Investors may want to avoid playing with favorites.
National Securities’ Art Hogan said on Monday that owning equal amounts of growing and cyclical shares will yield big benefits from the stock crash.
“Nothing will be binary this year,” the company’s chief market strategist told CNBC’s “Trading Nation”. “Having a balance between the two and rebalancing every two months puts you in a position to win the S&P with ease.”
The S&P 500 and Dow are starting 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 highs of all time. The Nasdaq, a reference in technology, also rose, with an increase of 1.7%, to 13,705.59.
“We often get to a point in markets where we think it is or / or. And, most of 2020 was mostly about technology,” said Hogan. “After Labor Day, we saw this rotation of growth for economically sensitive cyclicals. This is also not a trade that lasts forever.”
Hogan, who manages $ 20 billion in assets, released his official S&P 500 forecast of 4,300 for the end of the year on January 4. With the index 5% off, he said on Monday he could get there much earlier – mainly due to the daily doses of vaccine in the United States in the millions.
“In the wake of this, there is hope for better economic activity and, clearly, we are starting to see this in some economic data for March,” he added. “Clearly, the March data is proving that profit estimates for the S&P 500 are likely to be conservative.”
His thesis is that an “explosion of economic activity” will put fears of inflation in check due to the bullish impact it will have on corporate profits in general. According to Hogan, this will contribute to a healthy and broad market advantage.
On the cyclical or economically sensitive side, your best move is finance. Hogan speculated that it could be the best performing S&P group in 2021.
“Finance [are] obviously very dependent on GDP growth. We will see much more of this this year, “said Hogan, who also sees the main benefits of rising interest rates.
To play in an expanding market on the growth side, he listed semiconductors as his first place.
“It will be a long way to get back to producing the number of semifinals we need, and that number grows every day,” said Hogan. “We have seen a shortage of semiconductor chips adversely affecting all types of industries, including car manufacturers … They are very cyclical, but they have a large growth component.”
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