Stocks tumbled Tuesday and the Dow dropped over 100 points. How should investors be positioned? David Goerz, chief investment officer at Highmark Capital, and Sean Kraus, senior vice president and chief investment officer at Citizens Trust, shared their thoughts.
“We are optimistic about the markets—we’re seeing leading economic indicators moving in the right direction,” Kraus told CNBC.
“What you saw out of Ford , Texas Instruments and 3M [earnings] is a trend that we think is going to continue, with corporate profitability recovering.”
Kraus said the business cycle is currently in a 5-year expansion phase after hitting a low last year.
In the meantime, Goerz said investors should go for the cyclical trades.
“Industrials look like earnings should be a lot stronger than the analysts are expecting, so we see upside to industrials. And technology is going to be a strong trade but crowded right now,” he said.
“A lot of these plays are international plays and plays into emerging market trades and Europe, as the global cycle begins to accelerate.”
As we see real earnings come through globally, the challenge for the central banks will be to keep inflation under control, said Goerz.
“Longer-term, we’re going to be worried about inflation coming back, but we want to be overweight industrials, tilted towards value and small caps, and we think these are the trades that are working right now and should work for the next six months,” he said.
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No immediate information was available for Goerz or Kraus.