Transcript:
Caroline Woods Joining me to wrap up the week, Andy Goldberg, chief investment strategist, Nomura Asset Management International. Andy, great to have you at the desk. Happy Friday.
Andy Goldberg Thanks for having me. Thank God it’s
Caroline Woods Friday. I know, especially after this week. Actually, after yesterday’s brutal selloff, especially in tech really in everything.
Andy Goldberg Are you doing red on purpose?
Caroline Woods No, I am not. I’m contrarian here. We’re seeing a bit of a bounce back today, and, you know, in the tech trade and really, we’re seeing widespread strength. I think the big question is, what do we do now? Do we jump in and buy these AI stocks at a discount now after, you know, the selloff that we’ve been seeing, or do we think twice because something may have fundamentally changed here.
Andy Goldberg Yeah. So both are right. So I do think that there’s deals to be had out there right now. But I just want to point out one quick thing before we dive into like what to do next. I think there’s a little bit of a narrative that, you know, the timing of this thing. It was the election. And so there’s all this fallout, and there are some fundamental changes that may come along with that.
Andy Goldberg But this wasn’t just the election. And I just want to remind people that we’ve been building up to a nervous market for quite a while. We’ve had interest rates higher for a while. We’ve had energy weighing on the markets. You know, we’ve had some the market seeking out air pockets in the AI trade. It kind of thought it found one with Core
Andy Goldberg Weave and stuff like that. And then bam you have the election and there was a you know a bit more of a blue wave than anticipated. And it’s kind of like the straw that broke the camel’s back for for a minute. So when everybody decides, hey, I need to just trim up and lighten up on my, you know, big AI tech names at the same time, you know, this is what you get.
Andy Goldberg What that results in though is what feels like an overreaction in the market where fundamentals still look pretty good, like the economy is pretty good profits, most stock charts, profits are up and the prices are kind of down. And so there are going to be deals to to go around and pick up right now.
Caroline Woods It was an overreaction then would you say.
Andy Goldberg Yet again remember when these sell offs happen? It’s not like people sit there and think, okay, how far down should the market go? And I’ll put it this way: one person at a time and one entity at a time trims their portfolio a little bit in these sectors. But when that all happens at once it creates dislocations.
Andy Goldberg And so, you know, with everyone had this moment or you know, it’s been building and then all of a sudden the last straw. And so a lot of people trimming at the same time gets a little bit of a vacuum, where yesterday was a day where most people were selling, not buying. So I think I think now you get a lot of bargain hunters go out.
Andy Goldberg So I do think it was an overreaction, not that any single person said I’m out, right. It’s more just I everyone trims at the same time and it looks like a market overreaction.
Caroline Woods Almost looking for a reason to reset.
Andy Goldberg I think I think so again at the individual level. It’s not like if you look around at the individual level that anyone just dumped all their stocks. It’s much more of that when everybody decides to sell a little bit and that happens in aggregate. You know that’s a lot of selling pressure for the market. It’s the same thing as, like, when all of a sudden everybody decides that it’s lunchtime and you have to wait in a long line at the store, like outside on Broadway here, you know, whereas if you go at 10:00, it’s not busy.
Andy Goldberg So. So what happens is a lot of people are crowding for the exits at the same time, created a little bit of, downward pressure.
Caroline Woods We’ve seen some sharp sell offs like this in the past, Liberation Day, for example. And that was quickly followed by a rebound like we’re seeing today is this just another one of those moments, then. And I guess how positive of a sign is it that we already are seeing dip buyers come in?
Andy Goldberg My my tendency is always to assume that really volatile days, absent some really clear fundamental change. Right. Nothing overnight fundamentally changed profits or changed the economy. GDP didn’t change. Inflation didn’t change. What happened was there was a trigger that got everybody emotionally to decide to trim or something like that, the election. And so my tendency is so, you know, those charts that say, oh, if you missed the ten best days in the market over 20 years, your return will be halved.
Andy Goldberg If you miss the 20 best days, it’ll be down by 70%. What’s funny about those charts is you say to yourself, how would I ever miss just the ten best days? And the answer is when people sell the ten, six out of the ten best days in the markets over the last 20 years occur within two weeks of the worst days.
Andy Goldberg Meaning it’s it happens all the time. Markets sell off, so people are out within two weeks. They rebound. And that’s kind of what I think you’re seeing today.
