Investors may want to avoid playing favorites.
Art Hogan of National Securities said Monday that owning equal amounts of growth and cyclical stocks will produce major advantages as stocks break out.
"Nothing is going to be binary this year," the firm's chief market strategist told CNBC's "Trading Nation." "Having a balance between those two and rebalancing every couple of months puts you in a position to beat the S&P handily."
The S&P 500 and Dow are kicking off the week in record territory. The S&P 500 gained 1.4% to close at 4,077.91, while the Dow jumped 373.98 points to 33,527.19, both all-time highs. The benchmark tech-heavy Nasdaq also raced higher, up 1.7% to 13,705.59.
"We get to a point often times in markets where we think it's either/or. And, most of 2020 was mostly technology," Hogan said. "Post-Labor Day, we've seen this rotation out of growth and into economically sensitive cyclicals. That's not a trade that goes on forever, either."
Hogan, who oversees $20 billion in assets, released his official S&P 500 year-end forecast of 4,300 on Jan. 4. With the index 5% away, he said Monday that it may get there much sooner — particularly due to daily U.S. vaccine doses in the millions.
"In the wake of that comes the hope for better economic activity, and clearly we're starting to see that in some of the March economic data," he added. "Clearly, March data is proving out that the earnings estimates for the S&P 500 are likely conservative."
His thesis is that an "explosion of economic activity" will put inflation fears in check due to the bullish impact it will have on corporate earnings across the board. According to Hogan, it will contribute to healthy, broad-based market upside.
On the cyclical or economically sensitive side, his top play is financials. Hogan speculated it could be 2021's best performing S&P group.
"Financials [are] obviously very dependent on GDP growth. We're going to see a whole lot more of that this year," said Hogan, who also sees key benefits from rising interest rates.
To play a booming market on the growth side, he listed semiconductors as his top spot.
"There's going to be a very long haul for us to get back to producing the number of semis we need, and that number grows every day," Hogan said. "We've seen a shortage of semiconductor chips adversely affecting all sorts of industries including automobile makers. ... They're very cyclical, but they have a great growth component to them."
