Investors may want to avoid playing favorites.
National Securities’ Art Hogan said Monday that holding equal amounts of growth and cyclical stocks will produce major benefits as stocks break out.
“Nothing will be binary this year,” the company’s chief market strategist told CNBC Trading Nation. “Having a balance between the two and rebalancing every two months puts you in a position to beat S&P easily.”
The S&P 500 and Dow start this week on 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 historical highs. The benchmark technology Nasdaq also rose above, up 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 technology,” Hogan said. “The day after work, we have seen this rotation grow and into economically sensitive cycles. Nor is this a trade that continues forever.”
Hogan, which oversees $ 20 billion in assets, released its official S&P 500 forecast at the end of the year for $ 4,300 on January 4th. With the index 5% away, he said Monday that he could get there much earlier – especially due to daily doses of vaccine in the US. in millions.
“As a result, there is hope for better economic activity and we are clearly starting to see this in some economic data for March,” he added. “Clearly, March data shows that earnings estimates for the S&P 500 are likely to be conservative.”
His thesis is that an “explosion of economic activity” will frighten inflation fears due to the real impact it will have on corporate earnings on all sides. According to Hogan, this will contribute to a healthy market growth.
On the cyclical or economically sensitive side, its top game is finance. Hogan has speculated that it could be the best performing S&P group of 2021.
“Financial data [are] obviously very dependent on GDP growth. We will see a lot more things this year, “said Hogan, who also sees key benefits from rising interest rates.
To play a booming market on the growing side, he listed semiconductors as his first place.
“There will be a very long time to get back to producing the number of semis we need, and that number is growing every day,” Hogan said. “We’ve seen a shortage of semiconductor chips that negatively affect all kinds of industries, including carmakers … They’re very cyclical, but they have an excellent growth component.”
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