In his interview with TWST this week, portfolio manager Cory Krebs talked a little about where investors should be looking in the near future. He recommends not looking for bottom level buys in financials or consumers now, but to go where the larger themes are. For him, it’s looking at a global demand for base materials:
Mr. Krebs: Financials still look to be a bit of a mess. I wouldn’t bottom-fish n the finance arena trying to find some wonderful turnaround story. Even though here might be value there and the price might be below whatever the intrinsic value of that security is, it’s going to be difficult to get investors back into that space to make the price move in the short run to that value. I just don’t see a whole lot in that area unless you are counting maybe some REITs in that space. So there might be a little bit in that, but not from the true finance standpoint — not a bank or a diversified finance firm.
In addition, there is the discretionary consumer spending. Although retail same-store numbers look pretty positive today, it probably doesn’t have a whole lot of bang at this point. That is probably a little later in the cycle. The stimulus checks will help. Tax rebates will help, but it will probably be a little further out rather than anything immediate. So from that standpoint, I would say that those areas are maybe trouble points.
However, there are pockets of strength in this market. The theme that has been outlined — a global demand for base materials — is a persistent theme. It was there last year and it will probably be there again next year when I talk to you. There are companies that are well positioned to take advantage of that. I believe that investing in those securities is your best bet at this point.
For the full interview with Krebs, including an overview of his investment style and stock picks, click here.
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