MJP Wealth Adivsors President Brian Vendig shares what he's telling investors about the a pullback.
SEANA SMITH: Brian, I guess just your perspective, when you're figuring out where to put money right now where are you seeing the most opportunity at this time?
BRIAN VENDIG: Well, I think, looking at what happened over the summer, especially when we saw Delta news kickoff up and revise earning forecasts and outlooks for growth for the year, we actually saw the small cap sector of the market get hit the hardest. And when we look at the correlation of variables moving forward, as virus data improves so do small caps. So we think moving forward, there is still opportunity in the small cap space as well as similar to today some of the more value-oriented sectors such as financials and energies, but we also still like basic materials and industrials as well.
But at the same point in time, I think, similar to what, Jerry, just said on interest rates, you can't discount the pervasive part of society which is those large mega cap technology stocks. So keeping things equally weighted, especially on the heels of CPI data tomorrow as well as an FOMC meeting at the end of the month, for us makes a lot of sense as we move into the balance of the year.
ADAM SHAPIRO: Brian, for a lot of investors they're getting nervous because of the headlines last week and even this morning about, get ready for a 5% to 10% pullback. Of course, we had the same discussion going into the summer where analysts were telling us you always get 5% to 10% pullback. September being what September is what are you saying to those of us who don't perhaps have the skill you have in watching these markets about where I should be positioned right now? Where should investors be positioned right now? In cash ready for a dip or continuing with their strategy?
BRIAN VENDIG: Well, I'm not one to recommend trying to time the market. I mean academically we're definitely it's very easy to stay up for a little bit of a pullback. But again, eventually you'll be right if you call it out every day.
I think right now what makes sense is to allocate cash into equities on dips because it's been consistent since the pandemic has started that investors have been trained to buy on dips. And I definitely don't see that behavior changing anytime soon. I think there's more news to come on interest rates, especially interest rates going up over the next 12 months. As economies continue to expand people get back into the workforce, we rebuild those inventory levels with constrained supply chains over the next 12 months. So I'll still say stay balanced towards equities but be very selective and making sure that you're picking the areas that can provide protection to margin, profitability growth, and also as a means to hedge off any unnecessary inflation that we know is still in the cards for the near future.
SEANA SMITH: Brian, Bitcoin is a mover today. And I bring this up, you mentioned cryptocurrencies in your notes and we Bitcoin has been under a pretty decent amount of pressure over the last six months off just around 25% today just below 45,000. Are you finding any opportunity or are you finding any reason I guess to invest, not only in Bitcoin but in other cryptocurrencies as well?
BRIAN VENDIG: This is definitely a space that we take a look at. But, I think, for our clients we still look at this as a more speculative investment. I mean, a lot of folks are using digital assets as a hedge for inflation or Fiat currency debasement. And I just think that moving forward, it's such a competitive landscape that with other cryptocurrencies or other digital assets that will be available, especially with central bankers thinking about a stable coin that can be based in a notional currency, that's just going to cause more fragmentation in the space.
So it definitely be cautious moving forward as well as considering that the regulatory environment is changing as well. So right now for our clients we're sitting on the sidelines kind of evaluating the opportunity in the space. But moving forward, I think, real hard assets such as real estate possibly might be a better hedge for inflation than worrying about Bitcoin valuations at this time.
ADAM SHAPIRO: I'm glad you just said real estate because I wanted to ask you, when you say you're bullish on real estate, which part of real estate should an investor be considering? All of it? Should they be looking at commercial, residential, REITs? How should they be positioning that?
BRIAN VENDIG: Well, Seana and Adam, I definitely appreciate all these great questions today. On the real estate side, I would say specifically focus in on industrial real estate, which for example are warehouses, logistic centers, cold storage, apartments when you think about people relocating from the urban to suburban, hybrid environment, and then also at the same point in time, life and health sciences. We can't do genome testing in our bedroom, right, working from home.
We need to be in a lab. So I think these three areas of the real estate market to us look very attractive. Obviously there's some risks in office and retail, which we would have as a secondary concern.