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As earnings season unfolds, this is noted investor David Katz's "best advice"

  • Matrix Asset Advisors' David Katz is expecting good third-quarter earnings but a treacherous season in terms of stock prices.
  • That's because he thinks this quarter will be very similar to last quarter, when companies beat expectations and did pretty well in terms of outlook.
  • "Last quarter what you had is, if a company didn't beat and raise and they didn't beat in earnings and revenues, the stocks either sold off a little bit and if they missed, it sold off a lot," he said.

Noted investor David Katz is expecting good third-quarter earnings but a treacherous season in terms of stock prices.

That's because he thinks this quarter will be very similar to last quarter, when companies beat expectations and did pretty well in terms of outlook.

"Last quarter what you had is, if a company didn't beat and raise and they didn't beat in earnings and revenues, the stocks either sold off a little bit and if they missed, it sold off a lot," the president and chief investment officer of Matrix Asset Advisors said in an interview with "Closing Bell" on Wednesday.

"Our best advice to investors is don't buy in front of earnings unless you have a great conviction on a particular name."

Instead, he suggests waiting for earnings to come out.

"If the stock sells off a little bit and you still like it, dust settles, then we buy into it," he said.

On Wednesday, both BlackRock and Delta Air Lines reported quarterly results that beat expectations. Citigroup, JPMorgan Chase, Bank of America and Morgan Stanley, all up at least 12 percent year to date, are also scheduled to report this week.

GE strategy

Meanwhile, shares of General Electric closed down 1.24 percent on Wednesday after a JPMorgan report said a dividend cut is "increasingly likely." GE told CNBC that "the dividend remains a top priority."

Katz, who owns GE, thinks the company will keep the dividend but he said it could be reduced, depending on the outcome of third-quarter earnings.

However, he thinks there may be an opportunity down the road "if you turn down the noise" because of the company's new CEO.

"If you have a six-to-12-month time horizon on GE, we're expecting better things," he said. "We would hold it here. If it sells off after the earning reset, and we're comfortable with the outlook over the next 12 months, we would expect to add to that position."

— CNBC's Fred Imbert, Melody Myers and Evelyn Cheng contributed to this report.

Disclosure: Matrix clients and Katz own GE.

Disclaimer