Okay Ken, well, let's turn back to the major indexes again, a solid day of gains,
but we're still near our lowest levels of the year of 2022 on the major indexes
and it was still a volatile day with the market's down at one point about 1%.
And the major indexes at least the NASDAQ ending up 1.6% the S and P of 6/10 of a percent
After hitting a new year low today
and the Dow of 3/10 of a percent.
So joining me now is Adam Coombs portfolio manager at Winthrop Capital Management.
Adam,
it's good to see you what is your take on the continued volatility that we see
and could the old Adage sell in May and go away actually play out this month.
Yeah, so like you said at the start of the segment,
volatility is absolutely what we're seeing and
going to continue to see across markets.
And it's largely driven by the fact that
earning season um is well underway and is giving
us some surprises or hearing a narrative around uh
wage wages increase in more than than expected.
And that is causing uh firms to, you know, have to relook at their,
their business model and the strategy going forward as costs go up.
And then on top of that,
you have the Fed trying to fight inflation with with these interest
rate hikes and so that's got the market just in this,
this
turmoil of trying to figure out
what's going to happen next and anytime we have uncertainty
that leads to heightened volatility.
Well, certainly, you know,
as a portfolio manager at your firm that there is
a lot of active trading of course amid the volatility.
How are you treating your own portfolio right now?
And how much money do you have allocated simply into cash amid the volatility?
Yeah. So we we did increase our cash positions coming into the beginning of the year.
A large part of that was on the heels of what we expected the Fed to
do and the and the moves that they were going to make to tighten policy.
So um we're still maintaining that cash position.
We have started to incrementally put that money to
work last week when we started to do that.
Um and and a large part into technology stocks.
So with stocks that are down tremendously like google alphabet, um or even netflix,
those stories are are building the case for actual value plays once again.
So we are starting to the opportunities but we are
doing it incrementally and not going all in at once.
Okay, so what's your expectation adam?
The big question is whether or not we will have a recession here in the US
and what that might mean for the market's, could we see for instance,
the major indexes declined
another double digit percentage point
from here. What's your take?
Yeah, I mean it's possible and I think that the risk of a, of a recession are rising.
Um but what I think we're seeing here is a lot of market participants,
market participants are front running that,
and that's why you're seeing the NASDAQ down over 20%.
So I think what we have to look at is what's going to happen
afterwards. Um, and so we think that volatility will maybe drive stocks down.
But for the most part, when you look at interest rates, when you look at tech,
the market has priced in even some sort of a small recession.
So
despite the fact that we think a recession could happen, uh,
towards the back half of this, this year, um,
we think that in a large part is already priced in.
Uh and that risk,
it means that now is the time to invest.
So that's why we're we're dipping our toe
into the water because despite recessionary risks,
we think that this would be a pretty mild one.
Um, and it's not a major credit crisis.
So a lot of times the market will actually move ahead of that,
interesting. Um Well, here's another question for you.
You see pretty much everything declining in the stock market,
energy stocks might be the exception adam.
Are there opportunities to be had in this market?
There's still a lot of uncertainty.
I know you just said you're dipping your toe back into investments.
I'm knowing that a recession at least a little bit,
according to your data is priced in.
But are there opportunities, obvious opportunities out there for investors?
Yeah, I think what you want to focus on our our two big factors in the market and that's
quality and income. So we're looking at.
And when you look across the the history um
of the market is when you see increased volatility,
what you want to be in our stocks that have sure balance
sheets for the low debt and have a high cash flow ratio.
So,
um we're looking at companies like I just said alphabet Microsoft Apple.
I know these names are not
uh sexy in any way,
but they are tried and true names that
will withstand any sort of heightened market volatility.
They have enough cash on a business model
that can withstand any turmoil through the market.
So that's what we're seeing opportunity because there's
a lot of those stocks that are down
Well over 20%.
And so that's that's where we're seeing opportunity,
where we're staying away is energy.
Um we think that the energy markets have mostly topped.
Um so we think that the it's asymmetric, asymmetric risk for them to the downside.
And also
our exposure to
banks. We think that a platinum
blend.
Um So ultimately we're reducing our allegations of banks to
interesting, of course, banks saw massive run into the end
of last year, but they've nearly fallen out of bed.
I think one of the worst performing sectors that
we've seen so far this year amid those concerns.
Adam
potentially about a recession and the yield,
the yield curve
as well. So this is again a live look for our viewers of the major indexes.
We did end with games on the first day of a new month,
But if there is that saying, selling Megan go away.