Caroline Woods Sort of go back to that first question. What should we be doing right now. Doesn’t sound like we should be selling right now in your view. So should I be buying?
Andy Goldberg Yes. I think we should be buying here. I think it’s going to be way more selective than it used to be. So the way that these trends were especially big AI buildout is, Wow, there’s something new. It’s exciting. I don’t fully understand it, but, look, I’m just going to get my money exposed to this trend. That’s over..
Andy Goldberg Now, that was the last couple of years. Over time, as a cycle like that matures, the market becomes more selective, and it’s trying to identify, well, who’s going to get caught out because there’s going to be winners and losers in this. And, you know, if you think about the like some small company is going to be the next Google and some big company is going to be the next.
Andy Goldberg You know, I don’t know Netscape. Right. And so the market gets very selective. And that’s when I say, you know, they’re looking for air pockets. They’re looking for companies that maybe have a little too much debt and maybe not be able to service it. And so, yes, we should be buying here, but what you want to focus on are companies that you don’t think run the risk of either running out of money, companies that aren’t necessarily like, I’ll give you a quick fundamental, for instance, three states that are very, very big data center states, meaning they have either data centers planned or currently being built in: Texas, Ohio and Georgia.
Andy Goldberg All saw governors flip from Republican to Democrat. Okay. And the stance of the candidates in their in their campaign was, I want to pause all new data centers, not the ones currently being built. Those will get built. I want to pause all new data centers and so can figure out how to do this responsibly. So yes.
Caroline Woods Which doesn’t sound very bullish for the AI, not necessarily.
Andy Goldberg Not necessarily. But what it means for your viewers is you’re not buying indiscriminately. You got to do your homework and figure out, okay, if the company I want to buy was supposed to build a data center in Texas in the next year or two, what does that mean for them now, in terms of whether this doesn’t sound bullish for the AI trend, yes or no in the near term, but certainly obviously not.
Andy Goldberg It’s going to slow things down. But let me give you like a metaphor or an analogy here. You know how like there’s been some news about the oil supply shock. So all of a sudden it got hard to get oil through the Strait of Hormuz, who made a ton of money, oil companies and energy companies. Right.
Andy Goldberg Because when all of a sudden something’s hard to get, the price goes up. What’s happening with AI right now is there are constraints in chips. There are still huge shortages in GPUs and chips, semiconductors, by the way, I think semiconductors are very oversold. Okay. The second thing, there’s huge kind of bottlenecks and things like energy. But there’s also now going to be bottlenecks.
Andy Goldberg There’s something like 1500 lawsuits against data centers that are planning to be built. There’s potential political headwinds. And what that really means is that if you are fortunate enough to have gotten the resources together to actually build and turn on a data center look how profitable that’s going to be. And so I think this does two things. One is, it slows, if laws get passed to change the trajectory, which is still a question mark.
Andy Goldberg Okay. But if that happens, all those fears of the AI data center capex boom being a bubble are gone. This stretches it out over a much longer, potentially much longer period of time. And instead of getting like a whole bunch of returns up front, you actually stretch returns out over a longer period of time. And I actually think that it’s bearish in that you don’t get, I don’t know, let’s say a 50% return this year, but bullish in the sense that you get like maybe 10% a year every year for five years.
Andy Goldberg That kind of trend. Does that make sense?
Caroline Woods It does. Although we had Dan Ives, one of the biggest tech bulls. Oh yeah. He was actually on with us on Monday. Yeah, before all of this happened. But he’s since been out with notes, basically saying that the capex peak growth will have to be moved forward. Now it has to be you know, he’s he’s projecting that it will be 2027 for peak.
Caroline Woods Yeah. Max growth versus 2028 or 2029. So still bullish. Yep. But bringing it forward.
Andy Goldberg So so what he’s saying is if you’re if you’re going to try to get a data center built you better hurry up and get it done now because there might be rules and regulations that slow you down in the future. The problem is it’s actually quite difficult to pull that. He’s right in that that will be the tendency.
Andy Goldberg But it’s very, very difficult to do in practice because there still today, it’s not like you can just build a data center willy nilly. You have to get all kinds of permits, you have to get approvals. There’s local lawsuits at the local level trying to stop you. You need construction materials, fiber optic cables, water, liquid cooling. You need all this stuff.
