FBB Capital Partners Senior Portfolio Manager Jaime Quiros joins Yahoo Finance Live to discuss how investors can offset Fed rate hikes.
JULIE HYMAN: Retail investors, those putting money in there 401Ks, anyone wanting to buy real estate, everyone is asking about rate increases this year and what you do in your portfolios in order to strategize right now. It's a tricky question. Jaime Quiros is a senior portfolio manager at FBB Capital Partners. And he's here to help people navigate through it.
So when clients come to you and say, what do I do right now in terms of this, what are the sort of top tools that you give them?
JAIME QUIROS: Yeah, it's a great question. It is a hot topic right now. I get various calls or inquiries about it.
We're looking at stocks to offset the Fed rate hikes. We're looking at full equity allocations, because we feel that the long-term factors will more than offset the near-term pressures. We're looking at trimming those high-value-added names or expensive valuations and/or the large weightings that have run up in the portfolio and using those proceeds to add possibly to some of that fixed income when the rates do go up.
And then finally, we're adding to attractive valuations. The volatility recently in the markets has given some opportunities. And we're looking to take advantage of those.
JULIE HYMAN: And it's interesting, Jaime, as well, because you're looking at the ISM numbers, manufacturing surveys in particular, as potentially rolling over a little bit as we get further into the year. And so what kind of implications will that have? And how can people be sort of defensive if that's happening?
JAIME QUIROS: Yeah, again, just trimming those names that have run high and staying within targets. And if you're looking to add into the equity space, you're looking at defensive names, staples. So if that does happen in terms of if the manufacturing does cool off, then you're kind of protected in the portfolio.
BRIAN SOZZI: When clients or potential clients come to you right now, what's the biggest investing mistake you see them making?
JAIME QUIROS: Yeah, the fear of missing out on the names that have run up so much right now, trying to get into tech or the names that we're working during the peak of last year, in the middle of last year, names where they just ran up so high and trying to add to those. And right now, they're not doing so well.
JULIE HYMAN: And are you also talking to people about alternative assets in this environment?
JAIME QUIROS: If you mean cryptocurrencies and that kind of thing, it's tough to talk about those.
JULIE HYMAN: Yeah, whether it's cryptocurrencies, whether it's sort of real estate, anything that's not stocks, I guess basically is what I'm asking, where that should fit in.
JAIME QUIROS: Yeah, that's a good question. Yeah, well, we favor stocks more because of the dividends they pay and the growth aspects of it. When it comes to commodities, it's tough right. Right now, they are going up, but it's been volatile over the summer.
Yeah, no we favor more stocks. While we do keep an eye on commodities and real estate, right now, it's more appealing to be in the markets.
JULIE HYMAN: Gotcha. All right, sticking with stocks here. Thanks so much, Jaime. I appreciate it. Jaime Quiros joining us to talk through some strategy, your FBB Capital Partners, appreciate it. All right, we're going to take a quick break. When we come back, Davos may not be happening.