancing every two months will allow you to beat the S&P easily.”
The S&P 500 and Dow start the week in record territory. The S&P 500 gained 1.4% to close at 4,077.91, while the Dow jumped 373.98 points to 33,527.19, both all-time highs. The Nasdaq, a heavy technological benchmark, also rose 1.7% to 13,705.59.
“We get to a point often in markets where we think it’s either. And, most of 2020 was mostly technology,” Hogan said. “After Labor Day, we’ve seen this rotation out of growth and into economically sensitive cycles. Nor is it a trade that lasts forever.”
Hogan, which oversees $ 20 billion in assets, released its official 4,300 S&P 500 forecast of 4,300 on Jan. 4, with the distance index, said Monday it could get there much sooner, mostly due to of daily vaccine doses in the US in millions.
“After that comes the hope for an improvement in economic activity, and of course we are starting to see it in some of the March economic data,” he added. “Clearly, the March data shows that earnings forecasts for the S&P 500 are likely to be conservative.”
His thesis is that an “explosion of economic activity” will highlight inflation fears because of the upward impact it will have on corporate profits. According to Hogan, it will contribute to a healthy and broad market growth.
From a cyclical or economically sensitive point of view, its main game is financial. Hogan speculated that it could be the best-performing S&P group of 2021.
“Financiers [are] obviously very dependent on GDP growth. We’ll see a lot more this year, ”said Hogan, who also sees the key benefits of rising interest rates.
To play in a booming market in terms of growth, he included semiconductors as his first place.
“There’s going to be a long way to go back to producing the number of seeds we need, and that number is growing every day,” Hogan said. “We’ve seen a shortage of semiconductor chips that negatively affects all kinds of industries, including carmakers … They’re very cyclical, but they have a big growth component.”
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