Andy Goldberg And so as much as you’d want to pull it forward, it’s hard to do in practice. And so what ultimately happens is, and by the way, there’s a lot to be said for, you know, slow and steady wins the race. And I can remember multiple times throughout my career, I’ve been doing this for about 25 years, where when you have a really, really big market run, things get tough.
Andy Goldberg After that, you know, the market goes up 50% or 30%. It’s like 30% in a year. The next couple of years can be harder. I’d prefer to see returns spread across a number of years, because that way it’s not as exciting. It’s not as sexy for your portfolio. Right. But it it’s a more stable way. And I think what the voters are reflecting the voting public, which we have to really key into if you’re an investor and you get an election result like this, as an investor, you have to really key into what the voters want.
Andy Goldberg And I think what they’re saying is, if you’re going to build all these data centers, I need a little bit more clarity on what this means for, you know, for for jobs. What does this mean for energy and my energy prices? What does this mean for the environment, like the water in my city? And I think a lot of the fears that people have probably are a little overblown.
Andy Goldberg Like, what I’ve learned is that water usage for a data center is a lot less than people think. Like almonds are worse, things like that.
Caroline Woods So then I think the the two big questions is, are two big questions are then what does it mean for where the market’s going. Yeah. And what does that mean for how I should position my portfolio.
Andy Goldberg Great question. So ultimately what this all means is and there’s a few forces by the way, it’s not just what we’ve talked about. So there’s a couple of other things in terms of where’s my where’s where should I be looking. One is you saw energy prices fall off after the election. Now with the markets betting on with that trade that day is maybe the new Democratic leadership can have some success at getting the Iran war to wind down sooner than later.
Andy Goldberg I’m skeptical of that. Okay. But that’s a huge issue for the market. If energy prices come down, there’s a lot more juice where that came from. The second thing, interest rates is critically important to investors, and especially in terms of where we go from here. So for example, you saw that when interest rates surged this year, even though the S&P is still up, you know, and only 5.5% or whatever from its all time high, something like 50% of all the stocks in the Russell 3000 are 20% off or more since June.
Andy Goldberg Right. And so when you look at high energy prices, the surge in interest rates, that’s a big, big driver. My expectation and I think this is like the answer you’re building towards is we’ve had high energy for a while. We’ve had high rates for a while. And now if I look forward and ask myself and your viewers should ask themselves from here, is GDP likely to accelerate from here or decelerate?
Andy Goldberg Is the CapEx boom likely to accelerate from here or decelerate? Is inflation likely to accelerate from here? And for me, it’s like everything I think at this stage, after high interest rates, high energy, probably likely to cool off a little bit. And that should give us a reprieve in inflation and rates, which is going to be good for the broad stock market.
Andy Goldberg So the punchline I think, is we still like the eye trade. I think there’s a lot of bargains to be had, but I worry if I were an investor, I’d be really looking to broaden my portfolio and rotate into companies that got hit the hardest when rates went up. So I’m looking at REITs, utilities, telecom, value, small caps all got smashed when interest rates surged.
Andy Goldberg And you see it actually if you look underneath the covers, or underneath level one of the onion right now, you’re seeing some of those sectors catch a bid because interest rates have come off the boil. So that’s where I’d be looking.
Caroline Woods And going back to tech. And then we’ll kind of wrap it up and talk about diversifying portfolios a little bit more. You mentioned you like semiconductors. If we do see some restrictions on data centers, could that actually be a good thing? It seems like it would be a good thing for existing players who already have data centers. Yeah, but could it actually be bullish for software stocks.
Caroline Woods Versus.
Andy Goldberg So software is a very tricky one. I know that the general, the general sentiment is that software stocks are in trouble because it’s just so easy right now to go and use AI to build tools which basically rhyme with software. I will tell you, just from my experience working in the corporate world, you know, I spent 21 years at one of the largest financial institutions, the largest bank in the United States.
Andy Goldberg And when you look at the tech stacks of these companies, they’re extremely sophisticated. And it’s I think of it as like a really fancy wedding cake. And to say that software is going to be entirely disrupted by AI, you’d have to, like, unbake the cake, take the eggs back, take sugar out. It’s really hard to do. And so I do think at the margin for smaller use cases, I can certainly be disruptive.
