We’re in a Capital V-Shaped Recovery: Strategist
Major indexes hit new highs for the year on Tuesday, but will the rally continue? Tony Dwyer, equity market strategist, FTN Equity Capital Markets and Jim Swanson, chief investment strategist, MFS Investment Management shared their investment strategies.
“I think [the rally] has lot more legs,” said Dwyer. “The retail money that has been on the sidelines is being dragged in…There’s a lot of room left for money to come in and I think the fundamental backdrop is going to support it.”
Dwyer said the economy is in a “capital V-shaped recovery,” driven by business spending and also some consumer spending.
“Financials is going to act a lot like tech media and telecom did off of the 2002 debacle,” he said. “They had the sharpest recovery in the beginning of the bull market and they flat lined for a couple of years. However, I think the real exciting part right now is in the industrial space.”
In the meantime, Swanson said he is interested in the health care and technology sectors—particularly software.
“We’re going through some revolutions in software and it is a big export component,” he said. “Right now, the P/E is relative to historic norms in the software sub-segment in tech are very low. It’s not dirt cheap like it was 6 months ago, but extremely cheap by any sort of historical pattern given the growth of the earnings which we expect.”
Additionally, he recommended investors to look into the larger cap dividend paying stocks.
“I don’t see any inflation risk in the next year … But 2 to 3 years down the road, inflation could come back and dividend-paying stocks have historically been a terrific way to combat inflation surges and that’s the part of the market that has lagged,” he said. “So I would begin to look to migrate toward dividend paying international type companies.”
No immediate information was available for Dwyer or Swanson.
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