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Pullbacks This Year Are Buy Opportunities: Chief Investor

Stocks retreated on Wednesday after the Federal Reserve's Beige Book report showed the economy is improving—but not at a fast enough pace to spur hiring. How should investors be positioned ahead of the big employment data on Friday? Hank Smith, chief investment officer at Haverford Investments, discussed his market outlook.

“If we have a correction because of the jobs report, we think it’s going to be an opportunity to deploy cash,” Smith told CNBC.

“Pullbacks throughout this year are opportunities to get money in.”

Smith said investors in general are underinvested because there’s still fear and anxiety in the economy and markets.

“It’s a battle between the tailwinds: monetary policy, fiscal policy, global recovery,” he explained. “And the headwinds: deleveraging and all the uncertainties from Washington—taxes, health care, and cap and trade.”

Investors should sell cyclicals and industrials and look into consumerstaples and healthcare, Smith advised.

“If you buy into a below-average recovery, a muted expansion, then you’re going to want to be in stable and highly predictable companies that can grow their earnings and dividends regardless of whether GDP is 1.5 or 4.5 percent,” he said.

  • Watch Smith's Previous Appearance on CNBC (Feb. 4, 2010)

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Wednesday's Top Dow Gainers:

Coca-Cola

Cisco

General Electric*

Caterpillar

DuPont

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Disclosures:

No immediate information was available for Smith or his firm.

*GE is the parent company of CNBC and CNBC.com.

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