Andy Goldberg I also think that for certain parts of the software market, AI is only going to accelerate their ability to deliver powerful software in niche use cases. And so that’s a very difficult sector to play.
Caroline Woods So you avoid it?
Andy Goldberg We tend to underweight it just because there’s more uncertainty there than in other places in semiconductors. Semiconductors are the very thing that enable all of this compute. They call it you know, computing power to to happen. Nomura, where I work recently published and the investment bank side or global research team published the first chip shortage index. So you can pull it up on any kind of, you know, terminal or whatever.
Andy Goldberg And what it basically shows you is that there’s a multi-year, imbalance still to this day between the demand for chips and the supply. And the reason that I think they’re oversold is during the dot-com boom in the late, you know, kind of mid to late 90s, the prevailing wisdom at the time was, oh, internet traffic doubles every hundred days.
Andy Goldberg And so therefore we better lay 5 million miles of fiber optic cable underneath the oceans and along, you know, infrastructure to accommodate that. And then, lo and behold, the demand wasn’t yet there. And remember the term dark fiber from. So that cable never went live for like six, seven, eight years. That’s the exact opposite of what’s happening today.
Andy Goldberg If you can build a data center and get the GPUs and the semiconductors that you need in there and turn on that data center, they’re running at full tilt, max capacity from day one. In fact, we’re still running data centers that were built way back to build up the cloud infrastructure from seven years ago at full tilt.
Andy Goldberg And so it’s a very different dynamic. There’s concerns because they rose a lot. Yeah. And so I think that’s.
Caroline Woods Where you’re so bullish semiconductors and you can’t give stock picks. You can’t actually talk specific stocks. Does that mean you’d be bullish Mag Seven here then.
Andy Goldberg I would I would but with some caveats. So within the Mag seven there are a couple things to keep an eye on. For example, there are some big companies. You’ll figure out who I’m talking about that, you know, things like search is changing, right. So it would say like, you know, look, Google dominated search.
Caroline Woods Sure.
Andy Goldberg But now AI is coming into the space. And so those are like there’s things that you have to keep, keep an eye on and how those revenue sources develop over time. Now, now that said, if you look at like what some of those big companies are building on their own, they’re pulling some pretty impressive tools themselves. And so, you know, but the thing is, with the Mag Seven, what I like about those stocks is that they’re very, very large, very well capitalized companies with like hundreds if not thousands of revenue sources.
Andy Goldberg Okay. Which is different than like we’re I’m a little bit nervous is some of the upcoming IPOs. Those are firms that do one thing more or less. They make, you know, ever better AI models. And we see huge potential and huge promise for the work that they’re doing, especially at the genetic level. And I’m seeing more and more really sophisticated use cases for how those models work for a company to generate profitability.
Andy Goldberg Whenever the market gets volatile, you see a rush right back to the Mag Seven for a reason. And there’s very big, durable companies that they’re spending a lot of money, they’re borrowing some money, but their revenues far exceed the CapEx okay.
Caroline Woods So bullish semi bullish most of the Mag Seven avoiding software. Any other areas within tech that you think we should be buying.
Andy Goldberg Avoiding this. This might be boring. It might be boring for your viewers because it’s been said before. But I cannot stress enough how important this is. You have to continue to invest in cybersecurity.
Caroline Woods Maybe not boring, but expensive. Or some might say, oh, those aren’t the old saying.
Andy Goldberg There’s this old saying that, you know, and it was in the comment I’m making was, I forget, I think it was, you know, the Helmsley Building in Midtown Manhattan. Yeah, I think, I think it was,
Caroline Woods So the control room actually is.
Andy Goldberg For. Oh, no, today. Right. So it’s I think it was Mr. Helmsley who said that. He said in real estate, there’s no such thing as too expensive. It’s just early. Right. Okay. And the point being, these companies should grow into those valuations. So sure they’re expensive. I and like a pure price-to-sales or price or whatever I don’t that’s not what I’m what I’m worried about is over the long term, the demand for protecting against some of these cyber risks is only going to go up.
Andy Goldberg And so yeah, look you have to factor in like what what price am I paying for earnings and things like that. But I just think that you can probably be choosy there too. I think there’s a good opportunity to go hunting for small and up and comers that, you know, if you want to take a shot, you know, and find some juice there, maybe, maybe you could do that, okay.
