Beware of Emerging Market Bubble: Strategist

Many investors have been piling their money into the emerging markets, but is this the right move? Brian Belski, chief investment strategist at Oppenheimer, and Ronald Weiner, president and chief executive of RDM Financial Group, shared their market outlooks and investment strategies.

CNBC Market Edge
CNBC Market Edge   

“We’re cautiously optimistic,” Weiner told CNBC.

“[Markets are] getting better, but we threw hundreds of billions of dollars to this market and got a 2.8 GDP—I don’t think it’s going to go a whole lot faster than that, if it goes faster at all.”

Weiner said he has a “barbell approach” to investing, where he is not betting entirely on the U.S.

“In fact, we think the emerging market may actually bring out the developed markets and it’s possible that their growth will help us for the first time ever,” he said.

Weiner likes technology, energy, emerging markets and gold. He warned investors to avoid REITs, regional banks and go light on financials in general.

In the meantime, Belski said he remains very bullish on the overall recovery of the market.

“We think that most investors are not playing stocks right now, especially in terms of the private-client side of things—which I think is the next leg of the bull market,” he said.

Belski said he sees a bubble forming in the emerging markets and the commodities structure.

“We’re betting on the U.S,” he said.

“We agree that we want to buy those companies that benefit from international growth, but we don’t want to be in those companies that are dependent on international growth—those were the prior leadership."

"We think U.S. growth...will surprise most people, whereas the emerging market growth in some of the areas around the world that have been growing at a very fast pace can, will and should likely overheat in 2010 and that will force assets to come back to the U.S.”

Belski said he has a 1,300 target on the S&P 500 in 2010 and urges investors to increase exposure to stocks relative to bonds in 2010.

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Disclosures:

No immediate information was available for Belski or Weiner.

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