Ted Parrish says investor risk hasn't really increased -- merely the "perception" of it. So the co-portfolio manager at Henssler Equity Fund says the key to profiting from volatility is understanding that risk perception -- and hunting for perceived "stability."
Speaking on "Squawk on the Street," Parrish declared that "housing holds the key" to the market-meltdown psychology. He believes that higher-risk subprime lending has been a threat to the rest of the industry for some time, and such firms as Wells Fargo and Wachovia -- which acquired subprime lender Great Western -- will face "issues" of defaults and late payments.
He told CNBC's Mark Haines that in the current environment, investors will seek what they see as "safety and stability." Parrish says that's why his firm is overweight in consumer staples and health care. He believes the former sector, including Church & Dwight and Procter & Gamble, will see double-digit earnings in 2007; in the health care segment, he likes generics, such as Teva Pharmaceutical Industries.