Andy Goldberg But that’s another area that, just like I think is unavoidable.
Caroline Woods If I already have a lot of exposure to the S&P 500, which I know a lot of people do, and I feel like my big tech exposure is covered there. Yeah. You mentioned some other areas of the market that really now’s the time to be diversifying portfolios. Is that is that just because there are so many good opportunities or because we should be protecting ourselves against some downside if this continues for tech?
Andy Goldberg It’s a really good question. So every we’re it’s always a cycle. We’re in a cycle whether we know it or not. You never really know where you are in the cycle. What I can tell you is we’re closer to the middle of the cycle than the beginning, right? Because we’ve been cooking with gas for a while here.
Andy Goldberg And so just like the seasons change and I, you know, today’s warm and humid in New York City, but I know fall and winter are coming. I’m going to start to get.
Caroline Woods What’s coming in.
Andy Goldberg Box of winter stuff, right? Yeah. The same holds true for investing. Look, the reason that I’m advocating for building a more durable portfolio right now is that we’re through the super enthusiastic phase. One of the reasons I think we’re not in a bubble is because the market’s anticipating anti bubble behavior. It’s scrutinizing everything. It’s nervous. It’s jittery though.
Andy Goldberg Those are all healthy signs that the market is likely. And so but when the market gets starts to exhibit more volatility it just means that you’re on any given day or fortunes can change dramatically. And so what we do in portfolios at Nomura is we’re actually adding fixed income to portfolios and we’re diversifying within equities. Here’s the thing though.
Andy Goldberg For like ten years when the fed kept interest rates near zero and there was this term called Tina Tina, there is no alternative, remember. And then Jason Leonard, a colleague of mine over. Yeah. He’s I mean yeah, he so Jason coined the term TARA, There Are Reasonable Alternatives. I should have done that.
Caroline Woods Even know that. Okay, so in a durable portfolio, you mentioned the reason why you like some of the other areas in terms of the interest rate environment and everything. What are those alternatives in this durable portfolio actually, first, how much of that durable portfolio is still tech.
Andy Goldberg Yeah. How much. Oh well good question. So like right now the S&P 500 is like 40% of this whole thing is in ten stocks. So already and it depends where I am in my life stage. Right. Like if I’m nearing retirement or if there’s a bucket of money that I need for a down payment at home, I have no tech in that portfolio.
Andy Goldberg I’m buying bonds for now because I need to know that that money is there six months from now when I make my downpayment. Okay, if I’m a long term investor, I’m happy to have a bunch of tech because that’s really what’s driving the future of the economy right now. And the two are intertwined. So it very much depends on where you are in your journey.
Andy Goldberg
Caroline Woods What? So dig into some of those other areas that you want overweight exposure.
Andy Goldberg Exactly. So I’m still going to have so it’s so funny. Like if you look at every active manager in the asset manager industry, I mean, maybe not everybody pretty close. They’re all underweight tech and and like the Mag Seven because no one’s phoning up an active manager and saying, I’d love to pay you a management fee to overweight the stocks that are like.
Caroline Woods Oh yeah, I agree.
Andy Goldberg So the question is when you underweight some of those of the largest stocks, as you already have all the exposure in theory that you need, where do you put the money. And so let’s start with in the stock market, there’s a couple of areas. The first is consumer staples, which is kind of like a boring sleepy thing.
Andy Goldberg You know, you’re thinking of companies like what the Walmarts of the world, those have been trading at the lowest level relative to the other ten sectors I’m so used to. They’re only being ten. But now there’s been a lot. Right? Yeah. So it’s like but relatively then at any point in 30 years and and now the reason I’m moving like some money into that is let’s just say now that we’re later in the cycle, there is an accident or what if I’m wrong?
Andy Goldberg What if energy prices go to the moon and it causes a recession? There’s this old saying that, you know, if people buy in a recession, they don’t stop buying like beer. It used to be cigarettes, but I’ll say deodorant or toilet paper or whatever. And it’s like, I think it’s time to, like, have some of that in your portfolio.
