Stocks fell further on Wednesday after Federal Reserve Chairman Ben Bernanke outlined the Fed's exit strategy for its unprecedented economic stimulus measures. How should investors be positioned? Frank Holmes, chief executive and chief investment officer of U.S. Global Investors, and John Lekas, chief executive and portfolio manager at Leader Capital, shared their insights.
“We think the market heads lower… precipitated by uncertainty in Greece, unemployment not budging and high debt loads that need to be worked off,” Lekas told CNBC.
Lekas said he expects the Dow to dip to 8,300 to 8,400 in the near-term and the VIX index to rise as volatility continues. He told investors to look into short-term bonds.
“About 50 percent of our portfolio is in Libor plus notes—so as interest rates go up, we benefit,” he said.
“If you look at Bernanke closely, now that the political cloud is off him, he needs to raise interest rates to keep up with Brazil, China and Australia raising interest rates.”
In the meantime, Holmes said there is a paradigm shift taking place within the relationship between the U.S. dollar and markets.
“In the '90s, a strong dollar was a strong market," he said. "Now, a weak dollar is a strong market.”
“We need a declining dollar to deal with exports,” he said.
Holmes expects gold prices to rise as investors use it as protection against the declining dollar.
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More Market Views:
- 'Fast Money' Blog: Greece Bailout Is Not a Buy Signal
- Opportunities in Greece, Spain: Portfolio Manager
- Market Tips: Volatile Swings Will Continue
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CNBC Data Pages:
- Dow 30 Stocks—In Real Time
- Track the VIX Here
- Where's the US Dollar Today?
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Disclosures:
No immediate information was available for Holmes or Lekas.
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