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Market Volatility Coming—Focus on Yield: Strategist

Markets opened lower on Tuesday, but the Dow briefly rebounded, led by Home Depot after its earnings beat analysts' estimates. How should investors be positioned? Jerry Kleintop, chief market strategist at LPL Financial, and Sarat Sethi, partner and portfolio manager at Douglas C. Lane & Associates, shared their market insights.

“What you’re seeing is a first correction—I wouldn’t be surprised if we saw a second one in the summer,” Sethi told CNBC.

Sethi said the price-to-earnings ratio in the market is “fair-valued” and investors should look into investing in equities.

“You want companies that have earnings power, that have leverage in terms of earnings—not balance sheet leverage—because I still think companies that are over-levered in a slow economic period are going to get hurt,” he said.

In the meantime, Kleintop said investors need to own equities, but warned that markets will be volatile.

“So focus on yield rather than capital appreciation,” he said.

“So look to high yield bonds, REITs, Home Depot —they upped their dividend today, so that’s what you should be focusing on.”

  • Track the VIX (Volatility Index) Here

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Disclosures:

No immediate information was available for Kleintop or Sethi.

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