Andy Goldberg The other thing there is, I would start to think about who’s paying attractive dividends or growing dividends. And usually what happens is dividend stocks take a hit when interest rates rise because they’re less attractive today relative to the new interest rates. But I do think there’s something to be said for that. And I know this is a probably an unusual statement, but in outside of the U.S., like, for example, the European financial sectors dividend yield is 2 to 3 times what the dividend yield of the S&P 500 is.
Andy Goldberg I’m also looking at Japan. Japan is a really exciting growth story. They haven’t seen growth like this in 30 years. And it’s very fundamental. Japan passed new laws and regulations that are literally saying to Japanese corporate management and companies behave more like American businesses. And the way you treat your capital and things like that. And so you’ve seen some there’s reflation in Japan.
Andy Goldberg The stocks have performed well. And if you look across the average Americans portfolio, their allocation to international is like very, very low, relative to any benchmark relative to the All Country World Index. I talked to some financial advisors who have zero exposure international. Let me give you one more, by the way. Yeah. Emerging markets like it’s emerging markets.
Andy Goldberg It’s as volatile as rocket fuel right. However there are companies. And again I’m not saying this as a recommendation for the company. But for example there’s a company SK hynix, which is up, I don’t know, a couple thousand percent in the last few years. Right. You know, it trades at nine, right? So if you like the AI trade, you can find companies outside the U.S. where you can get similar exposure but at a cheaper price.
Caroline Woods Okay. So we want tech exposure staples exposure and international exposure. Any other areas of this market looking attractive to build out this diversified portfolio just quickly?
Andy Goldberg Yeah, sure. Sure. I still like I still like defense companies and I and.
Caroline Woods Defense versus defensive. All those staples I guess would be defensive.
Andy Goldberg I like the defense industry. I, I know there’s a narrative bubbling up that with the election results that’ll come off the boil a little bit, but I think, you know, the US is going to have to continue to spend money on this. And then the other area that I like is health care. I believe and we believe as a firm that some of the most profound impact of AI are going to be found in, in the healthcare segment, where a lot of people think of like health care and like manufacturing new drugs as like scientists in the lab, that’s part of it.
Andy Goldberg But most of their time is spent crunching data, and this is going to dramatically improve the ability of scientists to come up with new cures and and drugs.
Caroline Woods But you would also mention things like REITs. And I think you said utilities earlier. So those are things that we should be kind of nibbling on because we’ve seen such a sell.
Andy Goldberg So so I think the thesis there is that if you’re if you are a sector that’s sensitive to interest rates and interest rates surge, you got pummeled. So going forward, if you think that I might be right, and the interest rates are unlikely to be a runaway freight train and more well-behaved, and maybe come off the boil a little bit because growth will slow.
Andy Goldberg Then you want to play the opposite of that, you know, trade when they got pummeled and start to, you know, kind of and some of the sectors that I just mentioned like you’ll, you’ll find, you know, in there. So, and then on the fixed-income side, like, you know, back to there are reasonable alternatives. I mean, you know, like on a high yield municipal bond portfolio, you can get a taxable-equivalent yields of 9 or 9.5%.
Andy Goldberg I mean, like, why would you not be doing stuff like that.
Caroline Woods So muni bonds.
Andy Goldberg So you know, if you’re a high tax state or high tax bracket person in a high tax state, muni bonds, especially state specific muni bonds, if that makes sense. You know, for you, and then there’s just other like, and then the one that just the media does not love, but we do is private credit. Not all private credit.
Andy Goldberg You got to be selective. What we do in private credit, is focus on asset-backed loans. Meaning if I’m lending money to a business and they happen to default, I end up taking over the asset, which I want to own anyway, if I could, versus direct loans to, you know, to.
Caroline Woods Businesses and anything that you’re avoiding aside from software.
Andy Goldberg Yeah. So the most important thing to avoid is having over a concentration in any key segment. And so that’s why like 40% of the S&P in ten stocks is too much for me. You know what I mean. And so I’m avoiding those. And then the other thing I’m doing is just going out and looking for companies that have too much debt.
Andy Goldberg I don’t care what industry they’re in, but I’m looking at, you know, all any different ratio that shows like debt to equity debt. I’m very nervous about that right now. Now that the cycle is starting to mature.
Caroline Woods Okay. And just to wrap things up for the everyday retail investor who saw what happened Wednesday and then what happened Thursday, maybe has some whiplash, you know, today as stocks are higher, what’s the biggest mistake they could be making amidst these swings? And what should they be really focused on.
