Stocks Face Valuation 'Meat Cleaver': Chief Investor

Markets rose on Tuesday, helped by gains in drug and chip stocks. Where should investors be putting their money? John Lekas, chief executive and portfolio manager of Leader Capital, and Christopher Zook, chairman and chief investment officer of CAZ Investments, shared their market outlooks.

“We’re very much overvalued compared to where the growth is going to be,” Zook told CNBC.

“The markets have been pricing in a normal recovery and this recovery is going to be anything but normal.”

Zook said the market is continuing to rise on liquidity, but as investors start to realize that earnings and cash flow are not going to grow as they had been expecting, they will “take a meat cleaver to valuations” and stocks will fall.

“If they’re going to have stocks in their portfolio, then you have to have very high quality, low leverage and very defensive in nature, in the event that we have a double-dip recession,” he said.

In the meantime, Lekas said investors should look into the 30-year bonds.

“We think the 30-year can go to 2.75 this year on slower growth,” he said.

Zook Likes:

Oil Services

Lekas Likes:

30-Year Treasurys

Apple

Intel

Google

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Disclosures:

No immediate information was available for Lekas or Zook.

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