Andy Goldberg Fund flows over time prove that this is the case. The biggest mistake is that after a big bout of volatility, I sit out on the sidelines for a while. Like I said, six out of the last ten times over 20 years. Six of the ten best days in the market come within two weeks of the worst days. Yesterday counts up there as one of the worst days.
Andy Goldberg I suspect you’ll get a really, really good day, if not today, at some point in the next two weeks. And so the biggest mistake they can make is just avoiding investing as a result of this.
Caroline Woods Okay, so if you have money put it to work.
Andy Goldberg I that’s that’s what we believe.
Caroline Woods Yeah okay. All right I think it’s a great time to pivot to a rapid-fire round of This or That very quick questions quick answers. No hedging your first time playing. Are you ready? I’m ready. All right. Tech selloff: buy the pullback or wait for confirmation. The pullback this week’s turmoil temporary setback or start of a bigger decline.
Andy Goldberg Temporary setback. And we’ve already seen some decline.
Caroline Woods Data center fear is overreaction or justified.
Andy Goldberg Justified. But it won’t be as bad as people think.
Caroline Woods AI trade: still early or getting overheated.
Andy Goldberg Capex trade, a little overheated. Early still to pick future winners that benefit from
Caroline Woods AI. AI spending too much or not enough.
Andy Goldberg In the long run. Not enough.
Caroline Woods Next six months, Mag Seven or the rest of the market? The rest of.
Andy Goldberg The market.
Caroline Woods I.
Andy Goldberg I like this game. You can.
Caroline Woods AI infrastructure: hyperscalers or neoclouds.
Andy Goldberg Hyperscalers.
Caroline Woods You mentioned the data. That’s an easy one. Geographic exposure. U.S. stocks or international.
Andy Goldberg Oh, I’m going to go for the first time in a long time, international.
Caroline Woods Investment style growth or value.
Andy Goldberg Value for right now.
Caroline Woods Stocks or bonds right now.
Andy Goldberg I mean, stocks are going to drive better returns. But bonds are as valuable, more valuable than they’ve been in 20, 30 years. And so from a portfolio construction perspective, get back towards your allocation in bonds okay.
Caroline Woods And best value in the stock market right now.
Andy Goldberg Best bet on the stock right now is consumer staples.
Caroline Woods Fixed income treasuries or corporate bonds.
Andy Goldberg Corporate bonds.
Caroline Woods Biggest.
Andy Goldberg Yield.
Caroline Woods Biggest risk higher interest rates or weaker earnings.
Andy Goldberg Higher interest rates.
Caroline Woods Year end new record highs or more volatility.
Andy Goldberg Record highs.
Caroline Woods Finish this sentence. The biggest value in the market is.
Andy Goldberg The biggest value in the market is, a good question.
Caroline Woods I guess it’s not consumer staples because you’re.
Andy Goldberg Yeah, I know, that’s why I’m trying to think about, trying to think of another one. Biggest value in the market I’m going to say is, industrial companies. This is you got to be patient.
Caroline Woods Okay? Patient like a year.
Andy Goldberg Yeah. Okay. That’s fair.
Caroline Woods Oh, the sector with the most upside is sector.
Andy Goldberg The most upside probably over the long run is still going to be technology. You can’t you can’t avoid it.
Caroline Woods The biggest risk to the AI trade is.
Andy Goldberg Biggest risk to the AI trade is energy. That there’s not enough of it to power the demand that we need. Demand is not the risk, it’s supply.
Caroline Woods And just to bring it back to what you were saying, the biggest mistake investors could make after the sell off is.
Andy Goldberg Oh, to tune out from the market, you got to stay invested.
Caroline Woods And do you have a price target for your end? I don’t know, quite a bit higher from here.
Andy Goldberg Yeah. Higher from here.
Caroline Woods New highs.
Andy Goldberg Yeah. I mean I would even say new highs and I don’t even care about the 2027 new highs again okay. But it’s going to be bumpier okay.
Caroline Woods So buckle up. All right, that was great. Andy Goldberg, thank you so much, of Nomura Asset Management International really appreciate all of your insights.
Andy Goldberg Thanks for having.
Caroline Woods Me. Thank you.
